Amended in Senate April 17, 2013

Amended in Senate March 18, 2013

Senate Bill No. 251

Introduced by Senator Calderon

February 12, 2013

An act to amend Section 1633.3 of the Civil Code, and to amend Sections begin insert 38.5, 663, 678, 678.1, end insert 10083, 10086, and 10087 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 insert

This bill would authorize certain notices and disclosures relating to renewal and conditional renewal of an offer of coverage for automobile and specified property insurance to be provided by electronic transmission if an insurer complies with certain requirements.

end insert

Existing law prohibits residential property begin delete insurer’s end delete begin insert insurers end insert 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.

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

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.

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.

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

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

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

begin delete

SECTION 1.  

Section 1633.3 of the Civil Code, as amended
by Section 1 of Chapter 433 of the Statutes of 2009, is amended
to read:

1633.3.  

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

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

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

(2) Division 1 (commencing with Section 1101) of the Uniform
Commercial Code, except Sections 1206 and 1306.

(3) Divisions 3 (commencing with Section 3101), 4
(commencing with Section 4101), 5 (commencing with Section
5101), 8 (commencing with Section 8101), 9 (commencing with
Section 9101), and 11 (commencing with Section 11101) of the
Uniform Commercial Code.

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

(c) This title does not apply to any specific transaction described
in Section 17511.5 of the Business and Professions Code, Section
56.11, 56.17, 798.14, 1133, or 1134 of, Sections 1350 to 1376,
inclusive, of, Section 1689.6, 1689.7, or 1689.13 of, Chapter 2.5
(commencing with Section 1695) of Title 5 of Part 2 of Division
3 of, Section 1720, 1785.15, 1789.14, 1789.16, or 1793.23 of,
Chapter 1 (commencing with Section 1801) of Title 2 of Part 4 of
Division 3 of, Section 1861.24, 1862.5, 1917.712, 1917.713,
1950.5, 1950.6, 1983, 2924b, 2924c, 2924f, 2924i, 2924j, 2924.3,
or 2937 of, Article 1.5 (commencing with Section 2945) of Chapter
2 of Title 14 of Part 4 of Division 3 of, Section 2954.5 or 2963 of,
Chapter 2b (commencing with Section 2981) or 2d (commencing
with Section 2985.7) of Title 14 of Part 4 of Division 3 of, or
Section 3071.5 of, the Civil Code, subdivision (b) of Section 18608
or Section 22328 of the Financial Code, Section 1358.15, 1365,
1368.01, 1368.1, 1371, or 18035.5 of the Health and Safety Code,
Section 662, 663, 664, 667.5, 673, 677, 678, 678.1, 786, 10113.7,
10127.7, 10127.9, 10127.10, 10199.44, 10199.46, 10235.16,
10235.40, 10509.4, 10509.7, 11624.09, or 11624.1 of the Insurance
Code, Section 779.1, 10010.1, or 16482 of the Public Utilities
Code, or Section 9975 or 11738 of the Vehicle Code. An electronic
record may not be substituted for any notice that is required to be
sent pursuant to Section 1162 of the Code of Civil Procedure.
Nothing in this subdivision shall be construed to prohibit the
recordation of any document with a county recorder by electronic
means.

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

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

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

end delete

begin delete SEC. 2. end delete
begin insert SECTION 1. end insert   

Section 1633.3 of the Civil Code, as amended by
Section 36 of Chapter 181 of the Statutes of 2012, is amended to
read:

1633.3.  

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

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

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

(2) Division 1 (commencing with Section 1101) of the Uniform
Commercial Code, except Sections 1206 and 1306.

(3) Divisions 3 (commencing with Section 3101), 4
(commencing with Section 4101), 5 (commencing with Section
5101), 8 (commencing with Section 8101), 9 (commencing with
Section 9101), and 11 (commencing with Section 11101) of the
Uniform Commercial Code.

