Amended in Senate March 18, 2013

Senate BillNo. 251


Introduced by Senator Calderon

February 12, 2013


An act to amend Sectionbegin delete 38.5end deletebegin insert 1633.3 of the Civil Code, and to amend Sections 10083, 10086, and 10087end insert of the Insurance Code, relating to insurance.

LEGISLATIVE COUNSEL’S DIGEST

SB 251, as amended, Calderon. Insurance: notice: electronic transmission.

Existing law authorizes any written notice required to be given or mailed to any person by an insurer relating to any insurance on risks or on operations in this state, with exceptions, to be provided by electronic transmission if each party has agreed to conduct the transaction by electronic means, as provided.

begin delete

This bill would make technical, nonsubstantive changes to those provisions.

end delete
begin insert

Existing law prohibits residential property insurer’s from issuing or delivering property insurance without offering earthquake coverage. The offer of 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 the offer of coverage is mailed to the named insured or applicant, it is required to be mailed to the mailing address shown on the policy of residential property insurance or on the application.

end insert
begin insert

This bill would authorize the offer of earthquake coverage to be made electronically, as provided.

end insert
begin insert

Existing law authorizes an earthquake insurer, at any renewal, to modify the terms and conditions of an existing policy, rider, or endorsement, and that if the insurer modifies the terms and conditions of an existing policy, rider, or endorsement, the insurer is required to provide the insured with the renewal notice in a stand-alone disclosure document stating the changes in the terms and conditions of the insured’s existing policy, rider, or endorsement. Existing law also provides that, if an offer of earthquake coverage is not accepted, the insurer or any affiliated insurer is required to offer earthquake coverage every other year in connection with any continuation, renewal, or reinstatement of the policy following any lapse, or with respect to any other policy that extends, changes, supersedes, or replaces the policy of residential property insurance.

end insert
begin insert

This bill would authorize the renewal notice for earthquake coverage and the offer of earthquake coverage required to be made every other year to be made electronically, as provided.

end insert
begin insert

This bill would also delete obsolete cross-references and make conforming changes.

end insert

Vote: majority. Appropriation: no. Fiscal committee: no. 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 1633.3 of the end insertbegin insertCivil Codeend insertbegin insert, as amended by
2Section 1 of Chapter 433 of the Statutes of 2009, is amended to
3read:end insert

4

1633.3.  

(a) Except as otherwise provided in subdivisions (b)
5and (c), this title applies to electronic records and electronic
6signatures relating to a transaction.

7(b) This title does not apply to transactions subject to the
8following laws:

9(1) A law governing the creation and execution of wills, codicils,
10or testamentary trusts.

11(2) Division 1 (commencing with Section 1101) of the Uniform
12Commercial Code, except Sectionsbegin delete 1107 andend delete 1206begin insert and 1306end insert.

13(3) Divisions 3 (commencing with Section 3101), 4
14(commencing with Section 4101), 5 (commencing with Section
155101), 8 (commencing with Section 8101), 9 (commencing with
16Section 9101), and 11 (commencing with Section 11101) of the
17Uniform Commercial Code.

P3    1(4) A law that requires that specifically identifiable text or
2disclosures in a record or a portion of a record be separately signed,
3including initialed, from the record. However, this paragraph does
4not apply to Section 1677 or 1678 of this code or Section 1298 of
5the Code of Civil Procedure.

6(c) This title does not apply to any specific transaction described
7in Section 17511.5 of the Business and Professions Code, Section
856.11, 56.17, 798.14, 1133, or 1134 of, Sections 1350 to 1376,
9inclusive, of, Section 1689.6, 1689.7, or 1689.13 of, Chapter 2.5
10(commencing with Section 1695) of Title 5 of Part 2 of Division
113 of, Section 1720, 1785.15, 1789.14, 1789.16,begin delete 1789.33,end delete or 1793.23
12of, Chapter 1 (commencing with Section 1801) of Title 2 of Part
134 of Division 3 of, Section 1861.24, 1862.5, 1917.712, 1917.713,
141950.5, 1950.6, 1983, 2924b, 2924c, 2924f, 2924i, 2924j, 2924.3,
15or 2937 of, Article 1.5 (commencing with Section 2945) of Chapter
162 of Title 14 of Part 4 of Division 3 of, Section 2954.5 or 2963 of,
17Chapter 2b (commencing with Section 2981) or 2d (commencing
18with Section 2985.7) of Title 14 of Part 4 of Division 3 of, or
19Section 3071.5 of, the Civil Code, subdivision (b) of Section 18608
20or Section 22328 of the Financial Code, Section 1358.15, 1365,
211368.01, 1368.1, 1371, or 18035.5 of the Health and Safety Code,
22Section 662, 663, 664, 667.5, 673, 677, 678, 678.1, 786,begin delete 10086,end delete
23 10113.7, 10127.7, 10127.9, 10127.10,begin delete 10197,end delete 10199.44, 10199.46,
2410235.16, 10235.40, 10509.4, 10509.7, 11624.09, or 11624.1 of
25the Insurance Code, Section 779.1, 10010.1, or 16482 of the Public
26Utilities Code, or Section 9975 or 11738 of the Vehicle Code. An
27electronic record may not be substituted for any notice that is
28required to be sent pursuant to Section 1162 of the Code of Civil
29Procedure. Nothing in this subdivision shall be construed to
30prohibit the recordation of any document with a county recorder
31by electronic means.

