Amended in Senate August 11, 2014

Amended in Senate June 30, 2014

Amended in Senate June 11, 2014

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 amend Sections 10083 and 10086.1 of the Insurance Code, relating to earthquake insurance.

LEGISLATIVE COUNSEL’S DIGEST

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 issues or causes to be issued a policy with earthquake coverages other than the specified coverages, but in accordance with an approved rate application, no further or other offer of earthquake coverage meeting the coverage and deductible 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.

begin insert

This bill also would incorporate additional changes in Section 10083 of the Insurance Code, as amended by Section 12 of Chapter 369 of the Statutes of 2013, proposed by AB 2064, to be operative if AB 2064 and this bill are both enacted and become effective on or before January 1, 2015, and this bill is enacted last.

end insert
begin insert

This bill also would incorporate additional changes in Section 10083 of the Insurance Code, as added by Section 13 of Chapter 369 of the Statutes of 2013, proposed by AB 2064, to be operative if AB 2064 and this bill are both enacted and become effective on or before January 1, 2015, and this bill is enacted last.

end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

P2    1

SECTION 1.  

Section 10083 of the Insurance Code, as amended
2by Section 12 of Chapter 369 of the Statutes of 2013, is amended
3to read:

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.

P3    1WARNING: THESE COVERAGES MAY DIFFER
2SUBSTANTIALLY FROM AND PROVIDE LESS
3PROTECTION THAN THE COVERAGE PROVIDED BY YOUR
4HOMEOWNERS’ INSURANCE POLICY. THERE ARE
5EXCLUSIONS AND LIMITATIONS SUCH AS
6OUTBUILDINGS, SWIMMING POOLS, MASONRY FENCES,
7AND MASONRY CHIMNEYS. THIS DISCLOSURE FORM
8CONTAINS ONLY A GENERAL DESCRIPTION OF
9COVERAGES AND IS NOT PART OF YOUR EARTHQUAKE
10INSURANCE POLICY. ONLY THE SPECIFIC PROVISIONS
11OF YOUR POLICY WILL DETERMINE WHETHER A
12PARTICULAR LOSS IS COVERED AND, IF SO, THE
13AMOUNT PAYABLE.

14THE COVERAGE, SUBJECT TO POLICY PROVISIONS,
15MAY BE PURCHASED AT ADDITIONAL COST ON THE
16FOLLOWING TERMS:

17(A) AMOUNT OF DWELLING COVERAGE: ____

18(B) APPLICABLE DEDUCTIBLE: ____ IF YOUR LOSS IS
19BELOW THIS AMOUNT, YOU MAY NOT RECEIVE ANY
20PAYMENT FROM YOUR COVERAGE.

21YOUR INSURANCE COMPANY OR AGENT WILL
22PROVIDE WRITTEN NOTICE AS TO HOW THE
23DEDUCTIBLE APPLIES TO THE MARKET VALUE OF YOUR
24COVERAGE, THE INSURED VALUE OF YOUR COVERAGE,
25OR THE REPLACEMENT VALUE OF YOUR COVERAGE.

26(C) CONTENTS COVERAGE: ____

27IF YOUR LOSS DOES NOT EXCEED THE DEDUCTIBLE
28FOR THE DWELLING, YOU WILL NOT RECEIVE ANY
29PAYMENT FOR THIS COVERAGE.

30YOUR INSURANCE COMPANY OR AGENT WILL
31PROVIDE WRITTEN NOTICE AS TO HOW THE
32DEDUCTIBLE APPLIES TO THE AMOUNT YOU RECEIVE
33PURSUANT TO THIS COVERAGE.

34(D) ADDITIONAL LIVING EXPENSES: ____

35(E) RATE OR PREMIUM: ____

36YOU MUST ASK THE COMPANY TO ADD EARTHQUAKE
37COVERAGE WITHIN 30 DAYS FROM THE DATE OF
38MAILING OF THIS NOTICE OR IT SHALL BE
39CONCLUSIVELY PRESUMED THAT YOU HAVE NOT
40ACCEPTED THIS OFFER.