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

(c) This title does not apply to any specific transaction described
in Section 17511.5 of the Business and Professions Code, Section
56.11, 56.17, 798.14, 1133, or 1134 of, Section 1689.6, 1689.7,
or 1689.13 of, Chapter 2.5 (commencing with Section 1695) of
Title 5 of Part 2 of Division 3 of, Section 1720, 1785.15, 1789.14,
1789.16, or 1793.23 of, Chapter 1 (commencing with Section
1801) of Title 2 of Part 4 of Division 3 of, Section 1861.24, 1862.5,
1917.712, 1917.713, 1950.5, 1950.6, 1983, 2924b, 2924c, 2924f,
2924i, 2924j, 2924.3, or 2937 of, Article 1.5 (commencing with
Section 2945) of Chapter 2 of Title 14 of Part 4 of Division 3 of,
Section 2954.5 or 2963 of, Chapter 2b (commencing with Section
2981) or 2d (commencing with Section 2985.7) of Title 14 of Part
4 of Division 3 of, Section 3071.5 of, or Part 5 (commencing with
Section 4000) of Division 4 of, the Civil Code, subdivision (b) of
Section 18608 or Section 22328 of the Financial Code, Section
1358.15, 1365, 1368.01, 1368.1, 1371, or 18035.5 of the Health
and Safety Code, Section 662, begin delete 663, end delete begin insert paragraph (2) of subdivision
(a) of Section 663, Section end insert 664, 667.5, 673, 677, begin delete 678, 678.1, end delete
begin insert paragraph (2) of subdivision (a) of Section 678, subdivisions (a)
and (b) of Section 678.1, Section end insert 786, 10113.7, 10127.7, 10127.9,
10127.10, 10199.44, 10199.46, 10235.16, 10235.40, 10509.4,
10509.7, 11624.09, or 11624.1 of the Insurance Code, Section
779.1, 10010.1, or 16482 of the Public Utilities Code, or Section
9975 or 11738 of the Vehicle Code. An electronic record may not
be substituted for any notice that is required to be sent pursuant to
Section 1162 of the Code of Civil Procedure. Nothing in this
subdivision shall be construed to prohibit the recordation of any
document with a county recorder by electronic means.

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

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

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

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 38.5 of the end insert begin insert Insurance Code end insert begin insert is amended to read: end insert

38.5.  

begin insert (a) end insert begin insert   end insert 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 not excepted by Section 1851 from the
coverage of Chapter 9 (commencing with Section 1850.4) of Part
2 of Division 1 of this code may, if not excluded by subdivision
(b) or (c) of Section 1633.3 of the Civil Code, be provided by
electronic transmission pursuant to Title 2.5 (commencing with
Section 1633.1) of Part 2 of Division 3 of the Civil Code, if each
party has agreed to conduct the transaction by electronic means
pursuant to Section 1633.5 of the Civil Code. The affidavit of the
person who initiated the electronic transmission, stating the facts
of that transmission into an information processing system outside
of the control of the sender or of any person that sent the electronic
record on behalf of the sender, is prima facie evidence that the
notice was transmitted and shall be sufficient proof of notice. Any
notice provided by electronic transmission shall be treated as if
mailed or given for the purposes of any provision of this code,
except as provided by subdivision (g) of Section 1633.15 of the
Civil Code. The insurance company shall maintain a system for
confirming that any notice or document that is to be provided by
electronic means has been sent in a manner consistent with Section
1633.15 of the Civil Code. A valid electronic signature shall be
sufficient for any provision of law requiring a written signature.
The insurance company shall retain a copy of the confirmation
and electronic signature, when either is required, with the policy
information so that they are retrievable upon request by the
Department of Insurance while the policy is in force and for five
years thereafter.

begin insert

(b) The offer of renewal required by Sections 663 and 678, the
notice of conditional renewal required by Section 678.1, and the
offer of coverage or renewal or any disclosure required by Section
10086 may be provided by electronic transmission if an insurer
complies with all of the following:

end insert begin insert

(1) An insurer, or insurer’s representative, acquires the consent
of the insured to opt in to receive the offer, notice, or disclosure
by electronic transmission, and the insured has not withdrawn
that consent, prior to providing the offer, notice, or disclosure by
electronic transmission. An insured’s consent may be acquired
verbally, in writing, or electronically. If consent is acquired
verbally, the insurer shall confirm consent in writing or
electronically. The insurer shall retain a record of the insured’s
consent to receive the offer, notice, or disclosure by electronic
transmission with the policy information so that it is retrievable
upon request by the Department of Insurance while the policy is
in force and for five years thereafter.

end insert begin insert

(2) An insurer discloses, in writing or electronically, to the
insured all of the following:

end insert begin insert

(A) The opt in to receive the offer, notice, or disclosure by
electronic transmission is voluntary.

