Amended in Assembly June 5, 2013

Amended in Senate April 17, 2013

Amended in Senate March 18, 2013

Senate BillNo. 251


Introduced by Senator Calderon

February 12, 2013


An act to amend Section 1633.3 of the Civil Code, and to amend Sections 38.5, 663, 678, 678.1, 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.

This bill would authorize certain noticesbegin insert pertaining to workers’compensation to be provided by electronic transmission. The bill would authorize certain noticesend insert 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.

Existing law prohibits residential property insurers 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:

P2    1

SECTION 1.  

Section 1633.3 of the Civil Code, as amended
2by Section 36 of Chapter 181 of the Statutes of 2012, is amended
3to read:

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.

P3    1(2) Division 1 (commencing with Section 1101) of the Uniform
2Commercial Code, except Sections 1206 and 1306.

3(3) Divisions 3 (commencing with Section 3101), 4
4(commencing with Section 4101), 5 (commencing with Section
55101), 8 (commencing with Section 8101), 9 (commencing with
6Section 9101), and 11 (commencing with Section 11101) of the
7Uniform Commercial Code.

8(4) A law that requires that specifically identifiable text or
9disclosures in a record or a portion of a record be separately signed,
10including initialed, from the record. However, this paragraph does
11not apply to Section 1677 or 1678 of this code or Section 1298 of
12the Code of Civil Procedure.

13(c) This title does not apply to any specific transaction described
14in Section 17511.5 of the Business and Professions Code, Section
1556.11, 56.17, 798.14, 1133, or 1134 of, Section 1689.6, 1689.7,
16or 1689.13 of, Chapter 2.5 (commencing with Section 1695) of
17Title 5 of Part 2 of Division 3 of, Section 1720, 1785.15, 1789.14,
181789.16, or 1793.23 of, Chapter 1 (commencing with Section
191801) of Title 2 of Part 4 of Division 3 of, Section 1861.24, 1862.5,
201917.712, 1917.713, 1950.5, 1950.6, 1983, 2924b, 2924c, 2924f,
212924i, 2924j, 2924.3, or 2937 of, Article 1.5 (commencing with
22Section 2945) of Chapter 2 of Title 14 of Part 4 of Division 3 of,
23Section 2954.5 or 2963 of, Chapter 2b (commencing with Section
242981) or 2d (commencing with Section 2985.7) of Title 14 of Part
254 of Division 3 of, Section 3071.5 of, or Part 5 (commencing with
26Section 4000) of Division 4begin delete of, the Civil Codeend deletebegin insert this codeend insert,
27subdivision (b) of Section 18608 or Section 22328 of the Financial
28Code, Section 1358.15, 1365, 1368.01, 1368.1, 1371, or 18035.5
29of the Health and Safety Code, Section 662, paragraph (2) of
30subdivision (a) of Section 663, Section 664, 667.5, 673, 677,
31paragraph (2) of subdivision (a) of Section 678, subdivisions (a)
32and (b) of Section 678.1, Section 786, 10113.7, 10127.7, 10127.9,
3310127.10,begin insert 10192.18,end insert 10199.44, 10199.46, 10235.16, 10235.40,
3410509.4, 10509.7, 11624.09, or 11624.1 of the Insurance Code,
35Section 779.1, 10010.1, or 16482 of the Public Utilities Code, or
36Section 9975 or 11738 of the Vehicle Code. An electronic record
37may not be substituted for any notice that is required to be sent
38pursuant to Section 1162 of the Code of Civil Procedure. Nothing
39in this subdivision shall be construed to prohibit the recordation
40of any document with a county recorder by electronic means.

P4    1(d) This title applies to an electronic record or electronic
2signature otherwise excluded from the application of this title under
3subdivision (b) when used for a transaction subject to a law other
4than those specified in subdivision (b).

5(e) A transaction subject to this title is also subject to other
6applicable substantive law.

7(f) The exclusion of a transaction from the application of this
8title under subdivision (b) or (c) shall be construed only to exclude
9the transaction from the application of this title, but shall not be
10construed to prohibit the transaction from being conducted by
11electronic means if the transaction may be conducted by electronic
12means under any other applicable law.

13

SEC. 2.  

