Amended in Assembly March 27, 2014

California Legislature—2013–14 Regular Session

Assembly BillNo. 2735


Introduced by Committee on Insurance (Assembly Members Perea (Chair), Bradford, Ian Calderon, Cooley, Dababneh, Frazier, Gonzalez, V. Manuel Pérez, and Wieckowski)

February 25, 2014


An act to amendbegin delete Section 10086end deletebegin insert Sections 10083 and 10086.1end insert of the Insurance Code, relating to earthquake insurance.

LEGISLATIVE COUNSEL’S DIGEST

AB 2735, as amended, Committee on Insurance. Earthquake insurance.

Existing lawbegin delete prohibits a policy of residential property insurance from being issued or delivered unless the named insured is offered coverage for loss or damage caused by an earthquake, and specifies the minimum coverage that is required to be offeredend deletebegin insert provides that a policy of residential property insurance may not be issued or delivered or, under certain circumstances, initially renewed by an insurer unless the named insured is offered coverage for loss or damage caused by an earthquake. The required offer of earthquake coverage is authorized to be made prior to, concurrent with, or within 60 days following the issuance or renewal of a residential property insurance policyend insert. If an offer of earthquake coverage is not accepted, insurers are required to subsequently offer earthquake coverage to residential policyholders on an every other year basis.

begin delete

This bill would exempt those insurers whose insureds have accepted earthquake coverage that does not meet the minimum coverage requirement but has been approved by the Insurance Commissioner from being required to offer earthquake coverage meeting the minimum coverage requirements at any renewal if the insurer has offered a renewal of that policy and has provided written notice with that renewal regarding additional earthquake coverage available.

end delete
begin insert

This bill would provide that if an insurer offers specified insurance policies providing earthquake coverage that is greater than the minimum requirements, and an offer of one of those policies has been accepted, no further or other offer of earthquake coverage meeting the minimum earthquake coverage requirements is required at a renewal, if the insurer has offered a renewal of that policy and has provided written notice with that renewal regarding additional earthquake coverage that is available. The bill would require the form of that written notice to be approved by the Insurance Commissioner, as specified. The bill would also make additional conforming changes.

end insert

Vote: majority. Appropriation: no. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 10083 of the end insertbegin insertInsurance Codeend insertbegin insert, as amended
2by Section 12 of Chapter 369 of the Statutes of 2013, is amended
3to read:end insert

4

10083.  

(a) The offer of coverage required by Section 10081
5may be made prior to, concurrent with, or within 60 days following
6the issuance or renewal of a residential property insurance policy.
7If the offer of coverage is mailed to the named insured or applicant,
8it shall be mailed to the mailing address shown on the policy of
9residential property insurance or on the application. The offer may
10be made electronically pursuant to Section 38.5. The offer of
11earthquake coverage shall contain the following language in at
12least 10-point boldface type:


14YOUR POLICY DOES NOT PROVIDE COVERAGE
15AGAINST THE PERIL OF EARTHQUAKE.

16CALIFORNIA LAW REQUIRES THAT EARTHQUAKE
17COVERAGE BE OFFERED TO YOU AT YOUR OPTION.

18WARNING: THESE COVERAGES MAY DIFFER
19SUBSTANTIALLY FROM AND PROVIDE LESS
20PROTECTION THAN THE COVERAGE PROVIDED BY YOUR
21HOMEOWNERS’ INSURANCE POLICY. THERE ARE
P3    1EXCLUSIONS AND LIMITATIONS SUCH AS
2OUTBUILDINGS, SWIMMING POOLS, MASONRY FENCES,
3AND MASONRY CHIMNEYS. THIS DISCLOSURE FORM
4CONTAINS ONLY A GENERAL DESCRIPTION OF
5COVERAGES AND IS NOT PART OF YOUR EARTHQUAKE
6INSURANCE POLICY. ONLY THE SPECIFIC PROVISIONS
7OF YOUR POLICY WILL DETERMINE WHETHER A
8PARTICULAR LOSS IS COVERED AND, IF SO, THE
9AMOUNT PAYABLE.

