BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 335|
|Office of Senate Floor Analyses | |
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CONSENT
Bill No: SB 335
Author: Roth (D)
Introduced:2/23/15
Vote: 21
SENATE INSURANCE COMMITTEE: 7-0, 4/22/15
AYES: Roth, Gaines, Berryhill, Hernandez, Liu, Mitchell,
Wieckowski
NO VOTE RECORDED: Hall
SUBJECT: Earthquake insurance
SOURCE: Author
DIGEST: This bill requires additional earthquake insurance
premium paid as a result of failure to comply with specified
building code standards to be refunded to an insured that
subsequently brings the dwelling up to code, pro-rated as of the
date the approved inspection record is received by the insurer,
and makes other technical and clarifying changes.
ANALYSIS:
Existing law:
1) Generally provides for the regulation of residential
earthquake insurance.
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Page 2
2) Provides that no homeowners' insurance policy may be
offered or sold in California unless the homeowner is
offered earthquake coverage, either as part of the
homeowners' policy or as a separate policy.
3) Allows insurers to charge an additional earthquake premium
or deductible if a dwelling fails to comply with specified
uniform building codes.
4) Provides that if the dwelling is subsequently brought into
compliance with the applicable building code, then the
additional premium or deductible shall not be charged.
5) Requires a copy of the approved inspection record for the
work performed to bring the dwelling into compliance be
submitted by the insured to the insurer to verify that the
retrofits have been performed.
6) Requires personal lines insurers, including but not limited
to homeowners' and automobile insurers, whenever a policy
terminates or there is a reduction in coverage, to refund
the gross unearned premium to the insured within 25 business
days after the insurer receives notice of the event that
generated the unearned premium.
This bill:
1) Requires additional earthquake insurance premium or
deductible paid as a result of failure to conform with
building codes to be refunded to an insured that brings the
dwelling into compliance, prorated as of the date the
approved inspection record is received by the insurer.
2) Makes other technical and clarifying changes.
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Page 3
Background
Current law allows earthquake insurers to charge an additional
earthquake premium or deductible if a dwelling fails to meet
specified building standards. It also specifies that if the
dwelling is subsequently brought into compliance, then the
additional premium or deductible attributed to non-compliance
shall not be charged. A copy of the approved inspection record
must be submitted to the insurer to verify that the retrofits
have been performed. (Insurance Code §10082.5). Current law
requires personal lines insurers, whenever a policy terminates,
or there is a reduction in coverage, to refund the gross
unearned premium to the insured within 25 business days after
the insurer receives notice of the event that generated the
unearned premium. (Insurance Code §481.5) This bill makes clear
that a homeowner is entitled to a refund of any premium
surcharge as of the date the reason for the surcharge is
eliminated.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified4/22/15)
California Association of Realtors
OPPOSITION: (Verified4/22/15)
None received
ARGUMENTS IN SUPPORT: According to the author, individuals
that make the necessary improvements and upgrades to their homes
to meet building code standards to protect against earthquake
damage should not have to pay the higher premiums charged to
those who fail to comply with building code standards. Many
homeowners who purchase earthquake insurance pay their premiums
annually, or every six months, and they should be entitled to a
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Page 4
quick refund of any excess paid. The California Association of
Realtors supports SB 335 because it offers an equitable result
for homeowners who bring their homes into compliance with
recommended seismic reinforcements, and provides an additional
incentive to be pro-active in addressing the seismic safety of
their homes.
Prepared by:Erin Ryan / INS. / (916) 651-4110
4/24/15 15:45:03
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