BILL NUMBER: SB 1406	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MAY 19, 2010

INTRODUCED BY   Committee on Banking, Finance and Insurance (Senators
Calderon (Chair), Cogdill, Correa, Cox, Florez, Kehoe, Liu,
Lowenthal, Padilla, Price, and Runner)

                        FEBRUARY 19, 2010

   An act to amend Section 10083 of the Insurance Code, relating to
insurance.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1406, as amended, Committee on Banking, Finance and Insurance.
Earthquake insurance: coverage offer.
   Under existing law, a policy of residential property insurance may
not be issued or delivered or, under certain circumstances,
initially renewed by an insurer unless the named insured is offered
coverage for loss or damage caused by an earthquake. The required
offer of earthquake 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.
   This bill would provide that in addition to affording
administrative flexibility to insurers for the routine management of
their business, the above provision should be construed as
authorizing an insurer, for a period not to exceed 60 days following
the issuance or renewal of a residential property insurance policy,
to focus its claims and other resources on its services to existing
policyholders in the event of an earthquake and to temporarily defer
the mandatory offer and its associated workload, including any
inspections or other underwriting activity.  The bill would also
provide that the requirement that insurers   make all
mandatory offers of earthquake coverage prior to, concurrent with, or
within 60 days following the issuance or renewal of a residential
property insurance policy would not change. 
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


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

  SECTION 1.  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 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)  (1)    In addition to affording
administrative flexibility to insurers for the routine management of
their business, subdivision (a) should be construed as authorizing an
insurer, for a period not to exceed 60 days following the issuance
or renewal of a residential property insurance policy, to focus its
claims and other resources on its services to existing policyholders
in the event of an earthquake and to temporarily defer the mandatory
offer and its associated workload, including any inspections or other
underwriting activity. 
   (2) This subdivision does not vary the requirement that all
mandatory offers of coverage required by Section 10081 be made prior
to, concurrent with, or within 60 days following the issuance or
renewal of a residential property insurance policy, as specified in
subdivision (a). 
   (d) The offer may contain additional provisions not in conflict
with or in derogation of this section.
   (e) 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.
   (f) Use of the language prescribed by this section, or modified
language approved pursuant to subdivision (e), shall constitute
compliance with the requirements of Section 10081 by an insurer
subject thereto.