10THE COVERAGE, SUBJECT TO POLICY PROVISIONS,
11MAY BE PURCHASED AT ADDITIONAL COST ON THE
12FOLLOWING TERMS:

13(A) AMOUNT OF DWELLING COVERAGE: ____

14(B) APPLICABLE DEDUCTIBLE: ____ IF YOUR LOSS IS
15BELOW THIS AMOUNT, YOU MAY NOT RECEIVE ANY
16PAYMENT FROM YOUR COVERAGE.

17YOUR INSURANCE COMPANY OR AGENT WILL
18PROVIDE WRITTEN NOTICE AS TO HOW THE
19DEDUCTIBLE APPLIES TO THE MARKET VALUE OF YOUR
20COVERAGE, THE INSURED VALUE OF YOUR COVERAGE,
21OR THE REPLACEMENT VALUE OF YOUR COVERAGE.

22(C) CONTENTS COVERAGE: ____

23IF YOUR LOSS DOES NOT EXCEED THE DEDUCTIBLE
24FOR THE DWELLING, YOU WILL NOT RECEIVE ANY
25PAYMENT FOR THIS COVERAGE.

26YOUR INSURANCE COMPANY OR AGENT WILL
27PROVIDE WRITTEN NOTICE AS TO HOW THE
28DEDUCTIBLE APPLIES TO THE AMOUNT YOU RECEIVE
29PURSUANT TO THIS COVERAGE.

30(D) ADDITIONAL LIVING EXPENSES: ____

31(E) RATE OR PREMIUM: ____

32YOU MUST ASK THE COMPANY TO ADD EARTHQUAKE
33COVERAGE WITHIN 30 DAYS FROM THE DATE OF
34MAILING OF THIS NOTICE OR IT SHALL BE
35CONCLUSIVELY PRESUMED THAT YOU HAVE NOT
36ACCEPTED THIS OFFER.

37THIS COVERAGE SHALL BE EFFECTIVE ON THE DAY
38YOUR ACCEPTANCE OF THIS OFFER IS RECEIVED BY US.


P4    1(b) When the insurer, agent, or broker establishes delivery of
2the disclosure form by obtaining the signature of the applicant or
3insured, or when an insurer, agent, or broker provides the applicant
4with the disclosure form and the applicant does not return a signed
5acknowledgment of receipt within 60 days of the date it was
6provided, there shall be a conclusive presumption that the insurer,
7agent, or broker has complied with the disclosure requirements of
8this section.

9(c) The offer may contain additional provisions not in conflict
10with or in derogation of this section.

11(d) The commissioner may only approve modifications to the
12language prescribed in subdivision (a) if all of the following
13conditions are met:

14(1) The modifications are not in conflict with or in derogation
15of any provision of this section or Section 10089.

16(2) The modifications are necessary to ensure that the disclosure
17statement accurately reflects the coverage actually provided by
18the policy being offered.

19(3) The modifications are strictly limited to necessary changes
20so that the modified disclosure statement is otherwise identical to
21the disclosure statement prescribed in this section.

22(e) Use of the language prescribed by this section, or modified
23language approved pursuant to subdivision (d), shall constitute
24compliance with the requirements of Section 10081 by an insurer
25subject thereto.

begin insert

26(f) (1) If the insurer offers policies providing earthquake
27coverage, other than the coverage specified in subdivisions (a)
28and (b) of Section 10089, pursuant to a rate application approved
29by the commissioner in accordance with subdivision (c) of Section
3010089, and an offer of one of those policies has been accepted, no
31further or other offer of earthquake coverage meeting the minimum
32coverage requirements is required at a renewal if the insurer has
33offered a renewal of that policy and has provided written notice
34with that renewal regarding additional earthquake coverage that
35is available.

end insert
begin insert

36(2) The form of the written notice in paragraph (1) shall be filed
37with the commissioner at least 30 days before its first use. The
38form shall not be used if the commissioner disapproves the form
39of the written notice within that period for being misleading or
40incomplete.

end insert
begin delete

P5    1(f)

end delete

2begin insert(g)end insert This section shall remain in effect only until January 1, 2019,
3and as of that date is repealed, unless a later enacted statute, that
4is enacted before January 1, 2019, deletes or extends that date.

5begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 10083 of the end insertbegin insertInsurance Codeend insertbegin insert, as added by
6Section 13 of Chapter 369 of the Statutes of 2013, is amended to
7read:end insert

8

10083.  

(a) The offer of coverage required by Section 10081
9may be made prior to, concurrent with, or within 60 days following
10the issuance or renewal of a residential property insurance policy.
11If the offer of coverage is mailed to the named insured or applicant,
12it shall be mailed to the mailing address shown on the policy of
13residential property insurance or on the application. The offer of
14earthquake coverage shall contain the following language in at
15least 10-point boldface type:


17YOUR POLICY DOES NOT PROVIDE COVERAGE
18AGAINST THE PERIL OF EARTHQUAKE.

19CALIFORNIA LAW REQUIRES THAT EARTHQUAKE
20COVERAGE BE OFFERED TO YOU AT YOUR OPTION.

21WARNING: THESE COVERAGES MAY DIFFER
22SUBSTANTIALLY FROM AND PROVIDE LESS
23PROTECTION THAN THE COVERAGE PROVIDED BY YOUR
24HOMEOWNERS’ INSURANCE POLICY. THERE ARE
25EXCLUSIONS AND LIMITATIONS SUCH AS
26OUTBUILDINGS, SWIMMING POOLS, MASONRY FENCES,
27AND MASONRY CHIMNEYS. THIS DISCLOSURE FORM
28CONTAINS ONLY A GENERAL DESCRIPTION OF
29COVERAGES AND IS NOT PART OF YOUR EARTHQUAKE
30INSURANCE POLICY. ONLY THE SPECIFIC PROVISIONS
31OF YOUR POLICY WILL DETERMINE WHETHER A
32PARTICULAR LOSS IS COVERED AND, IF SO, THE
33AMOUNT PAYABLE.

34THE COVERAGE, SUBJECT TO POLICY PROVISIONS,
35MAY BE PURCHASED AT ADDITIONAL COST ON THE
36FOLLOWING TERMS:

37(A) AMOUNT OF DWELLING COVERAGE: ____

38(B) APPLICABLE DEDUCTIBLE: ____   IF YOUR LOSS IS
39BELOW THIS AMOUNT, YOU MAY NOT RECEIVE ANY
40PAYMENT FROM YOUR COVERAGE.

P6    1YOUR INSURANCE COMPANY OR AGENT WILL
2PROVIDE WRITTEN NOTICE AS TO HOW THE
3DEDUCTIBLE APPLIES TO THE MARKET VALUE OF YOUR
4COVERAGE, THE INSURED VALUE OF YOUR COVERAGE,
5OR THE REPLACEMENT VALUE OF YOUR COVERAGE.

6(C) CONTENTS COVERAGE: ____

7IF YOUR LOSS DOES NOT EXCEED THE DEDUCTIBLE
8FOR THE DWELLING, YOU WILL NOT RECEIVE ANY
9PAYMENT FOR THIS COVERAGE.

10YOUR INSURANCE COMPANY OR AGENT WILL
11PROVIDE WRITTEN NOTICE AS TO HOW THE
12DEDUCTIBLE APPLIES TO THE AMOUNT YOU RECEIVE
13PURSUANT TO THIS COVERAGE.

14(D) ADDITIONAL LIVING EXPENSES: ____

15(E) RATE OR PREMIUM: ____

16YOU MUST ASK THE COMPANY TO ADD EARTHQUAKE
17COVERAGE WITHIN 30 DAYS FROM THE DATE OF
18MAILING OF THIS NOTICE OR IT SHALL BE
19CONCLUSIVELY PRESUMED THAT YOU HAVE NOT
20ACCEPTED THIS OFFER.