end insert begin insert

(B) That the insured may opt out of receiving the offer, notice,
or disclosure by electronic transmission at any time, and the
process or system for the insured to opt out.

end insert begin insert

(C)  A description of the offer, notice, or disclosure that the
insured will receive by electronic transmission.

end insert begin insert

(D) The process or system to report a change or correction in
the insured’s email address.

end insert begin insert

(E) The insurer’s contact information, which includes, but is
not limited to, a toll-free number or an insurer’s Internet Web site
address.

end insert begin insert

(3) An insurer shall include the insured’s email address on the
policy declaration page.

end insert begin insert

(4)  An insurer shall provide one free printed copy of the notices
or documents described in subdivision (b) and provide the notices
or documents by electronic transmission annually upon request
by the insured.

end insert begin insert

(5) An insurer shall maintain a process or system that can
demonstrate that the offer, notice, or disclosure provided by
electronic transmission was both sent and received consistent with
Section 1633.15 of the Civil Code. The insurer shall retain
information so that the information is retrievable upon request by
the Department of Insurance while the policy is in force and for
five years thereafter related to its process or system demonstrating
that the offer, notice, or disclosure provided by electronic
transmission was sent by the applicable statutory regular mail
delivery deadlines and received electronically. The offer, notice,
or disclosure provided by electronic transmission shall be treated
as if mailed so long as the insurer delivers it to the insured in
compliance with the applicable statutory regular mail delivery
deadlines.

end insert begin insert

(6) Upon an insurer receiving information indicating that the
offer, notice, or disclosure sent by electronic transmission was not
received by the insured, the insurer shall, within two business days,
do one of the following:

end insert begin insert

(A) Contact the insured to confirm or update the insured’s email
address and resend the offer, notice, or disclosure by electronic
transmission. If the insurer elects to resend the offer, notice, or
disclosure by electronic transmission, the insurer shall demonstrate
the transmission was received by the insured, pursuant to
paragraph (5). If the insurer is unable to confirm or update the
insured’s email address, the insurer shall resend the offer, notice,
or disclosure by regular mail to the insured at the address shown
on the policy.

end insert begin insert

(B) Resend the offer, notice, or disclosure initially provided by
electronic transmission by regular mail to the insured at the
address shown on the policy.

end insert begin insert

(c) The department may suspend an insurer from providing
offers, notices, or disclosures by electronic transmission if there
is a pattern or practices that demonstrate the insurer has failed
to comply with the requirements of this section. An insurer may
appeal the suspension and resume its electronic transmission of
offers, notices, or disclosures upon communication from the
department that the changes the insurer made to its process or
system to comply with the requirements of this section are
satisfactory.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 663 of the end insert begin insert Insurance Code end insert begin insert is amended to read: end insert

663.  

(a) Before policy expiration, an insurer shall deliver begin delete to end delete
or mail to the named insured, at the address shown on the policy,
one of the following:

(1) At least 20 days before expiration, a written or verbal offer
of renewal of the policy, contingent upon payment of premium as
stated in the offer.

(2) At least 30 days before expiration, a written notice of
nonrenewal of the policy, including the statement required by
Section 666.

(b) (1) An insurer that delivers a verbal offer to renew that is
declined by an insured shall, at least 20 days before expiration of
the policy, deliver to or mail to the named insured, at the address
shown on the policy, a written confirmation of the offer and
rejection.

(2) An insurer that attempts to satisfy subdivision (a) with a
verbal offer to renew, but is unable to contact the named insured
directly at least 20 days before policy expiration, shall, at least 20
days before policy expiration, deliver to or mail to the named
insured, at the address shown on the policy, a written offer to renew
the policy, contingent upon payment of premium as stated in the
offer.

(c) In the event that an insurer fails to give the named insured
either an offer of renewal or notice of nonrenewal as required by
this section, the existing policy, with no change in its terms and
conditions, shall remain in effect for 30 days from the date that
either the offer to renew or the notice of nonrenewal is delivered
or mailed to the named insured. A notice to this effect shall be
provided by the insurer to the named insured with the policy or
the notice of renewal or nonrenewal. Notwithstanding the failure
of an insurer to comply with this section, the policy shall terminate
on the effective date of any other replacement or succeeding
automobile insurance policy procured by the insured, or his agent
or broker, with respect to any automobile designated in both
policies.