P4    1THIS COVERAGE SHALL BE EFFECTIVE ON THE DAY
2YOUR ACCEPTANCE OF THIS OFFER IS RECEIVED BY US.


4(b) When the insurer, agent, or broker establishes delivery of
5the disclosure form by obtaining the signature of the applicant or
6insured, or when an insurer, agent, or broker provides the applicant
7with the disclosure form and the applicant does not return a signed
8acknowledgment of receipt within 60 days of the date it was
9provided, there shall be a conclusive presumption that the insurer,
10agent, or broker has complied with the disclosure requirements of
11this section.

12(c) The offer may contain additional provisions not in conflict
13with or in derogation of this section.

14(d) The commissioner may only approve modifications to the
15language prescribed in subdivision (a) if all of the following
16conditions are met:

17(1) The modifications are not in conflict with or in derogation
18of any provision of this section or Section 10089.

19(2) The modifications are necessary to ensure that the disclosure
20statement accurately reflects the coverage actually provided by
21the policy being offered.

22(3) The modifications are strictly limited to necessary changes
23so that the modified disclosure statement is otherwise identical to
24the disclosure statement prescribed in this section.

25(e) Use of the language prescribed by this section, or modified
26language approved pursuant to subdivision (d), shall constitute
27compliance with the requirements of Section 10081 by an insurer
28subject thereto.

29(f) (1) If an insurer issues or causes to be issued a policy with
30earthquake coverages other than the coverages specified in
31subdivisions (a) and (b) of Section 10089, pursuant to a rate
32application approved by the commissioner in accordance with
33subdivision (c) of Section 10089, no further or other offer of
34earthquake coverage as specified in subdivisions (a) and (b) of
35Section 10089 and no further or other notice of noncoverage is
36required by the insurer if both of the following apply:

37(A) A renewal of that policy is offered.

38(B) A written notice is provided with that renewal regarding
39additional earthquake coverage that is available.

P5    1(2) The form of the written notice in paragraph (1) shall be filed
2with the commissioner at least 30 days before its first use. The
3form shall not be used if the commissioner disapproves the form
4of the written notice within that period for being misleading or
5incomplete.

6(g) This section shall remain in effect only until January 1, 2019,
7and as of that date is repealed, unless a later enacted statute, that
8is enacted before January 1, 2019, deletes or extends that date.

9begin insert

begin insertSEC. 1.5.end insert  

end insert

begin insertSection 10083 of the end insertbegin insertInsurance Codeend insertbegin insert, as amended
10by Section 12 of Chapter 369 of the Statutes of 2013, is amended
11to read:end insert

12

10083.  

(a) The offer of coverage required by Section 10081
13may be made prior to, concurrent with, or within 60 days following
14the issuance or renewal of a residential property insurance policy.
15If the offer of coverage is mailed to the named insured or applicant,
16it shall be mailed to the mailing address shown on the policy of
17residential property insurance or on the application. The offer may
18be made electronically pursuant to Section 38.5. The offer of
19earthquake coverage shall contain the following language in at
20least 10-point boldface type:


begin delete

22 YOUR

end delete

23begin insert“YOURend insert POLICY DOES NOT PROVIDE COVERAGE
24AGAINST THE PERIL OF EARTHQUAKE.

25CALIFORNIA LAW REQUIRES THAT EARTHQUAKE
26COVERAGE BE OFFERED TO YOU AT YOUR OPTION.

27WARNING: THESE COVERAGES MAY DIFFER
28SUBSTANTIALLY FROM AND PROVIDE LESS
29PROTECTION THAN THE COVERAGE PROVIDED BY YOUR
30HOMEOWNERS’ INSURANCE POLICY. THERE ARE
31EXCLUSIONS AND LIMITATIONS SUCH AS
32OUTBUILDINGS, SWIMMING POOLS, MASONRY FENCES,
33AND MASONRY CHIMNEYS. THIS DISCLOSURE FORM
34CONTAINS ONLY A GENERAL DESCRIPTION OF
35COVERAGES AND IS NOT PART OF YOUR EARTHQUAKE
36INSURANCE POLICY. ONLY THE SPECIFIC PROVISIONS
37OF YOUR POLICY WILL DETERMINE WHETHER A
38PARTICULAR LOSS IS COVERED AND, IF SO, THE
39AMOUNT PAYABLE.