21THIS COVERAGE SHALL BE EFFECTIVE ON THE DAY
22YOUR ACCEPTANCE OF THIS OFFER IS RECEIVED BY US.


24(b) When the insurer, agent, or broker establishes delivery of
25the disclosure form by obtaining the signature of the applicant or
26insured, or when an insurer, agent, or broker provides the applicant
27with the disclosure form and the applicant does not return a signed
28acknowledgment of receipt within 60 days of the date it was
29provided, there shall be a conclusive presumption that the insurer,
30agent, or broker has complied with the disclosure requirements of
31this section.

32(c) The offer may contain additional provisions not in conflict
33with or in derogation of this section.

34(d) The commissioner may only approve modifications to the
35language prescribed in subdivision (a) if all of the following
36conditions are met:

37(1) The modifications are not in conflict with or in derogation
38of any provision of this section or Section 10089.

P7    1(2) The modifications are necessary to ensure that the disclosure
2statement accurately reflects the coverage actually provided by
3the policy being offered.

4(3) The modifications are strictly limited to necessary changes
5so that the modified disclosure statement is otherwise identical to
6the disclosure statement prescribed in this section.

7(e) Use of the language prescribed by this section, or modified
8language approved pursuant to subdivision (d), shall constitute
9compliance with the requirements of Section 10081 by an insurer
10subject thereto.

begin insert

11(f) (1) If the insurer offers policies providing earthquake
12coverage, other than the coverage specified in subdivisions (a)
13and (b) of Section 10089, pursuant to a rate application approved
14by the commissioner in accordance with subdivision (c) of Section
1510089, and an offer of one of those policies has been accepted, no
16further or other offer of earthquake coverage meeting the minimum
17coverage requirements is required at a renewal if the insurer has
18offered a renewal of that policy and has provided written notice
19with that renewal regarding additional earthquake coverage that
20is available.

end insert
begin insert

21(2) The form of the written notice in paragraph (1) shall be filed
22with the commissioner at least 30 days before its first use. The
23form shall not be used if the commissioner disapproves the form
24of the written notice within that period for being misleading or
25incomplete.

end insert
begin delete

26(f)

end delete

27begin insert(g)end insert This section shall become operative on January 1, 2019.

28begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 10086.1 of the end insertbegin insertInsurance Codeend insertbegin insert is amended to
29read:end insert

30

10086.1.  

begin insert(a)end insertbegin insertend insertWhere the offer of earthquake coverage has not
31been accepted, the insurer shall notify the named insured that the
32policy does not provide that coverage. After the offer on an every
33other year basis, the notice of noncoverage shall be provided prior
34to or concurrent with the renewal of the policy of residential
35property insurance. This section shall not affect any other
36provisions of this chapter nor shall it affect coverage under the
37policy of residential property insurance.

begin insert

38(b) (1) If the insurer offers policies providing earthquake
39coverage, other than the coverage specified in subdivisions (a)
40and (b) of Section 10089, pursuant to a rate application approved
P8    1by the commissioner in accordance with subdivision (c) of Section
210089, and an offer of one of those policies has been accepted, no
3further or other offer of earthquake coverage meeting the minimum
4coverage requirements is required at a renewal if the insurer has
5offered a renewal of that policy and has provided written notice
6with that renewal regarding additional earthquake coverage that
7is available.

end insert
begin insert

8(2) The form of the written notice in paragraph (1) shall be filed
9with the commissioner at least 30 days before its first use. The
10form shall not be used if the commissioner disapproves the form
11of the written notice within that period for being misleading or
12incomplete.

end insert
begin delete
13

SECTION 1.  

Section 10086 of the Insurance Code, as amended
14by Section 14 of Chapter 369 of the Statutes of 2013, is amended
15to read:

16

10086.  

(a) If an offer of earthquake coverage is accepted, the
17coverage shall be continued at the applicable rates and conditions
18for the policy term, provided the policy of residential property
19insurance is not terminated by the named insured or insurer.

