AB 2735, as amended, Committee on Insurance. Earthquake insurance.
Existing law 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 policy. 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.
This bill would provide that if an insurer issuesbegin insert or causes to be issuedend insert a policy with earthquakebegin delete coverage that does not meet the
minimum coverage requirements,end deletebegin insert coverages other than the specified coverages, but in accordance with an approved rate application,end insert no further or other offer of earthquake coverage meeting thebegin delete minimumend delete coveragebegin insert and deductibleend insert requirements and no further or other notice of noncoverage is required by the insurer if a renewal of that policy is offered, and a written notice is provided 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.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 10083 of the Insurance Code, as amended
2by Section 12 of Chapter 369 of the Statutes of 2013, is amended
3to read:
(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
22EXCLUSIONS AND LIMITATIONS SUCH AS
23OUTBUILDINGS, SWIMMING POOLS, MASONRY FENCES,
24AND MASONRY CHIMNEYS. THIS DISCLOSURE FORM
25CONTAINS ONLY A GENERAL DESCRIPTION OF
26COVERAGES AND IS NOT PART OF YOUR EARTHQUAKE
27INSURANCE POLICY. ONLY THE SPECIFIC PROVISIONS
28OF YOUR POLICY WILL DETERMINE WHETHER A
P3 1PARTICULAR LOSS IS COVERED AND, IF SO, THE
2AMOUNT PAYABLE.
3THE COVERAGE, SUBJECT TO POLICY PROVISIONS,
4MAY BE PURCHASED AT ADDITIONAL COST ON THE
5FOLLOWING TERMS:
6(A) AMOUNT OF DWELLING COVERAGE: ____
7(B) APPLICABLE DEDUCTIBLE: ____ IF YOUR LOSS IS
8BELOW THIS AMOUNT, YOU MAY NOT RECEIVE ANY
9PAYMENT FROM YOUR COVERAGE.
10YOUR INSURANCE COMPANY OR AGENT WILL
11PROVIDE WRITTEN NOTICE AS TO HOW THE
12DEDUCTIBLE APPLIES TO THE MARKET VALUE OF YOUR
13COVERAGE, THE INSURED VALUE OF YOUR COVERAGE,
14OR THE REPLACEMENT VALUE OF YOUR COVERAGE.
15(C) CONTENTS COVERAGE: ____
16IF YOUR LOSS DOES NOT EXCEED THE DEDUCTIBLE
17FOR THE DWELLING, YOU WILL NOT RECEIVE ANY
18PAYMENT FOR THIS COVERAGE.
19YOUR INSURANCE COMPANY OR AGENT WILL
20PROVIDE WRITTEN NOTICE AS TO HOW THE
21DEDUCTIBLE APPLIES TO THE AMOUNT YOU RECEIVE
22PURSUANT TO THIS
COVERAGE.
23(D) ADDITIONAL LIVING EXPENSES: ____
24(E) RATE OR PREMIUM: ____
25YOU MUST ASK THE COMPANY TO ADD EARTHQUAKE
26COVERAGE WITHIN 30 DAYS FROM THE DATE OF
27MAILING OF THIS NOTICE OR IT SHALL BE
28CONCLUSIVELY PRESUMED THAT YOU HAVE NOT
29ACCEPTED THIS OFFER.
30THIS COVERAGE SHALL BE EFFECTIVE ON THE DAY
31YOUR ACCEPTANCE OF THIS OFFER IS RECEIVED BY US.
33(b) When the insurer, agent, or broker establishes delivery of
34the disclosure form by obtaining the signature of the applicant or
35insured, or when an insurer, agent, or broker provides the applicant
36with the disclosure form and the applicant does
not return a signed
37acknowledgment of receipt within 60 days of the date it was
38provided, there shall be a conclusive presumption that the insurer,
39agent, or broker has complied with the disclosure requirements of
40this section.
P4 1(c) The offer may contain additional provisions not in conflict
2with or in derogation of this section.
