BILL ANALYSIS                                                                                                                                                                                                    



                                                                     SB 335


                                                                    Page  1





          Date of Hearing:  June 24, 2015


                           ASSEMBLY COMMITTEE ON INSURANCE


                                   Tom Daly, Chair


          SB  
          335 (Roth) - As Introduced February 23, 2015


          SENATE VOTE:  34-0


          SUBJECT:  Earthquake insurance.


          SUMMARY:  Specifies that insurers must prorate earthquake  
          insurance premium reductions based on seismic retrofitting to  
          the date the inspection report is received by the insurer, and  
          deletes obsolete statutory provisions.  


          EXISTING LAW:   


          1)Generally provides for the regulation of residential earthquake  
            insurance.

          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.








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          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. 

          FISCAL EFFECT:  Undetermined


          COMMENTS:  


           1)Purpose of the bill  .  According to the author, this bill  
            ensures that homeowners who repair or retrofit their homes to  
            meet required building codes get a refund of any surcharges  
            for noncompliance they have pre-paid once their home is  
            brought into compliance.  

           2)Background .  Fewer than 11% of California homeowners purchase  
            earthquake insurance.  Current law allows earthquake insurers  
            to charge an additional earthquake premium or deductible if a  
            dwelling fails to meet building standards that reduce the risk  
            and/or extent of earthquake damage. 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. This bill makes clear that a homeowner is  








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            entitled to a refund of any premium surcharge as of the date  
            the reason for the surcharge is eliminated.

          REGISTERED SUPPORT / OPPOSITION:




          Support


          California Association of Realtors




          Opposition


          None recevied




          Analysis Prepared by:Paul Riches / INS. / (916)  
          319-2086