32(d) This title applies to an electronic record or electronic
33signature otherwise excluded from the application of this title under
34subdivision (b) when used for a transaction subject to a law other
35than those specified in subdivision (b).

36(e) A transaction subject to this title is also subject to other
37applicable substantive law.

38(f) The exclusion of a transaction from the application of this
39title under subdivision (b) or (c) shall be construed only to exclude
40the transaction from the application of this title, but shall not be
P4    1construed to prohibit the transaction from being conducted by
2electronic means if the transaction may be conducted by electronic
3means under any other applicable law.

4begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 1633.3 of the end insertbegin insertCivil Codeend insertbegin insert, as amended by
5Section 36 of Chapter 181 of the Statutes of 2012, is amended to
6read:end insert

7

1633.3.  

(a) Except as otherwise provided in subdivisions (b)
8and (c), this title applies to electronic records and electronic
9signatures relating to a transaction.

10(b) This title does not apply to transactions subject to the
11following laws:

12(1) A law governing the creation and execution of wills, codicils,
13or testamentary trusts.

14(2) Division 1 (commencing with Section 1101) of the Uniform
15Commercial Code, except Sectionsbegin delete 1107 andend delete 1206begin insert and 1306end insert.

16(3) Divisions 3 (commencing with Section 3101), 4
17(commencing with Section 4101), 5 (commencing with Section
185101), 8 (commencing with Section 8101), 9 (commencing with
19Section 9101), and 11 (commencing with Section 11101) of the
20Uniform Commercial Code.

21(4) A law that requires that specifically identifiable text or
22disclosures in a record or a portion of a record be separately signed,
23including initialed, from the record. However, this paragraph does
24not apply to Section 1677 or 1678 of this code or Section 1298 of
25the Code of Civil Procedure.

26(c) This title does not apply to any specific transaction described
27in Section 17511.5 of the Business and Professions Code, Section
2856.11, 56.17, 798.14, 1133, or 1134 of, Section 1689.6, 1689.7,
29or 1689.13 of, Chapter 2.5 (commencing with Section 1695) of
30Title 5 of Part 2 of Division 3 of, Section 1720, 1785.15, 1789.14,
311789.16,begin delete 1789.33,end delete or 1793.23 of, Chapter 1 (commencing with
32Section 1801) of Title 2 of Part 4 of Division 3 of, Section 1861.24,
331862.5, 1917.712, 1917.713, 1950.5, 1950.6, 1983, 2924b, 2924c,
342924f, 2924i, 2924j, 2924.3, or 2937 of, Article 1.5 (commencing
35with Section 2945) of Chapter 2 of Title 14 of Part 4 of Division
363 of, Section 2954.5 or 2963 of, Chapter 2b (commencing with
37Section 2981) or 2d (commencing with Section 2985.7) of Title
3814 of Part 4 of Division 3 of, Section 3071.5 of, or Part 5
39(commencing with Section 4000) of Division 4 of, the Civil Code,
40subdivision (b) of Section 18608 or Section 22328 of the Financial
P5    1Code, Section 1358.15, 1365, 1368.01, 1368.1, 1371, or 18035.5
2of the Health and Safety Code, Section 662, 663, 664, 667.5, 673,
3677, 678, 678.1, 786,begin delete 10086,end delete 10113.7, 10127.7, 10127.9, 10127.10,
4begin delete 10197,end delete 10199.44, 10199.46, 10235.16, 10235.40, 10509.4, 10509.7,
511624.09, or 11624.1 of the Insurance Code, Section 779.1,
610010.1, or 16482 of the Public Utilities Code, or Section 9975
7or 11738 of the Vehicle Code. An electronic record may not be
8substituted for any notice that is required to be sent pursuant to
9Section 1162 of the Code of Civil Procedure. Nothing in this
10subdivision shall be construed to prohibit the recordation of any
11document with a county recorder by electronic means.