Section 38.5 of the Insurance Code is amended to read:

14

38.5.  

(a) Any written notice required to be given or mailed to
15any person by an insurer relating to any insurance on risks or on
16operations in this state not excepted bybegin insert subdivision (a), (b), (c),
17(d), (e), or (g) ofend insert
Section 1851 from the coverage of Chapter 9
18(commencing with Section 1850.4) of Part 2 of Division 1 of this
19code may, if not excluded by subdivision (b) or (c) of Section
201633.3 of the Civil Code, be provided by electronic transmission
21pursuant to Title 2.5 (commencing with Section 1633.1) of Part 2
22of Division 3 of the Civil Code, if each party has agreed to conduct
23the transaction by electronic means pursuant to Section 1633.5 of
24the Civil Code. The affidavit of the person who initiated the
25electronic transmission, stating the facts of that transmission into
26an information processing system outside of the control of the
27sender or of any person that sent the electronic record on behalf
28of the sender, is prima facie evidence that the notice was
29transmitted and shall be sufficient proof of notice. Any notice
30provided by electronic transmission shall be treated as if mailed
31or given for the purposes of any provision of this code, except as
32provided by subdivision (g) of Section 1633.15 of the Civil Code.
33The insurance company shall maintain a system for confirming
34that any notice or document that is to be provided by electronic
35means has been sent in a manner consistent with Section 1633.15
36of the Civil Code. A valid electronic signature shall be sufficient
37for any provision of law requiring a written signature. The
38insurance company shall retain a copy of the confirmation and
39electronic signature, when either is required, with the policy
40information so that they are retrievable upon request by the
P5    1Department of Insurance while the policy is in force and for five
2years thereafter.

3(b) The offer of renewal required by Sections 663 and 678, the
4notice of conditional renewal required by Section 678.1, and the
5offer of coverage or renewal or any disclosure required by Section
610086begin insert and the offer of renewal for a workers’ compensation policyend insert
7 may be provided by electronic transmission if an insurer complies
8with all of the following:

9(1) An insurer, or insurer’s representative, acquires the consent
10of the insured to opt in to receive the offer, notice, or disclosure
11by electronic transmission, and the insured has not withdrawn that
12consent, prior to providing the offer, notice, or disclosure by
13electronic transmission. An insured’s consent may be acquired
14verbally, in writing, or electronically. If consent is acquired
15verbally, the insurer shall confirm consent in writing or
16electronically. The insurer shall retain a record of the insured’s
17consent to receive the offer, notice, or disclosure by electronic
18transmission with the policy information so that it is retrievable
19upon request by the Department of Insurance while the policy is
20in force and for five years thereafter.

21(2) An insurer discloses, in writing or electronically, to the
22insured all of the following:

23(A) The opt in to receive the offer, notice, or disclosure by
24electronic transmission is voluntary.

25(B) That the insured may opt out of receiving the offer, notice,
26or disclosure by electronic transmission at any time, and the process
27or system for the insured to opt out.

28(C)  A description of the offer, notice, or disclosure that the
29insured will receive by electronic transmission.

30(D) The process or system to report a change or correction in
31the insured’s email address.

32(E) The insurer’s contact information, which includes, but is
33not limited to, a toll-free number or an insurer’s Internet Web site
34address.

35(3) An insurer shall include the insured’s email address on the
36policy declaration page.

37(4)  An insurer shallbegin insert annuallyend insert provide one free printed copy of
38begin delete the notices or documentsend deletebegin insert any offer, notice, or disclosureend insert described
39in subdivision (b)begin delete and provide the notices or documents by
40electronic transmission annuallyend delete
upon request by the insured.

P6    1(5) An insurer shall maintain a process or system that can
2demonstrate that the offer, notice, or disclosure provided by
3 electronic transmission was both sent and received consistent with
4Section 1633.15 of the Civil Code. The insurer shall retain
5information so that the information is retrievable upon request by
6the Department of Insurance while thebegin insert currentend insert policy is in force
7and for five years thereafter related to its process or system
8demonstrating that the offer, notice, or disclosure provided by
9electronic transmission was sent by the applicable statutory regular
10mail delivery deadlines and received electronically. The offer,
11notice, or disclosure provided by electronic transmission shall be
12treated as if mailed so long as the insurer delivers it to the insured
13in compliance with the applicable statutory regular mail delivery
14deadlines.