(d) The insurer shall not be required to notify the named insured,
or any other insured, of nonrenewal of the policy if the insurer has
mailed or delivered a notice of expiration or cancellation, on or
prior to the 30th day preceding expiration of the policy period.

begin insert

(e) The offer of renewal pursuant to this section may be provided
electronically to the email address shown on the policy if the
insurer complies with subdivision (b) of Section 38.5.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 678 of the end insert begin insert Insurance Code end insert begin insert is amended to read: end insert

678.  

(a) At least 45 days prior to policy expiration, an insurer
shall deliver to the named insured or mail to the named insured at
the address shown in the policy, either of the following:

(1) An offer of renewal of the policy contingent upon payment
of premium as stated in the offer, stating each of the following:

(A) Any reduction of limits or elimination of coverage.

(B) The telephone number of the insurer’s representatives who
handle consumer inquiries or complaints. The telephone number
shall be displayed prominently in a font size consistent with the
other text of the renewal offer.

(2) A notice of nonrenewal of the policy. That notice shall
contain each of the following:

(A) The reason or reasons for the nonrenewal.

(B) The telephone number of the insurer’s representatives who
handle consumer inquiries or complaints. The telephone number
shall be displayed prominently in a font size consistent with the
other text of the notice of nonrenewal.

(C) A brief statement indicating that if the consumer has
contacted the insurer to discuss the nonrenewal and remains
unsatisfied, he or she may have the matter reviewed by the
department. The statement shall include the telephone number of
the unit within the department that responds to consumer inquiries
and complaints.

(b) In the event an insurer fails to give the named insured either
an offer of renewal or notice of nonrenewal as required by this
section, the existing policy, with no change in its terms and
conditions, shall remain in effect for 45 days from the date that
either the offer to renew or the notice of nonrenewal is delivered
or mailed to the named insured. A notice to this effect shall be
provided by the insurer to the named insured with the policy or
the notice of renewal or nonrenewal.

(c) Any policy written for a term of less than one year shall be
considered as if written for a term of one year. Any policy written
for a term longer than one year, or any policy with no fixed
expiration date, shall be considered as if written for successive
policy periods or terms of one year.

(d) This section applies only to policies of insurance specified
in Section 675.

begin insert

(e) The offer of renewal pursuant to this section may be provided
electronically to the email address shown on the policy if the
insurer complies with subdivision (b) of Section 38.5.

end insert

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 678.1 of the end insert begin insert Insurance Code end insert begin insert is amended to
read: end insert

678.1.  

(a) This section applies only to policies of insurance
of commercial insurance that are subject to Sections 675.5 and
676.6.

(b) A notice of nonrenewal shall be in writing and shall be
delivered or mailed to the producer of record and to the named
insured at the mailing address shown on the policy. Subdivision
(a) of Section 1013 of the Code of Civil Procedure shall be
applicable if the notice is mailed.

(c) An insurer, at least 60 days, but not more than 120 days, in
advance of the end of the policy period, shall give notice of
nonrenewal, and the reasons for the nonrenewal, if the insurer
intends not to renew the policy, or to condition renewal upon
reduction of limits, elimination of coverages, increase in
deductibles, or increase of more than 25 percent in the rate upon
which the premium is based.

(d) If an insurer fails to give timely notice required by
subdivision (c), the policy of insurance shall be continued, with
no change in its terms or conditions, for a period of 60 days after
the insurer gives the notice.

(e) With respect to policies defined in subdivision (b) of Section
676.6, in addition to the bases for conditional renewal set forth in
subdivision (c), an insurer may also condition renewal upon
requirements relating to the underlying policy or policies. If the
requirements are not satisfied as of (1) the expiration date of the
policy, or (2) 30 days after mailing or delivery of such notice,
whichever is later, the conditional renewal notice shall be treated
as an effective notice of nonrenewal, provided the insurer has sent
written confirmation to the first named insured and the producer
of record that the conditions were not met and that coverage ceased
at the expiration date shown in the expiring policy.

(f) A notice of nonrenewal shall not be required in any of the
following situations.

(1) The transfer of, or renewal of, a policy without a change in
its terms or conditions or the rate on which the premium is based
between insurers that are members of the same insurance group.