20(1) At any renewal, an insurer may modify the terms and
21conditions of an existing policy, rider, or endorsement providing
22coverage against loss or damage caused by the peril of earthquake
23if the modified terms and conditions provide the minimum
24coverages required by Section 10089.

25(2) An insurer that modifies the terms and conditions of an
26existing policy, rider, or endorsement shall provide the insured
27with the renewal notice in a stand-alone disclosure document
28stating the changes in the terms and conditions of the insured’s
29existing policy, rider, or endorsement. The offer of renewal may
30be made electronically pursuant to Section 38.5. Proof of mailing
31of the disclosure document by first-class mail to a named insured
32at the mailing address shown on the policy or application, or proof
33consistent with Section 38.5 that the offer of renewal of coverage
34was sent to the named insured or applicant by electronic
35transmission, creates a conclusive presumption that the disclosure
36document was provided. The disclosure shall include the following
37statement in 14-point boldface type:

38THE COVERAGE IN THE POLICY WE ARE OFFERING
39YOU WITH THIS RENEWAL HAS BEEN REDUCED, AND
40SUBSTANTIALLY DIFFERS FROM THE COVERAGES
P9    1PROVIDED BY YOUR HOMEOWNERS’ POLICY.
2INSURANCE COMPANIES ARE ALLOWED TO RENEW
3EARTHQUAKE INSURANCE POLICIES WITH COVERAGE
4THAT IS REDUCED FROM THE COVERAGE YOU
5PREVIOUSLY PURCHASED. YOU MAY REQUEST A
6SAMPLE COPY OF THIS NEW POLICY TO REVIEW PRIOR
7TO MAKING A DECISION TO ACCEPT THIS RENEWAL,
8AND WE WILL MAIL OR DELIVER IT TO YOU WITHIN 14
9DAYS OF YOUR REQUEST. A REQUEST FOR THE SAMPLE
10COPY SHALL NOT CHANGE OR EXTEND THE POLICY
11EXPIRATION DATE SPECIFIED IN THE RENEWAL NOTICE.
12A SUMMARY OF THE CHANGES IS INCLUDED WITH THIS
13NOTICE.

14The commissioner shall approve the form of the summary at the
15time he or she approves the policy. The summary shall include the
16information contained in subdivision (a) of Section 10083, and
17may be included with the renewal notice in standard type.

18The commissioner may approve substantially similar disclosure
19forms if necessary to accurately disclose relevant information to
20the policyholder. The commissioner may also approve disclosure
21forms substantially similar to the disclosure statement required by
22Section 10083 if necessary to accurately disclose relevant
23information to the policyholder.

24(3) If the earthquake coverage is provided by a policy issued
25by the California Earthquake Authority, the following disclosure
26shall be provided in 14-point boldface type:

2728CALIFORNIA EARTHQUAKE AUTHORITY POLICY
29DISCLOSURE
30

31THIS POLICY IS BEING PURCHASED FROM THE
32CALIFORNIA EARTHQUAKE AUTHORITY (“CEA”). THE
33COVERAGE IN THIS CEA POLICY SUBSTANTIALLY
34DIFFERS FROM THE COVERAGES PROVIDED IN YOUR
35HOMEOWNER’S POLICY. THE CEA IS NOT PART OF OR
36ASSOCIATED WITH YOUR HOMEOWNER’S INSURANCE
37COMPANY. IF LOSSES AS A RESULT OF AN EARTHQUAKE
38OR A SERIES OF EARTHQUAKES EXCEED THE
39AVAILABLE RESOURCES OF THE CEA, THIS POLICY IS
40NOT COVERED BY THE CALIFORNIA INSURANCE
P10   1GUARANTY ASSOCIATION. THEREFORE, THE
2CALIFORNIA INSURANCE GUARANTY ASSOCIATION
3WILL NOT PAY YOUR CLAIMS OR PROTECT YOUR
4ASSETS IF THE CEA BECOMES INSOLVENT AND IS
5UNABLE TO MAKE PAYMENTS AS PROMISED. IN
6 ADDITION, YOUR CEA POLICY MAY BE SUBJECT TO
7FUTURE SURCHARGES OF THE POLICY PREMIUM IN
8CERTAIN CASES WHERE AN EARTHQUAKE OR SERIES
9OF EARTHQUAKES HAS EXCEEDED AVAILABLE
10RESOURCES TO PAY CLAIMS. IN THAT CASE, THIS
11MEANS THAT IN ADDITION TO THE ANNUAL PREMIUM,
12YOU MAY BE CHARGED UP TO AN ADDITIONAL 20% OF
13THE PREMIUM.