15(6) Upon an insurer receiving information indicating that the
16offer, notice, or disclosure sent by electronic transmission was not
17received by the insured, the insurer shall, within two business days,
18do one of the following:

19(A) Contact the insured to confirm or update the insured’s email
20address and resend the offer, notice, or disclosure by electronic
21transmission. If the insurer elects to resend the offer, notice, or
22disclosure by electronic transmission, the insurer shall demonstrate
23the transmission was received by the insured, pursuant to paragraph
24(5). If the insurer is unable to confirm or update the insured’s email
25address, the insurer shall resend the offer, notice, or disclosure by
26regular mail to the insured at the address shown on the policy.

27(B) Resend the offer, notice, or disclosure initially provided by
28electronic transmission by regular mail to the insured at the address
29shown on the policy.

30(c) The department may suspend an insurer from providing
31offers, notices, or disclosures by electronic transmission if there
32is a pattern or practices that demonstrate the insurer has failed to
33comply with the requirements of this section. An insurer may
34appeal the suspension and resume its electronic transmission of
35offers, notices, or disclosures upon communication from the
36department that the changes the insurer made to its process or
37system to comply with the requirements of this section are
38satisfactory.

39

SEC. 3.  

Section 663 of the Insurance Code is amended to read:

P7    1

663.  

(a) Before policy expiration, an insurer shall deliver or
2mail to the named insured, at the address shown on the policy, one
3of the following:

4(1) At least 20 days before expiration, a written or verbal offer
5of renewal of the policy, contingent upon payment of premium as
6stated in the offer.

7(2) At least 30 days before expiration, a written notice of
8nonrenewal of the policy, including the statement required by
9Section 666.

10(b) (1) An insurer that delivers a verbal offer to renew that is
11 declined by an insured shall, at least 20 days before expiration of
12the policy, deliver to or mail to the named insured, at the address
13shown on the policy, a written confirmation of the offer and
14rejection.

15(2) An insurer that attempts to satisfy subdivision (a) with a
16verbal offer to renew, but is unable to contact the named insured
17directly at least 20 days before policy expiration, shall, at least 20
18days before policy expiration, deliver to or mail to the named
19insured, at the address shown on the policy, a written offer to renew
20the policy, contingent upon payment of premium as stated in the
21offer.

22(c) In the event that an insurer fails to give the named insured
23either an offer of renewal or notice of nonrenewal as required by
24this section, the existing policy, with no change in its terms and
25conditions, shall remain in effect for 30 days from the date that
26either the offer to renew or the notice of nonrenewal is delivered
27or mailed to the named insured. A notice to this effect shall be
28provided by the insurer to the named insured with the policy or
29the notice of renewal or nonrenewal. Notwithstanding the failure
30of an insurer to comply with this section, the policy shall terminate
31on the effective date of any other replacement or succeeding
32automobile insurance policy procured by the insured, or hisbegin insert or herend insert
33 agent or broker, with respect to any automobile designated in both
34policies.

35(d) The insurer shall not be required to notify the named insured,
36or any other insured, of nonrenewal of the policy if the insurer has
37mailed or delivered a notice of expiration or cancellation, on or
38prior to the 30th day preceding expiration of the policy period.

P8    1(e) The offer of renewal pursuant to this section may be provided
2electronically to the email address shown on the policy if the
3insurer complies with subdivision (b) of Section 38.5.

4

SEC. 4.  

Section 678 of the Insurance Code is amended to read:

5

678.  

(a) At least 45 days prior to policy expiration, an insurer
6shall deliver to the named insured or mail to the named insured at
7the address shown in the policy, either of the following:

8(1) An offer of renewal of the policy contingent upon payment
9of premium as stated in the offer, stating each of the following:

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

11(B) The telephone number of the insurer’s representatives who
12handle consumer inquiries or complaints. The telephone number
13shall be displayed prominently in a font size consistent with the
14other text of the renewal offer.

15(2) A notice of nonrenewal of the policy. That notice shall
16contain each of the following:

17(A) The reason or reasons for the nonrenewal.