3(d) The commissioner may only approve modifications to the
4language prescribed in subdivision (a) if all of the following
5conditions are met:
6(1) The modifications are not in conflict with or in derogation
7of any provision of this section or Section 10089.
8(2) The modifications are necessary to ensure that the disclosure
9statement
accurately reflects the coverage actually provided by
10the policy being offered.
11(3) The modifications are strictly limited to necessary changes
12so that the modified disclosure statement is otherwise identical to
13the disclosure statement prescribed in this section.
14(e) Use of the language prescribed by this section, or modified
15language approved pursuant to subdivision (d), shall constitute
16compliance with the requirements of Section 10081 by an insurer
17subject thereto.
18(f) (1) If
an insurer issuesbegin insert or causes to be issuedend insert a policy with
19earthquakebegin delete coverage that does not meet the minimum coverage begin insert coverages other than the coveragesend insert specified in
20requirementsend delete
21subdivisions (a) and (b) of Section 10089, pursuant to a rate
22application approved by the commissioner in accordance with
23subdivision (c) of Section 10089, no further or other offer of
24earthquake coveragebegin delete meeting the minimum coverage requirementsend delete
25begin insert
as specified in subdivisions (a) and (b) of Section 10089end insert and no
26further or other notice of noncoverage is required by the insurer
27if both of the following apply:
28(A) A renewal of that policy is offered.
29(B) A written notice is provided with that renewal regarding
30additional earthquake coverage that is available.
31(2) The form of the written notice in paragraph (1) shall be filed
32with the commissioner at least 30 days before its first use. The
33form shall not be used if the commissioner disapproves the form
34of the written notice within that period for being misleading or
35incomplete.
36(g) This section shall
remain in effect only until January 1, 2019,
37and as of that date is repealed, unless a later enacted statute, that
38is enacted before January 1, 2019, deletes or extends that date.
Section 10083 of the Insurance Code, as added by
2Section 13 of Chapter 369 of the Statutes of 2013, is amended to
3read:
(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 of
10earthquake coverage shall contain the following language in at
11least 10-point boldface type:
13YOUR POLICY DOES NOT PROVIDE COVERAGE
14AGAINST THE PERIL OF EARTHQUAKE.
15CALIFORNIA LAW REQUIRES THAT EARTHQUAKE
16COVERAGE BE OFFERED TO YOU AT YOUR
OPTION.
17WARNING: THESE COVERAGES MAY DIFFER
18SUBSTANTIALLY FROM AND PROVIDE LESS
19PROTECTION THAN THE COVERAGE PROVIDED BY YOUR
20HOMEOWNERS’ INSURANCE POLICY. THERE ARE
21EXCLUSIONS AND LIMITATIONS SUCH AS
22OUTBUILDINGS, SWIMMING POOLS, MASONRY FENCES,
23AND MASONRY CHIMNEYS. THIS DISCLOSURE FORM
24CONTAINS ONLY A GENERAL DESCRIPTION OF
25COVERAGES AND IS NOT PART OF YOUR EARTHQUAKE
26INSURANCE POLICY. ONLY THE SPECIFIC PROVISIONS
27OF YOUR POLICY WILL DETERMINE WHETHER A
28PARTICULAR LOSS IS COVERED AND, IF SO, THE
29AMOUNT PAYABLE.
30THE COVERAGE, SUBJECT TO POLICY PROVISIONS,
31MAY BE PURCHASED AT ADDITIONAL COST ON THE
32FOLLOWING TERMS:
33(A) AMOUNT OF DWELLING COVERAGE: ____
34(B) APPLICABLE DEDUCTIBLE: ____ IF YOUR LOSS IS
35BELOW THIS AMOUNT, YOU MAY NOT RECEIVE ANY
36PAYMENT FROM YOUR COVERAGE.
37YOUR INSURANCE COMPANY OR AGENT WILL
38PROVIDE WRITTEN NOTICE AS TO HOW THE
39DEDUCTIBLE APPLIES TO THE MARKET VALUE OF YOUR
P6 1COVERAGE, THE INSURED VALUE OF YOUR COVERAGE,
2OR THE REPLACEMENT VALUE OF YOUR COVERAGE.