14(b) (1) If the insurer offers policies providing earthquake
15coverage, other than the coverage specified in subdivisions (a) and
16(b) of Section 10089, pursuant to a rate application approved by
17the commissioner in accordance with subdivision (c) of Section
1810089, and an offer of that policy has been accepted, no further
19or other offer of earthquake coverage meeting the minimum
20coverage requirements is required at any renewal if the insurer has
21done both of the following:

22(A) Offered a renewal of that policy.

23(B) Has provided written notice with that renewal regarding
24additional earthquake coverage available.

25(2) The form of the written notice shall be filed with the
26commissioner at least 30 days prior to its first use and shall not be
27used if the commissioner disapproves the form of the written notice
28as being misleading or incomplete within that period.

29(c) If the offer is not accepted, the insurer or any affiliated
30insurer shall be required on an every other year basis to offer
31earthquake coverage in connection with any continuation, renewal,
32or reinstatement of the policy following any lapse thereof, or with
33respect to any other policy that extends, changes, supersedes, or
34replaces the policy of residential property insurance. The offer
35may be made electronically pursuant to Section 38.5.

36(d) Nothing in this section shall preclude the named insured
37from terminating the earthquake coverage at any time.

38(e) This section shall remain in effect only until January 1, 2019,
39and as of that date is repealed, unless a later enacted statute, that
40is enacted before January 1, 2019, deletes or extends that date.

P11   1

SEC. 2.  

Section 10086 of the Insurance Code, as added by Section
215 of Chapter 369 of the Statutes of 2013, is amended to read:

3

10086.  

(a) If an offer of earthquake coverage is accepted, the
4coverage shall be continued at the applicable rates and conditions
5for the policy term, provided the policy of residential property
6insurance is not terminated by the named insured or insurer.

7(1) At any renewal, an insurer may modify the terms and
8conditions of an existing policy, rider, or endorsement providing
9coverage against loss or damage caused by the peril of earthquake
10if the modified terms and conditions provide the minimum
11coverages required by Section 10089.

12(2) An insurer that modifies the terms and conditions of an
13existing policy, rider, or endorsement shall provide the insured
14with the renewal notice in a stand-alone disclosure document
15stating the changes in the terms and conditions of the insured’s
16existing policy, rider, or endorsement. Proof of mailing of the
17disclosure document by first-class mail to a named insured at the
18mailing address shown on the policy or application creates a
19conclusive presumption that the disclosure document was provided.
20The disclosure shall include the following statement in 14-point
21boldface type:

22THE COVERAGE IN THE POLICY WE ARE OFFERING
23YOU WITH THIS RENEWAL HAS BEEN REDUCED, AND
24SUBSTANTIALLY DIFFERS FROM THE COVERAGES
25PROVIDED BY YOUR HOMEOWNERS’ POLICY.
26INSURANCE COMPANIES ARE ALLOWED TO RENEW
27EARTHQUAKE INSURANCE POLICIES WITH COVERAGE
28THAT IS REDUCED FROM THE COVERAGE YOU
29PREVIOUSLY PURCHASED. YOU MAY REQUEST A
30SAMPLE COPY OF THIS NEW POLICY TO REVIEW PRIOR
31TO MAKING A DECISION TO ACCEPT THIS RENEWAL,
32AND WE WILL MAIL OR DELIVER IT TO YOU WITHIN 14
33DAYS OF YOUR REQUEST. A REQUEST FOR THE SAMPLE
34COPY SHALL NOT CHANGE OR EXTEND THE POLICY
35EXPIRATION DATE SPECIFIED IN THE RENEWAL NOTICE.
36A SUMMARY OF THE CHANGES IS INCLUDED WITH THIS
37NOTICE.