18(B) The telephone number of the insurer’s representatives who
19handle consumer inquiries or complaints. The telephone number
20shall be displayed prominently in a font size consistent with the
21other text of the notice of nonrenewal.

22(C) A brief statement indicating that if the consumer has
23contacted the insurer to discuss the nonrenewal and remains
24unsatisfied, he or she may have the matter reviewed by the
25department. The statement shall include the telephone number of
26the unit within the department that responds to consumer inquiries
27and complaints.

28(b) In the event an insurer fails to give the named insured either
29an offer of renewal or notice of nonrenewal as required by this
30section, the existing policy, with no change in its terms and
31conditions, shall remain in effect for 45 days from the date that
32either the offer to renew or the notice of nonrenewal is delivered
33or mailed to the named insured. A notice to this effect shall be
34provided by the insurer to the named insured with the policy or
35the notice of renewal or nonrenewal.

36(c) Any policy written for a term of less than one year shall be
37considered as if written for a term of one year. Any policy written
38for a term longer than one year, or any policy with no fixed
39expiration date, shall be considered as if written for successive
40policy periods or terms of one year.

P9    1(d) This section applies only to policies of insurance specified
2in Section 675.

3(e) The offer of renewal pursuant to this section may be provided
4electronically to the email address shown on the policy if the
5insurer complies with subdivision (b) of Section 38.5.

6

SEC. 5.  

Section 678.1 of the Insurance Code is amended to
7read:

8

678.1.  

(a) This section applies only to policies of insurance
9of commercial insurance that are subject to Sections 675.5 and
10676.6.

11(b) A notice of nonrenewal shall be in writing and shall be
12delivered or mailed to the producer of record and to the named
13insured at the mailing address shown on the policy. Subdivision
14(a) of Section 1013 of the Code of Civil Procedure shall be
15applicable if the notice is mailed.

16(c) An insurer, at least 60 days, but not more than 120 days, in
17advance of the end of the policy period, shall give notice of
18nonrenewal, and the reasons for the nonrenewal, if the insurer
19intends not to renew the policy, or to condition renewal upon
20 reduction of limits, elimination of coverages, increase in
21deductibles, or increase of more than 25 percent in the rate upon
22which the premium is based.

23(d) If an insurer fails to give timely notice required by
24subdivision (c), the policy of insurance shall be continued, with
25no change in its terms or conditions, for a period of 60 days after
26the insurer gives the notice.

27(e) With respect to policies defined in subdivision (b) of Section
28676.6, in addition to the bases for conditional renewal set forth in
29subdivision (c), an insurer may also condition renewal upon
30requirements relating to the underlying policy or policies. If the
31requirements are not satisfied as of (1) the expiration date of the
32policy, or (2) 30 days after mailing or delivery of such notice,
33whichever is later, the conditional renewal notice shall be treated
34as an effective notice of nonrenewal, provided the insurer has sent
35written confirmation to the first named insured and the producer
36of record that the conditions were not met and that coverage ceased
37at the expiration date shown in the expiring policy.

38(f) A notice of nonrenewal shall not be required in any of the
39followingbegin delete situations.end deletebegin insert situations:end insert

P10   1(1) The transfer of, or renewal of, a policy without a change in
2its terms or conditions or the rate on which the premium is based
3between insurers that are members of the same insurance group.

4(2) The policy has been extended for 90 days or less, if the
5notice required in subdivision (c) has been given prior to the
6extension.

7(3) The named insured has obtained replacement coverage or
8has agreed, in writing, within 60 days of the termination of the
9policy, to obtain that coverage.

10(4) The policy is for a period of no more than 60 days and the
11insured is notified at the time of issuance that it may not be
12renewed.

13(5) The named insured requests a change in the terms or
14conditions or risks covered by the policy within 60 days prior to
15the end of the policy period.

16(6) The insurer has made a written offer to the insured, within
17the time period specified in subdivision (c), to renew the policy
18under changed terms or conditions or at a changed premium rate.
19As used herein, “terms or conditions” includes, but is not limited
20to, a reduction in limits, elimination of coverages, or an increase
21in deductibles.