P6    1THE COVERAGE, SUBJECT TO POLICY PROVISIONS,
2MAY BE PURCHASED AT ADDITIONAL COST ON THE
3FOLLOWING TERMS:

4(A) AMOUNT OF DWELLING COVERAGE: ____

5(B) APPLICABLE DEDUCTIBLE: ____ IF YOUR LOSS IS
6BELOW THIS AMOUNT, YOU MAY NOT RECEIVE ANY
7PAYMENT FROM YOUR COVERAGE.

8YOUR INSURANCE COMPANY OR AGENT WILL
9PROVIDE WRITTEN NOTICE AS TO HOW THE
10DEDUCTIBLE APPLIES TO THE MARKET VALUE OF YOUR
11COVERAGE, THE INSURED VALUE OF YOUR COVERAGE,
12OR THE REPLACEMENT VALUE OF YOUR COVERAGE.

13(C) CONTENTS COVERAGE: ____

14IF YOUR LOSS DOES NOT EXCEED THE DEDUCTIBLE
15FOR THE DWELLING, YOU WILL NOT RECEIVE ANY
16PAYMENT FOR THIS COVERAGE.

17YOUR INSURANCE COMPANY OR AGENT WILL
18PROVIDE WRITTEN NOTICE AS TO HOW THE
19DEDUCTIBLE APPLIES TO THE AMOUNT YOU RECEIVE
20PURSUANT TO THIS COVERAGE.

21(D) ADDITIONAL LIVING EXPENSES: ____

22(E) RATE OR PREMIUM: ____

23YOU MUST ASK THE COMPANY TO ADD EARTHQUAKE
24COVERAGE WITHIN 30 DAYS FROM THE DATE OF
25MAILING OF THIS NOTICE OR IT SHALL BE
26CONCLUSIVELY PRESUMED THAT YOU HAVE NOT
27ACCEPTED THIS OFFER.

28THIS COVERAGE SHALL BE EFFECTIVE ON THE DAY
29YOUR ACCEPTANCE OF THIS OFFER IS RECEIVED BYbegin delete US.end delete
30begin insert US.”end insert


32(b) When the insurer, agent, or broker establishes delivery of
33the disclosure form by obtaining the signature of the applicant or
34insured, or when an insurer, agent, or broker provides the applicant
35with the disclosure form and the applicant does not return a signed
36 acknowledgment of receipt within 60 days of the date it was
37provided, there shall be a conclusive presumption that the insurer,
38agent, or broker has complied with the disclosure requirements of
39this section.

P7    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.

begin insert

18(f) (1) If an insurer issues or causes to be issued a policy with
19earthquake coverages other than the coverages specified in
20subdivisions (a) and (b) of Section 10089, pursuant to a rate
21application approved by the commissioner in accordance with
22subdivision (c) of Section 10089, no further or other offer of
23earthquake coverage as specified in subdivisions (a) and (b) of
24Section 10089 and no further or other notice of noncoverage is
25required by the insurer if both of the following apply:

end insert
begin insert

26(A) A renewal of that policy is offered.

end insert
begin insert

27(B) A written notice is provided with that renewal regarding
28additional earthquake coverage that is available.

end insert
begin insert

29(2) The form of the written notice in paragraph (1) shall be filed
30with the commissioner at least 30 days before its first use. The
31form shall not be used if the commissioner disapproves the form
32of the written notice within that period for being misleading or
33incomplete.

end insert
begin delete

34(f)

end delete

35begin insert(g)end insert This section shall remain in effect only until January 1,begin delete 2019,end delete
36begin insert 2016,end insert and as of that date is repealed, unless a later enacted statute,
37that is enacted before January 1,begin delete 2019,end deletebegin insert 2016,end insert deletes or extends
38that date.