38The commissioner shall approve the form of the summary at the
39time he or she approves the policy. The summary shall include the
P12   1information contained in subdivision (a) of Section 10083, and
2may be included with the renewal notice in standard type.

3The commissioner may approve substantially similar disclosure
4forms if necessary to accurately disclose relevant information to
5the policyholder. The commissioner may also approve disclosure
6forms substantially similar to the disclosure statement required by
7Section 10083 if necessary to accurately disclose relevant
8information to the policyholder.

9(3) If the earthquake coverage is provided by a policy issued
10by the California Earthquake Authority, the following disclosure
11shall be provided in 14-point boldface type:

12CALIFORNIA EARTHQUAKE AUTHORITY POLICY
13DISCLOSURE

14THIS POLICY IS BEING PURCHASED FROM THE
15CALIFORNIA EARTHQUAKE AUTHORITY (“CEA”). THE
16COVERAGE IN THIS CEA POLICY SUBSTANTIALLY
17DIFFERS FROM THE COVERAGES PROVIDED IN YOUR
18HOMEOWNER’S POLICY. THE CEA IS NOT PART OF OR
19ASSOCIATED WITH YOUR HOMEOWNER’S INSURANCE
20COMPANY. IF LOSSES AS A RESULT OF AN EARTHQUAKE
21OR A SERIES OF EARTHQUAKES EXCEED THE
22AVAILABLE RESOURCES OF THE CEA, THIS POLICY IS
23NOT COVERED BY THE CALIFORNIA INSURANCE
24GUARANTY ASSOCIATION. THEREFORE, THE
25CALIFORNIA INSURANCE GUARANTY ASSOCIATION
26WILL NOT PAY YOUR CLAIMS OR PROTECT YOUR
27ASSETS IF THE CEA BECOMES INSOLVENT AND IS
28UNABLE TO MAKE PAYMENTS AS PROMISED. IN
29ADDITION, YOUR CEA POLICY MAY BE SUBJECT TO
30FUTURE SURCHARGES OF THE POLICY PREMIUM IN
31CERTAIN CASES WHERE AN EARTHQUAKE OR SERIES
32OF EARTHQUAKES HAS EXCEEDED AVAILABLE
33RESOURCES TO PAY CLAIMS. IN THAT CASE, THIS
34MEANS THAT IN ADDITION TO THE ANNUAL PREMIUM,
35YOU MAY BE CHARGED UP TO AN ADDITIONAL 20% OF
36THE PREMIUM.

37(b) (1) If the insurer offers policies providing earthquake
38coverage, other than the coverage specified in subdivisions (a) and
39(b) of Section 10089, pursuant to a rate application approved by
40the commissioner in accordance with subdivision (c) of Section
P13   110089, and an offer of that policy has been accepted, no further
2or other offer of earthquake coverage meeting the minimum
3coverage requirements is required at any renewal if the insurer has
4done both of the following:

5(A) Offered a renewal of that policy.

6(B) Has provided written notice with that renewal regarding
7additional earthquake coverage available.

8(2) The form of the written notice shall be filed with the
9commissioner at least 30 days prior to its first use and shall not be
10used if the commissioner disapproves the form of the written notice
11as being misleading or incomplete within that period.

12(c) If the offer is not accepted, the insurer or any affiliated
13insurer shall be required on an every other year basis to offer
14earthquake coverage in connection with any continuation, renewal,
15or reinstatement of the policy following any lapse thereof, or with
16 respect to any other policy that extends, changes, supersedes, or
17replaces the policy of residential property insurance.

18(d) Nothing in this section shall preclude the named insured
19from terminating the earthquake coverage at any time.

20(e) This section shall become operative on January 1, 2019.

end delete


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