(2) The policy has been extended for 90 days or less, if the
notice required in subdivision (c) has been given prior to the
extension.

(3) The named insured has obtained replacement coverage or
has agreed, in writing, within 60 days of the termination of the
policy, to obtain that coverage.

(4) The policy is for a period of no more than 60 days and the
insured is notified at the time of issuance that it may not be
renewed.

(5) The named insured requests a change in the terms or
conditions or risks covered by the policy within 60 days prior to
the end of the policy period.

(6) The insurer has made a written offer to the insured, within
the time period specified in subdivision (c), to renew the policy
under changed terms or conditions or at a changed premium rate.
As used herein, “terms or conditions” includes, but is not limited
to, a reduction in limits, elimination of coverages, or an increase
in deductibles.

begin insert

(g) The notice of conditional renewal described in subdivision
(c) may be provided electronically to the email address shown on
the policy if the insurer complies with subdivision (b) of Section
38.5.

end insert

begin delete SEC. 3. end delete
begin insert SEC. 6. end insert   

Section 10083 of the Insurance Code is amended to
read:

10083.  

(a) The offer of coverage required by Section 10081
may 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 shall be mailed to the mailing address shown on the policy of
residential property insurance or on the application. The offer may
be made electronically pursuant to Section 38.5. The offer of
earthquake coverage shall contain the following language in at
least 10-point boldface type:

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

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

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

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

(A) AMOUNT OF DWELLING COVERAGE: ____

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

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

(C) CONTENTS COVERAGE: ____

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

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

(D) ADDITIONAL LIVING EXPENSES: ____

(E) RATE OR PREMIUM: ____

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

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

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

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

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

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

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

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

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

begin delete SEC. 4. end delete
begin insert SEC. 7. end insert   

Section 10086 of the Insurance Code is amended to
read:

10086.  

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

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

(2) An insurer that modifies the terms and conditions of an
existing policy, rider, or endorsement shall 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. The offer of renewal may
be made electronically pursuant to Section 38.5. Proof of mailing
of the disclosure document by first-class mail to a named insured
at the mailing address shown on the policy or application, or proof
consistent with Section 38.5 that the offer of renewal of coverage
was sent to the named insured or applicant by electronic
transmission, creates a conclusive presumption that the disclosure
document was provided. The disclosure shall include the following
statement in 14-point boldface type:

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

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

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

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

CALIFORNIA EARTHQUAKE AUTHORITY POLICY
DISCLOSURE

THIS POLICY IS BEING PURCHASED FROM THE
CALIFORNIA EARTHQUAKE AUTHORITY (“CEA”). THE
COVERAGE IN THIS CEA POLICY SUBSTANTIALLY
DIFFERS FROM THE COVERAGES PROVIDED IN YOUR
HOMEOWNER’S POLICY. THE CEA IS NOT PART OF OR
ASSOCIATED WITH YOUR HOMEOWNER’S INSURANCE
COMPANY. IF LOSSES AS A RESULT OF AN EARTHQUAKE
OR A SERIES OF EARTHQUAKES EXCEED THE
AVAILABLE RESOURCES OF THE CEA, THIS POLICY IS
NOT COVERED BY THE CALIFORNIA INSURANCE
GUARANTY ASSOCIATION. THEREFORE, THE
CALIFORNIA INSURANCE GUARANTY ASSOCIATION
WILL NOT PAY YOUR CLAIMS OR PROTECT YOUR
ASSETS IF THE CEA BECOMES INSOLVENT AND IS
UNABLE TO MAKE PAYMENTS AS PROMISED. IN
ADDITION, YOUR CEA POLICY MAY BE SUBJECT TO
FUTURE SURCHARGES OF THE POLICY PREMIUM IN
CERTAIN CASES WHERE AN EARTHQUAKE OR SERIES
OF EARTHQUAKES HAS EXCEEDED AVAILABLE
RESOURCES TO PAY CLAIMS. IN THAT CASE, THIS
MEANS THAT IN ADDITION TO THE ANNUAL PREMIUM,
YOU MAY BE CHARGED UP TO AN ADDITIONAL 20% OF
THE PREMIUM.

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

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

begin delete SEC. 5. end delete
begin insert SEC. 8. end insert   

Section 10087 of the Insurance Code is amended to
read:

10087.  

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

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