P8    1

SEC. 2.  

Section 10083 of the Insurance Code, as added by
2Section 13 of Chapter 369 of the Statutes of 2013, is amended to
3read:

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 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
P9    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.

P10   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 issues or causes to be issued a policy with
9earthquake coverages other than the coverages specified in
10subdivisions (a) and (b) of Section 10089, pursuant to a rate
11application approved by the commissioner in accordance with
12subdivision (c) of Section 10089, no further or other offer of
13earthquake coverage as specified in subdivisions (a) and (b) of
14Section 10089 and no further or other notice of noncoverage is
15required by the insurer if both of the following apply:

16(A) A renewal of that policy is offered.

17(B) A written notice is provided with that renewal regarding
18additional earthquake coverage that is available.

19(2) The form of the written notice in paragraph (1) shall be filed
20with the commissioner at least 30 days before its first use. The
21form shall not be used if the commissioner disapproves the form
22of the written notice within that period for being misleading or
23incomplete.

24(g) This section shall become operative on January 1, 2019.

25begin insert

begin insertSEC. 2.5.end insert  

end insert

begin insertSection 10083 of the end insertbegin insertInsurance Codeend insertbegin insert, as added by
26Section 13 of Chapter 369 of the Statutes of 2013, is amended to
27read:end insert

28

10083.  

(a) The offer of coverage required by Section 10081
29may be made prior to, concurrent with, or within 60 days following
30the issuance or renewal of a residential property insurance policy.
31If the offer of coverage is mailed to the named insured or applicant,
32it shall be mailed to the mailing address shown on the policy of
33residential property insurance or on the application.begin delete The offer of
34earthquake coverage shall contain the following language in at
35least 10-point boldface type:end delete


begin delete

37YOUR POLICY DOES NOT PROVIDE COVERAGE
38AGAINST THE PERIL OF EARTHQUAKE.

39CALIFORNIA LAW REQUIRES THAT EARTHQUAKE
40COVERAGE BE OFFERED TO YOU AT YOUR OPTION.

P11   1WARNING: THESE COVERAGES MAY DIFFER
2SUBSTANTIALLY FROM AND PROVIDE LESS
3PROTECTION THAN THE COVERAGE PROVIDED BY YOUR
4HOMEOWNERS’ INSURANCE POLICY. THERE ARE
5EXCLUSIONS AND LIMITATIONS SUCH AS
6OUTBUILDINGS, SWIMMING POOLS, MASONRY FENCES,
7AND MASONRY CHIMNEYS. THIS DISCLOSURE FORM
8CONTAINS ONLY A GENERAL DESCRIPTION OF
9COVERAGES AND IS NOT PART OF YOUR EARTHQUAKE
10INSURANCE POLICY. ONLY THE SPECIFIC PROVISIONS
11OF YOUR POLICY WILL DETERMINE WHETHER A
12PARTICULAR LOSS IS COVERED AND, IF SO, THE
13AMOUNT PAYABLE.

14THE COVERAGE, SUBJECT TO POLICY PROVISIONS,
15MAY BE PURCHASED AT ADDITIONAL COST ON THE
16FOLLOWING TERMS:

17(A) AMOUNT OF DWELLING COVERAGE: ____

18(B) APPLICABLE DEDUCTIBLE: ____   IF YOUR LOSS IS
19BELOW THIS AMOUNT, YOU MAY NOT RECEIVE ANY
20PAYMENT FROM YOUR COVERAGE.

21YOUR INSURANCE COMPANY OR AGENT WILL
22PROVIDE WRITTEN NOTICE AS TO HOW THE
23DEDUCTIBLE APPLIES TO THE MARKET VALUE OF YOUR
24COVERAGE, THE INSURED VALUE OF YOUR COVERAGE,
25OR THE REPLACEMENT VALUE OF YOUR COVERAGE.