12(d) This title applies to an electronic record or electronic
13signature otherwise excluded from the application of this title under
14subdivision (b) when used for a transaction subject to a law other
15than those specified in subdivision (b).

16(e) A transaction subject to this title is also subject to other
17applicable substantive law.

18(f) The exclusion of a transaction from the application of this
19title under subdivision (b) or (c) shall be construed only to exclude
20the transaction from the application of this title, but shall not be
21construed to prohibit the transaction from being conducted by
22electronic means if the transaction may be conducted by electronic
23means under any other applicable law.

24begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 10083 of the end insertbegin insertInsurance Codeend insertbegin insert is amended to
25read:end insert

26

10083.  

(a) The offer of coverage required by Section 10081
27may be made prior to, concurrent with, or within 60 days following
28the issuance or renewal of a residential property insurance policy.
29If the offer of coverage is mailed to the named insured or applicant,
30it shall be mailed to the mailing address shown on the policy of
31residential property insurance or on the application.begin insert The offer may
32be made electronically pursuant to Section 38.5.end insert
The offer of
33earthquake coverage shall contain the following language in at
34least 10-point boldface type:

35YOUR POLICY DOES NOT PROVIDE COVERAGE
36AGAINST THE PERIL OF EARTHQUAKE.

37CALIFORNIA LAW REQUIRES THAT EARTHQUAKE
38COVERAGE BE OFFERED TO YOU AT YOUR OPTION.

39WARNING: THESE COVERAGES MAY DIFFER
40SUBSTANTIALLY FROM AND PROVIDE LESS
P6    1PROTECTION THAN THE COVERAGE PROVIDED BY YOUR
2HOMEOWNERS’ INSURANCE POLICY. THERE ARE
3EXCLUSIONS AND LIMITATIONS SUCH AS
4OUTBUILDINGS, SWIMMING POOLS, MASONRY FENCES,
5AND MASONRY CHIMNEYS. THIS DISCLOSURE FORM
6CONTAINS ONLY A GENERAL DESCRIPTION OF
7COVERAGES AND IS NOT PART OF YOUR EARTHQUAKE
8INSURANCE POLICY. ONLY THE SPECIFIC PROVISIONS
9OF YOUR POLICY WILL DETERMINE WHETHER A
10PARTICULAR LOSS IS COVERED AND, IF SO, THE
11AMOUNT PAYABLE.

12THE COVERAGE, SUBJECT TO POLICY PROVISIONS,
13MAY BE PURCHASED AT ADDITIONAL COST ON THE
14FOLLOWING TERMS:

15(A) AMOUNT OF DWELLING COVERAGE: ____

16(B) APPLICABLE DEDUCTIBLE: ____ IF YOUR LOSS IS
17BELOW THIS AMOUNT, YOU MAY NOT RECEIVE ANY
18PAYMENT FROM YOUR COVERAGE.

19YOUR INSURANCE COMPANY OR AGENT WILL
20PROVIDE WRITTEN NOTICE AS TO HOW THE
21DEDUCTIBLE APPLIES TO THE MARKET VALUE OF YOUR
22COVERAGE, THE INSURED VALUE OF YOUR COVERAGE,
23OR THE REPLACEMENT VALUE OF YOUR COVERAGE.

24(C) CONTENTS COVERAGE: ____

25IF YOUR LOSS DOES NOT EXCEED THE DEDUCTIBLE
26FOR THE DWELLING, YOU WILL NOT RECEIVE ANY
27PAYMENT FOR THIS COVERAGE.

28YOUR INSURANCE COMPANY OR AGENT WILL
29PROVIDE WRITTEN NOTICE AS TO HOW THE
30DEDUCTIBLE APPLIES TO THE AMOUNT YOU RECEIVE
31PURSUANT TO THIS COVERAGE.