22(g) The notice of conditional renewal described in subdivision
23(c) may be provided electronically to the email address shown on
24the policy if the insurer complies with subdivision (b) of Section
2538.5.

26

SEC. 6.  

Section 10083 of the Insurance Code is amended to
27read:

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. The offer may
34be made electronically pursuant to Section 38.5. The offer of
35earthquake coverage shall contain the following language in at
36least 10-point boldface type:

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

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

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

16(1) The modifications are not in conflict with or in derogation
17of any provision of this section or Section 10089.

18(2) The modifications are necessary to ensure that the disclosure
19statement accurately reflects the coverage actually provided by
20the policy being offered.

21(3) The modifications are strictly limited to necessary changes
22so that the modified disclosure statement is otherwise identical to
23the disclosure statement prescribed in this section.

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

28

SEC. 7.  

Section 10086 of the Insurance Code is amended to
29read:

30

10086.  

(a) If an offer of earthquake coverage is accepted, the
31coverage shall be continued at the applicable rates and conditions
32for the policy term, provided the policy of residential property
33insurance is not terminated by the named insured or insurer.

34(1) At any renewal, an insurer may modify the terms and
35conditions of an existing policy, rider, or endorsement providing
36 coverage against loss or damage caused by the peril of earthquake
37if the modified terms and conditions provide the minimum
38coverages required by Section 10089.

39(2) An insurer that modifies the terms and conditions of an
40existing policy, rider, or endorsement shall provide the insured
P13   1with the renewal notice in a stand-alone disclosure document
2stating the changes in the terms and conditions of the insured’s
3existing policy, rider, or endorsement. The offer of renewal may
4be made electronically pursuant to Section 38.5. Proof of mailing
5of the disclosure document by first-class mail to a named insured
6at the mailing address shown on the policy or application, or proof
7consistent with Section 38.5 that the offer of renewal of coverage
8was sent to the named insured or applicant by electronic
9transmission, creates a conclusive presumption that the disclosure
10document was provided. The disclosure shall include the following
11statement in 14-point boldface type:

12THE COVERAGE IN THE POLICY WE ARE OFFERING
13YOU WITH THIS RENEWAL HAS BEEN REDUCED, AND
14SUBSTANTIALLY DIFFERS FROM THE COVERAGES
15PROVIDED BY YOUR HOMEOWNERS’ POLICY.
16INSURANCE COMPANIES ARE ALLOWED TO RENEW
17EARTHQUAKE INSURANCE POLICIES WITH COVERAGE
18THAT IS REDUCED FROM THE COVERAGE YOU
19PREVIOUSLY PURCHASED. YOU MAY REQUEST A
20SAMPLE COPY OF THIS NEW POLICY TO REVIEW PRIOR
21TO MAKING A DECISION TO ACCEPT THIS RENEWAL,
22AND WE WILL MAIL OR DELIVER IT TO YOU WITHIN 14
23DAYS OF YOUR REQUEST. A REQUEST FOR THE SAMPLE
24COPY SHALL NOT CHANGE OR EXTEND THE POLICY
25EXPIRATION DATE SPECIFIED IN THE RENEWAL NOTICE.
26A SUMMARY OF THE CHANGES IS INCLUDED WITH THIS
27NOTICE.

28The commissioner shall approve the form of the summary at the
29time he or she approves the policy. The summary shall include the
30information contained in subdivision (a) of Section 10083, and
31may be included with the renewal notice in standard type.

32The commissioner may approve substantially similar disclosure
33forms if necessary to accurately disclose relevant information to
34the policyholder. The commissioner may also approve disclosure
35forms substantially similar to the disclosure statement required by
36Section 10083 if necessary to accurately disclose relevant
37information to the policyholder.

38(3) If the earthquake coverage is provided by a policy issued
39by the California Earthquake Authority, the following disclosure
40shall be provided in 14-point boldface type:

P14   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. The offer
33may be made electronically pursuant to Section 38.5.

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

36

SEC. 8.  

Section 10087 of the Insurance Code is amended to
37read:

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,
P15   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 application, or proof consistent with Section 38.5
15that the offer of coverage was sent to the named insured or
16applicant by electronic transmission, shall create a conclusive
17presumption that the offer was made.



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