26(C) CONTENTS COVERAGE: ____

27IF YOUR LOSS DOES NOT EXCEED THE DEDUCTIBLE
28FOR THE DWELLING, YOU WILL NOT RECEIVE ANY
29PAYMENT FOR THIS COVERAGE.

30YOUR INSURANCE COMPANY OR AGENT WILL
31PROVIDE WRITTEN NOTICE AS TO HOW THE
32DEDUCTIBLE APPLIES TO THE AMOUNT YOU RECEIVE
33PURSUANT TO THIS COVERAGE.

34(D) ADDITIONAL LIVING EXPENSES: ____

35(E) RATE OR PREMIUM: ____

36YOU MUST ASK THE COMPANY TO ADD EARTHQUAKE
37COVERAGE WITHIN 30 DAYS FROM THE DATE OF
38MAILING OF THIS NOTICE OR IT SHALL BE
39CONCLUSIVELY PRESUMED THAT YOU HAVE NOT
40ACCEPTED THIS OFFER.

P12   1THIS COVERAGE SHALL BE EFFECTIVE ON THE DAY
2YOUR ACCEPTANCE OF THIS OFFER IS RECEIVED BY US.
3


end delete
begin insert

4(1) If the offer is made by a nonparticipating insurer as defined
5in Section 10089.5, the offer of earthquake coverage shall contain
6all of the following language in at least 10-point boldface type:

end insert

begin insertend insert
begin insert

8“Your residential property insurance policy does not cover
9earthquake damage to your home or its contents.

end insert
begin insert

10To cover earthquake damage to your home and its contents you
11need to purchase a separate earthquake insurance policy. The
12coverage provided by an earthquake insurance policy is different
13from, and typically more limited than, the coverage provided by
14your residential property insurance policy.

end insert
begin insert

15California law requires insurance companies to offer earthquake
16insurance in conjunction with a residential property insurance
17policy. If you do not accept the offer of earthquake insurance below
18within 30 days of the mailing of this notice, your insurance
19company shall presume that you have not accepted this offer of
20earthquake insurance.

end insert
begin insert

21You may purchase earthquake insurance coverage on the
22following terms:

end insert
begin insert

23(A) Amount of Dwelling/Building Coverage Limit:
24_______________

end insert
begin insert

25(B) Deductible: ______________

end insert
begin insert

26(C) Contents Coverage Limit: _______________

end insert
begin insert

27(D) Additional Living Expenses Coverage Limit:
28_____________

end insert
begin insert

29(E) Estimated Annual Premium:_______________

end insert
begin insert

30The deductible represents the amount of damage your covered
31property must incur before the earthquake insurance coverage
32begins. If your covered loss is less than the applicable deductible,
33you may not receive any payment.

end insert
begin insert

34Contact your insurance agent or your insurance company to
35obtain details regarding this offer of earthquake insurance and
36other coverage options.”

end insert

begin insertend insert
begin insert

38(2) If the offer is made by a participating insurer as defined by
39Section 10089.5, the offer of earthquake coverage shall contain
40all of the following language in at least 10-point boldface type:

end insert

begin insertend insert
begin insert

P13   2“Your residential property insurance policy does not cover
3earthquake damage to your home or its contents.

end insert
begin insert

4To cover earthquake damage to your home and its contents you
5need to purchase a separate earthquake insurance policy. The
6coverage provided by an earthquake insurance policy is different
7from, and typically more limited than, the coverage provided by
8your residential property insurance policy.

end insert
begin insert

9California law requires insurance companies to offer earthquake
10insurance in conjunction with a residential property insurance
11policy. If you do not accept the offer of earthquake insurance below
12within 30 days of the mailing of this notice, your insurance
13company shall presume that you have not accepted this offer of
14earthquake insurance.

end insert
begin insert

15You may purchase earthquake insurance coverage on the
16following terms:

end insert
begin insert

17(A) Amount of Dwelling/Building Coverage Limit:
18_______________

end insert
begin insert

19(B) Deductible: ______________

end insert
begin insert

20(C) Contents Coverage Limit: _______________

end insert
begin insert

21(D) Additional Living Expenses Coverage Limit:
22_____________

end insert
begin insert

23(E) Estimated Annual Premium:_______________

end insert
begin insert

24The deductible represents the amount of damage your covered
25property must incur before the earthquake insurance coverage
26begins. If your covered loss is less than the applicable deductible,
27you may not receive any payment.