32(D) ADDITIONAL LIVING EXPENSES: ____

33(E) RATE OR PREMIUM: ____

34YOU MUST ASK THE COMPANY TO ADD EARTHQUAKE
35COVERAGE WITHIN 30 DAYS FROM THE DATE OF
36MAILING OF THIS NOTICE OR IT SHALL BE
37CONCLUSIVELY PRESUMED THAT YOU HAVE NOT
38ACCEPTED THIS OFFER.

39THIS COVERAGE SHALL BE EFFECTIVE ON THE DAY
40YOUR ACCEPTANCE OF THIS OFFER IS RECEIVED BY US.

P7    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

begin insertSEC. 4.end insert  

end insert

begin insertSection 10086 of the end insertbegin insertInsurance Codeend insertbegin insert is amended to
27read:end insert

28

10086.  

(a) If an offer of earthquake coverage is accepted, the
29coverage shall be continued at the applicable rates and conditions
30for the policy term, provided the policy of residential property
31insurance is not terminated by the named insured or insurer.

32(1) At any renewal, an insurer may modify the terms and
33conditions of an existing policy, rider, or endorsement providing
34coverage against loss or damage caused by the peril of earthquake
35if the modified terms and conditions provide the minimum
36coverages required by Section 10089.

37(2) An insurer that modifies the terms and conditions of an
38existing policy, rider, or endorsement shall provide the insured
39with the renewal notice in a stand-alone disclosure document
40stating the changes in the terms and conditions of the insured’s
P8    1existing policy, rider, or endorsement.begin insert The offer of renewal may
2be made electronically pursuant to Section 38.5.end insert
Proof of mailing
3of the disclosure document by first-class mail to a named insured
4at the mailing address shown on the policy or applicationbegin insert, or proof
5consistent with Section 38.5 that the offer of renewal of coverage
6was sent to the named insured or applicant by electronic
7transmission,end insert
creates a conclusive presumption that the disclosure
8document was provided. The disclosure shall include the following
9statement in 14-point boldface type:

10THE COVERAGE IN THE POLICY WE ARE OFFERING
11YOU WITH THIS RENEWAL HAS BEEN REDUCED, AND
12SUBSTANTIALLY DIFFERS FROM THE COVERAGES
13PROVIDED BY YOUR HOMEOWNERS’ POLICY.
14INSURANCE COMPANIES ARE ALLOWED TO RENEW
15EARTHQUAKE INSURANCE POLICIES WITH COVERAGE
16THAT IS REDUCED FROM THE COVERAGE YOU
17PREVIOUSLY PURCHASED. YOU MAY REQUEST A
18SAMPLE COPY OF THIS NEW POLICY TO REVIEW PRIOR
19TO MAKING A DECISION TO ACCEPT THIS RENEWAL,
20AND WE WILL MAIL OR DELIVER IT TO YOU WITHIN 14
21DAYS OF YOUR REQUEST. A REQUEST FOR THE SAMPLE
22COPY SHALL NOT CHANGE OR EXTEND THE POLICY
23EXPIRATION DATE SPECIFIED IN THE RENEWAL NOTICE.
24A SUMMARY OF THE CHANGES IS INCLUDED WITH THIS
25NOTICE.

26The commissioner shall approve the form of the summary at the
27time he or she approves the policy. The summary shall include the
28information contained in subdivision (a) of Section 10083, and
29may be included with the renewal notice in standard type.

30The commissioner may approve substantially similar disclosure
31forms if necessary to accurately disclose relevant information to
32the policyholder. The commissioner may also approve disclosure
33forms substantially similar to the disclosure statement required by
34Section 10083 if necessary to accurately disclose relevant
35information to the policyholder.

36(3) If the earthquake coverage is provided by a policy issued
37by the California Earthquake Authority, the following disclosure
38shall be provided in 14-point boldface type:

