BILL NUMBER: SB 251	CHAPTERED
	BILL TEXT

	CHAPTER  369
	FILED WITH SECRETARY OF STATE  SEPTEMBER 26, 2013
	APPROVED BY GOVERNOR  SEPTEMBER 26, 2013
	PASSED THE SENATE  SEPTEMBER 10, 2013
	PASSED THE ASSEMBLY  SEPTEMBER 9, 2013
	AMENDED IN ASSEMBLY  SEPTEMBER 3, 2013
	AMENDED IN ASSEMBLY  JUNE 17, 2013
	AMENDED IN ASSEMBLY  JUNE 5, 2013
	AMENDED IN SENATE  APRIL 17, 2013
	AMENDED IN SENATE  MARCH 18, 2013

INTRODUCED BY   Senator Calderon
   (Coauthors: Assembly Members Bocanegra, Bonta, Fong, Hall, and
Pan)

                        FEBRUARY 12, 2013

   An act to amend, repeal, and add Section 1633.3 of the Civil Code,
and to amend, repeal, and add Sections 38.5, 663, 678, 678.1, 10083,
10086, and 10087 of the Insurance Code, relating to insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 251, 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, until January 1, 2019, authorize certain notices
pertaining to workers' compensation to be provided by electronic
transmission. The 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. The bill would require the Insurance
Commissioner to submit a report, on or before January 1, 2018, to the
Governor and to the committees of the Senate and Assembly having
jurisdiction over insurance and the judiciary, regarding the impact
and implementation of the authorization of the electronic
transmission of certain insurance renewal offers, notices, or
disclosures, as specified.
   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, until January 1, 2019, 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, until January 1, 2019, 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.
   This bill would incorporate additional changes to Section 1633.3
of the Civil Code proposed by SB 752 that would become operative if
this bill and SB 752 are both chaptered and this bill is chaptered
last.



THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  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 this 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,
paragraph (2) of subdivision (a) of Section 663, Section 664, 667.5,
673, 677, paragraph (2) of subdivision (a) of Section 678,
subdivisions (a) and (b) of Section 678.1, Section 786, 10113.7,
10127.7, 10127.9, 10127.10, 10192.18, 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.
   (g) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date.
  SEC. 1.5.  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, Part 5 (commencing with Section 4000) of
Division 4 of, or Part 5.3 (commencing with Section 6500) of Division
4 of this 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, paragraph (2) of
subdivision (a) of Section 663, 664, 667.5, 673, 677, paragraph (2)
of subdivision (a) of Section 678, subdivisions (a) and (b) of
Section 678.1, Section 786, 10113.7, 10127.7, 10127.9, 10127.10,
10192.18, 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.
   (g) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date.
  SEC. 2.  Section 1633.3 is added to the Civil Code, 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, this 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, 10086, 10113.7, 10127.7,
10127.9, 10127.10, 10192.18, 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.
   (g) This section shall become operative on January 1, 2019.
  SEC. 3.  Section 1633.3 is added to the Civil Code, 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 Part 5 (commencing with Section 4000) of
Division 4 of, or Part 5.3 (commencing with Section 6500) of Division
4 of this 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, 10086, 10113.7, 10127.7, 10127.9,
10127.10, 10192.18, 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.
   (g) This section shall become operative on January 1, 2019.
  SEC. 4.  Section 38.5 of the Insurance Code is amended to read:
   38.5.  (a) 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 subdivision (a), (b), (c),
(d), (e), or (g) of 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.
   (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 and the offer of renewal for a workers' compensation policy may
be provided by electronic transmission if an insurer complies with
all of the following:
   (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.
   (2) An insurer discloses, in writing or electronically, to the
insured all of the following:
   (A) The opt in to receive the offer, notice, or disclosure by
electronic transmission is voluntary.
   (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.
   (C)  A description of the offer, notice, or disclosure that the
insured will receive by electronic transmission.
   (D) The process or system to report a change or correction in the
insured's email address.
   (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.
   (3) An insurer shall include the insured's email address on the
policy declaration page.
   (4)  An insurer shall annually provide one free printed copy of
any offer, notice, or disclosure described in this subdivision upon
request by the insured.
   (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. If a different method of sending
or receiving is agreed upon by the insurer and the insured pursuant
to Section 1633.15 of the Civil Code, an insurer shall comply with
the provisions of this subdivision. The insurer shall retain and
document information so that the documentation and information is
retrievable upon request by the Department of Insurance while the
current 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 to the
insured 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.
   (A) Acceptable methods for an insurer to demonstrate that the
offer, notice, or disclosure was sent to the insured include simple
mail transfer protocol server log files indicating transmission, or
other methodologies indicating sent transmission consistent with
standards set forth in Section 1633.15 of the Civil Code.
   (B) Acceptable methods for an insurer to demonstrate that the
offer, notice, or disclosure was received by the insured include
server log files indicating that the email or application has been
received, or log files showing that the insured logged into his or
her secured account with the insurer, or other methodologies
indicating received transmission consistent with standards set forth
in Section 1633.15 of the Civil Code.
   (6) If the offer, notice, or disclosure is not delivered directly
to the electronic address designated by the insured, but placed at an
electronic address accessible to the insured, an insurer shall
notify the insured in plain, clear, and conspicuous language at the
electronic address designated by the insured that describes the
offer, notice, or disclosure, informs that insured that it is
available at another location, and provides instructions to the
insured as to how to obtain the offer, notice, or disclosure.
   (7) (A) 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,
either clause (i) or (ii):
   (i) 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.
   (ii) Resend the offer, notice, or disclosure initially provided by
electronic transmission by regular mail to the insured at the
address shown on the policy.
   (B) If the insurer sends the first electronic offer, notice, or
disclosure within the time period required by law and the insurer
complies with both paragraph (5) and subparagraph (A) of this
paragraph, the electronic offer, notice, or disclosure sent pursuant
to clause (i) or (ii) of subparagraph (A) shall be treated as if
mailed in compliance with the applicable statutory regular mail
delivery deadlines.
   (8) On or before January 1, 2018, the commissioner shall submit a
report to the Governor and to the committees of the Senate and
Assembly having jurisdiction over insurance and the judiciary,
regarding the impact and implementation of the authorization of the
electronic transmission of certain insurance renewal offers, notices,
or disclosures as authorized by this section. The report shall
include input from insurers, consumers, and consumer organizations,
and shall include an assessment of the department's experience
pertaining to the authorization of the electronic transmission of
insurance renewals as authorized by this section.
   (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.
   (d) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date.
  SEC. 5.  Section 38.5 is added to the Insurance Code, to read:
   38.5.  (a) 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.
   (b) This section shall become operative on January 1, 2019.
  SEC. 6.  Section 663 of the Insurance Code is amended to read:
   663.  (a) Before policy expiration, an insurer shall deliver 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 or her 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.
   (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.
   (f) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date.
  SEC. 7.  Section 663 is added to the Insurance Code, to read:
   663.  (a) Before policy expiration, an insurer shall deliver to 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.
   (e) This section shall become operative on January 1, 2019.
  SEC. 8.  Section 678 of the Insurance Code is amended to read:
   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.
   (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.
   (f) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date.
  SEC. 9.  Section 678 is added to the Insurance Code, to read:
   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.
   (e) This section shall become operative on January 1, 2019.
  SEC. 10.  Section 678.1 of the Insurance Code is amended to read:
   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.
   (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.
   (h) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date.
  SEC. 11.  Section 678.1 is added to the Insurance Code, to read:
   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.
   (g) This section shall become operative on January 1, 2019.
  SEC. 12.  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.
   (f) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date.
  SEC. 13.  Section 10083 is added to the Insurance Code, 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 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.
   (f) This section shall become operative on January 1, 2019.
  SEC. 14.  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.
   (d) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date.
  SEC. 15.  Section 10086 is added to the Insurance Code, 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. 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 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.
   (c) Nothing in this section shall preclude the named insured from
terminating the earthquake coverage at any time.
   (d) This section shall become operative on January 1, 2019.
  SEC. 16.  Section 10087 of the Insurance Code is amended to read:
   10087.  (a) As used in this chapter, "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, 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.
   (c) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date.
  SEC. 17.  Section 10087 is added to the Insurance Code, to read:
   10087.  (a) As used in this chapter "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 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 shall create a conclusive presumption that the
offer was made.
   (c) This section shall become operative on January 1, 2019.
  SEC. 18.  Section 1.5 of this bill incorporates amendments to
Section 1633.3 of the Civil Code proposed by both this bill and
Senate Bill 752. It shall only become operative if (1) both bills are
enacted and become effective on or before January 1, 2014, (2) each
bill amends Section 1633.3 of the Civil Code, and (3) this bill is
enacted after Senate Bill 752, in which case Section 1 of this bill
shall not become operative.
  SEC. 19.  Section 2 of this bill shall only become operative if (1)
this bill is enacted and becomes effective on or before January 1,
2014, (2) this bill amends Section 1633.3 of the Civil Code, and (3)
Senate Bill 752 is not enacted, or if enacted on or before January 1,
2014, does not amend Section 1633.3 of the Civil Code, in which case
Section 3 of this bill shall not become operative.
  SEC. 20.  Section 3 of this bill shall only become operative if (1)
both this bill and Senate Bill 752 are enacted and become effective
on or before January 1, 2014, and (2) each bill amends Section 1633.3
of the Civil Code, in which case Section 2 of this bill shall not
become operative.