end insert
begin insert

28If you choose not to accept this offer within the 30-day period,
29you may apply for earthquake coverage at a later date.

end insert
begin insert

30Your insurance company contracts with the California
31Earthquake Authority (CEA) to offer earthquake insurance to its
32customers. For an additional premium, you can choose CEA
33coverage options such as higher limits for Contents or Additional
34Living Expenses, increased building code upgrade limits, or a
35lower deductible. You can also choose to buy certain CEA
36coverages separately.

end insert
begin insert

37Contact your insurance agent or your insurance company to
38obtain details regarding this offer of earthquake insurance and
39other coverage options.”

end insert

begin insertend insert

P14   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.

26begin insert(f)end insertbegin insertend insertbegin insert(1)end insertbegin insertend insertbegin insertIf an insurer issues or causes to be issued a policy with
27earthquake coverages other than the coverages specified in
28subdivisions (a) and (b) of Section 10089, pursuant to a rate
29application approved by the commissioner in accordance with
30subdivision (c) of Section 10089, no further or other offer of
31earthquake coverage as specified in subdivisions (a) and (b) of
32Section 10089 and no further or other notice of noncoverage is
33required by the insurer if both of the following apply:end insert

begin insert

34(A) A renewal of that policy is offered.

end insert
begin insert

35(B) A written notice is provided with that renewal regarding
36additional earthquake coverage that is available.

end insert
begin insert

37(2) The form of the written notice in paragraph (1) shall be filed
38with the commissioner at least 30 days before its first use. The
39form shall not be used if the commissioner disapproves the form
P15   1of the written notice within that period for being misleading or
2incomplete.

end insert
begin delete

3(f)

end delete

4begin insert(g)end insert This section shall become operative on January 1, 2019.

5

SEC. 3.  

Section 10086.1 of the Insurance Code is amended to
6read:

7

10086.1.  

(a) Where the offer of earthquake coverage has not
8been accepted, the insurer shall notify the named insured that the
9policy does not provide that coverage. After the offer on an every
10other year basis, the notice of noncoverage shall be provided prior
11to or concurrent with the renewal of the policy of residential
12property insurance. This section shall not affect any other
13provisions of this chapter nor shall it affect coverage under the
14policy of residential property insurance.

15(b) No further or other notice of noncoverage is required
16pursuant to subdivision (a) for policies subject to subdivision (f)
17of Section 10083, and the insurer has complied with the conditions
18of subdivision (f) of Section 10083.

19begin insert

begin insertSEC. 4.end insert  

end insert
begin insert

Section 1.5 of this bill incorporates amendments to
20Section 10083 of the Insurance Code, as amended by Section 12
21of Chapter 369 of the Statutes of 2013, proposed by both this bill
22and Assembly Bill 2064. It shall only become operative if (1) both
23bills are enacted and become effective on or before January 1,
242015, (2) each bill amends Section 10083 of the Insurance Code,
25as amended by Section 12 of Chapter 369 of the Statutes of 2013,
26and (3) this bill is enacted after Assembly Bill 2064, in which case
27Section 1 of this bill shall not become operative.

end insert
28begin insert

begin insertSEC. 5.end insert  

end insert
begin insert

Section 2.5 of this bill incorporates amendments to
29Section 10083 of the Insurance Code, as added by Section 13 of
30Chapter 369 of the Statutes of 2013, proposed by both this bill and
31Assembly Bill 2064. It shall only become operative if (1) both bills
32are enacted and become effective on or before January 1, 2015,
33(2) each bill amends Section 10083 of the Insurance Code, as
34added by Section 13 of Chapter 369 of the Statutes of 2013, and
35(3) this bill is enacted after Assembly Bill 2064, in which case
36Section 2 of this bill shall not become operative.

end insert


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