P9    1CALIFORNIA EARTHQUAKE AUTHORITY POLICY
2DISCLOSURE
3

4THIS POLICY IS BEING PURCHASED FROM THE
5CALIFORNIA EARTHQUAKE AUTHORITY (“CEA”). THE
6COVERAGE IN THIS CEA POLICY SUBSTANTIALLY
7DIFFERS FROM THE COVERAGES PROVIDED IN YOUR
8HOMEOWNER’S POLICY. THE CEA IS NOT PART OF OR
9ASSOCIATED WITH YOUR HOMEOWNER’S INSURANCE
10COMPANY. IF LOSSES AS A RESULT OF AN EARTHQUAKE
11OR A SERIES OF EARTHQUAKES EXCEED THE
12AVAILABLE RESOURCES OF THE CEA, THIS POLICY IS
13 NOT COVERED BY THE CALIFORNIA INSURANCE
14GUARANTY ASSOCIATION. THEREFORE, THE
15CALIFORNIA INSURANCE GUARANTY ASSOCIATION
16WILL NOT PAY YOUR CLAIMS OR PROTECT YOUR
17ASSETS IF THE CEA BECOMES INSOLVENT AND IS
18UNABLE TO MAKE PAYMENTS AS PROMISED. IN
19ADDITION, YOUR CEA POLICY MAY BE SUBJECT TO
20FUTURE SURCHARGES OF THE POLICY PREMIUM IN
21CERTAIN CASES WHERE AN EARTHQUAKE OR SERIES
22OF EARTHQUAKES HAS EXCEEDED AVAILABLE
23RESOURCES TO PAY CLAIMS. IN THAT CASE, THIS
24MEANS THAT IN ADDITION TO THE ANNUAL PREMIUM,
25YOU MAY BE CHARGED UP TO AN ADDITIONAL 20% OF
26THE PREMIUM.

27(b) If the offer is not accepted, the insurer or any affiliated
28insurer shall be required on an every other year basis to offer
29earthquake coverage in connection with any continuation, renewal,
30or reinstatement of the policy following any lapse thereof, or with
31respect to any other policy that extends, changes, supersedes, or
32replaces the policy of residential property insurance.begin insert The offer may
33be made electronically pursuant to Section 38.5.end insert

34(c) Nothing in this section shall preclude the named insured
35from terminating the earthquake coverage at any time.

36begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 10087 of the end insertbegin insertInsurance Codeend insertbegin insert is amended to
37read:end insert

38

10087.  

(a) As used in this chapter “policy of residential
39property insurance” shall mean a policy insuring individually
40owned residential structures of not more than four dwelling units,
P10   1individually owned condominium units, or individually owned
2mobilehomes, and their contents, located in this state and used
3exclusively for residential purposes or a tenant’s policy insuring
4personal contents of a residential unit located in this state. “Policy
5of residential property insurance,” as defined, shall not include
6insurance for real property or its contents used for any commercial,
7industrial or business purpose, except a structure of not more than
8four dwelling units rented for individual residential purposes. A
9policy that does not include any of the perils insured against in a
10standard fire policy shall not be included in the definition of “policy
11of residential property insurance.”

12(b) Proof of mailing of the offer by first-class mail addressed
13to a named insured or applicant at the mailing address shown on
14the policy or applicationbegin insert, or proof consistent with Section 38.5
15that the offer of coverage was sent to the named insured or
16applicant by electronic transmission,end insert
shall create a conclusive
17presumption that the offer was made.

begin delete
18

SECTION 1.  

Section 38.5 of the Insurance Code is amended
19to read:

20

38.5.  

(a) Any written notice required to be given or mailed to
21any person by an insurer relating to any insurance on risks or on
22operations in this state not excepted by Section 1851 from the
23coverage of Chapter 9 (commencing with Section 1850.4) of Part
242 of Division 1 may, if not excluded by subdivision (b) or (c) of
25Section 1633.3 of the Civil Code, be provided by electronic
26transmission pursuant to Title 2.5 (commencing with Section
271633.1) of Part 2 of Division 3 of the Civil Code, if each party has
28agreed to conduct the transaction by electronic means pursuant to
29Section 1633.5 of the Civil Code.

30(b) The affidavit of the person who initiated the electronic
31transmission, stating the facts of that transmission into an
32information processing system outside of the control of the sender
33or of any person that sent the electronic record on behalf of the
34sender, is prima facie evidence that the notice was transmitted and
35shall be sufficient proof of notice. Any notice provided by
36electronic transmission shall be treated as if mailed or given for
37the purposes of any provision of this code, except as provided by
38subdivision (g) of Section 1633.15 of the Civil Code.

39(c) The insurance company shall maintain a system for
40confirming that any notice or document that is to be provided by
P11   1electronic means has been sent in a manner consistent with Section
21633.15 of the Civil Code. A valid electronic signature shall be
3sufficient for any provision of law requiring a written signature.
4The insurance company shall retain a copy of the confirmation
5and electronic signature, when either is required, with the policy
6information so that they are retrievable upon request by the
7Department of Insurance while the policy is in force and for five
8years thereafter.

end delete


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