3(C) CONTENTS COVERAGE: ____
4IF YOUR LOSS DOES NOT EXCEED THE DEDUCTIBLE
5FOR THE DWELLING, YOU WILL NOT RECEIVE ANY
6PAYMENT FOR THIS COVERAGE.
7YOUR INSURANCE COMPANY OR AGENT WILL
8PROVIDE WRITTEN NOTICE AS TO HOW THE
9DEDUCTIBLE APPLIES TO THE AMOUNT YOU RECEIVE
10PURSUANT TO THIS COVERAGE.
11(D) ADDITIONAL LIVING EXPENSES: ____
12(E) RATE OR PREMIUM: ____
13YOU MUST ASK THE COMPANY TO ADD EARTHQUAKE
14COVERAGE WITHIN 30 DAYS FROM THE DATE OF
15MAILING OF THIS NOTICE OR IT SHALL BE
16CONCLUSIVELY PRESUMED THAT YOU HAVE NOT
17ACCEPTED THIS OFFER.
18THIS COVERAGE SHALL BE EFFECTIVE ON THE DAY
19YOUR ACCEPTANCE OF THIS OFFER IS RECEIVED BY US.
21(b) When the insurer, agent, or broker establishes delivery of
22the disclosure form by obtaining the signature of the applicant or
23insured, or when an insurer, agent, or broker provides the applicant
24with the disclosure form and the applicant does not return a signed
25acknowledgment of receipt within 60 days
of the date it was
26provided, there shall be a conclusive presumption that the insurer,
27agent, or broker has complied with the disclosure requirements of
28this section.
29(c) The offer may contain additional provisions not in conflict
30with or in derogation of this section.
31(d) The commissioner may only approve modifications to the
32language prescribed in subdivision (a) if all of the following
33conditions are met:
34(1) The modifications are not in conflict with or in derogation
35of any provision of this section or Section 10089.
36(2) The modifications are necessary to ensure that the disclosure
37statement accurately reflects the coverage actually provided by
38the
policy being offered.
P7 1(3) The modifications are strictly limited to necessary changes
2so that the modified disclosure statement is otherwise identical to
3the disclosure statement prescribed in this section.
4(e) Use of the language prescribed by this section, or modified
5language approved pursuant to subdivision (d), shall constitute
6compliance with the requirements of Section 10081 by an insurer
7subject thereto.
8(f) (1) If an insurer issuesbegin insert or causes to be issuedend insert a policy with
9earthquakebegin delete coverage that
does not meet the minimum coverage
10requirementsend delete
11subdivisions (a) and (b) of Section 10089, pursuant to a rate
12application approved by the commissioner in accordance with
13subdivision (c) of Section 10089, no further or other offer of
14earthquake coveragebegin delete meeting the minimum coverage requirementsend delete
15begin insert as specified in subdivisions (a) and (b) of Section 10089end insert and no
16further or other notice of noncoverage is required by the insurer
17if both of the following apply:
18(A) A renewal of that policy is offered.
19(B) A written notice is provided with that renewal regarding
20additional earthquake coverage that is available.
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.
26(g) This section shall become operative on January 1, 2019.
Section 10086.1 of the Insurance Code is amended to
28read:
(a) Where the offer of earthquake coverage has not
30been accepted, the insurer shall notify the named insured that the
31policy does not provide that coverage. After the offer on an every
32other year basis, the notice of noncoverage shall be provided prior
33to or concurrent with the renewal of the policy of residential
34property insurance. This section shall not affect any other
35provisions of this chapter nor shall it affect coverage under the
36policy of residential property insurance.
37(b) No further or other notice of noncoverage is required
38pursuant to subdivision (a) for policies subject to subdivision (f)
P8 1of Section 10083, and the insurer has
complied with the conditions
2of subdivision (f) of Section 10083.
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