AB 2735, as amended, Committee on Insurance. Earthquake insurance.
Existing law provides that 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. If an offer of earthquake coverage is not accepted, insurers are required to subsequently offer earthquake coverage to residential policyholders on an every other year basis.
This bill would provide that if an insurerbegin delete offers specified insurance policies providing earthquake coverage that is greater than the minimum requirements, and an offer of one of those policies has been accepted, no further or other offer of earthquake coverage meeting the minimum earthquake coverage requirements is required at a renewal, if the insurer has offered a renewal of that policy and has provided written notice with that renewal regarding additional earthquake coverage that is available.end deletebegin insert
issues a policy with earthquake coverage that does not meet the minimum coverage requirements, no further or other offer of earthquake coverage meeting the minimum coverage requirements and no further or other notice of noncoverage is required by the insurer if a renewal of that policy is offered, and a written notice is provided with that renewal regarding additional earthquake coverage that is available.end insert The bill would require the form of that written notice to be approved by the Insurance Commissioner, as specified. The bill would also make additional conforming changes.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 10083 of the Insurance Code, as amended
2by Section 12 of Chapter 369 of the Statutes of 2013, is amended
3to read:
(a) The offer of coverage required by Section 10081
5may be made prior to, concurrent with, or within 60 days following
6the issuance or renewal of a residential property insurance policy.
7If the offer of coverage is mailed to the named insured or applicant,
8it shall be mailed to the mailing address shown on the policy of
9residential property insurance or on the application. The offer may
10be made electronically pursuant to Section 38.5. The offer of
11earthquake coverage shall contain the following language in at
12least 10-point boldface type:
14YOUR POLICY DOES NOT PROVIDE COVERAGE
15AGAINST THE PERIL OF EARTHQUAKE.
16CALIFORNIA LAW
REQUIRES THAT EARTHQUAKE
17COVERAGE BE OFFERED TO YOU AT YOUR OPTION.
18WARNING: THESE COVERAGES MAY DIFFER
19SUBSTANTIALLY FROM AND PROVIDE LESS
20PROTECTION THAN THE COVERAGE PROVIDED BY YOUR
21HOMEOWNERS’ INSURANCE POLICY. THERE ARE
22EXCLUSIONS AND LIMITATIONS SUCH AS
23OUTBUILDINGS, SWIMMING POOLS, MASONRY FENCES,
24AND MASONRY CHIMNEYS. THIS DISCLOSURE FORM
P3 1CONTAINS ONLY A GENERAL DESCRIPTION OF
2COVERAGES AND IS NOT PART OF YOUR EARTHQUAKE
3INSURANCE POLICY. ONLY THE SPECIFIC PROVISIONS
4OF YOUR POLICY WILL DETERMINE WHETHER A
5PARTICULAR LOSS IS COVERED AND, IF SO, THE
6AMOUNT PAYABLE.
7THE COVERAGE, SUBJECT TO POLICY PROVISIONS,
8MAY BE PURCHASED AT ADDITIONAL COST ON THE
9FOLLOWING TERMS:
10(A) AMOUNT OF DWELLING COVERAGE: ____
11(B) APPLICABLE DEDUCTIBLE: ____ IF YOUR LOSS IS
12BELOW THIS AMOUNT, YOU MAY NOT RECEIVE ANY
13PAYMENT FROM YOUR COVERAGE.
14YOUR INSURANCE COMPANY OR AGENT WILL
15PROVIDE WRITTEN NOTICE AS TO HOW THE
16DEDUCTIBLE APPLIES TO THE MARKET VALUE OF YOUR
17COVERAGE, THE INSURED VALUE OF YOUR COVERAGE,
18OR THE REPLACEMENT VALUE OF YOUR COVERAGE.
19(C) CONTENTS COVERAGE: ____
20IF YOUR LOSS DOES NOT EXCEED THE DEDUCTIBLE
21FOR THE DWELLING, YOU WILL NOT RECEIVE ANY
22PAYMENT FOR THIS COVERAGE.
23YOUR INSURANCE COMPANY OR AGENT WILL
24PROVIDE WRITTEN NOTICE AS TO HOW THE
25DEDUCTIBLE APPLIES TO THE AMOUNT YOU RECEIVE
26PURSUANT TO THIS
COVERAGE.
27(D) ADDITIONAL LIVING EXPENSES: ____
28(E) RATE OR PREMIUM: ____
29YOU MUST ASK THE COMPANY TO ADD EARTHQUAKE
30COVERAGE WITHIN 30 DAYS FROM THE DATE OF
31MAILING OF THIS NOTICE OR IT SHALL BE
32CONCLUSIVELY PRESUMED THAT YOU HAVE NOT
33ACCEPTED THIS OFFER.
34THIS COVERAGE SHALL BE EFFECTIVE ON THE DAY
35YOUR ACCEPTANCE OF THIS OFFER IS RECEIVED BY US.
37(b) When the insurer, agent, or broker establishes delivery of
38the disclosure form by obtaining the signature of the applicant or
39 insured, or when an insurer, agent, or broker provides the applicant
40with the disclosure form and the applicant
does not return a signed
P4 1acknowledgment of receipt within 60 days of the date it was
2provided, there shall be a conclusive presumption that the insurer,
3agent, or broker has complied with the disclosure requirements of
4this section.
5(c) The offer may contain additional provisions not in conflict
6with or in derogation of this section.
7(d) The commissioner may only approve modifications to the
8language prescribed in subdivision (a) if all of the following
9conditions are met:
10(1) The modifications are not in conflict with or in derogation
11of any provision of this section or Section 10089.
12(2) The modifications are necessary to ensure that the disclosure
13statement
accurately reflects the coverage actually provided by
14the policy being offered.
15(3) The modifications are strictly limited to necessary changes
16so that the modified disclosure statement is otherwise identical to
17the disclosure statement prescribed in this section.
18(e) Use of the language prescribed by this section, or modified
19language approved pursuant to subdivision (d), shall constitute
20compliance with the requirements of Section 10081 by an insurer
21subject thereto.
22(f) (1) Ifbegin delete the insurer offers policies providing earthquake begin insert
an insurer issues a policy with
23coverage, other than the coverageend delete
24earthquake coverage that does not meet the minimum coverage
25requirementsend insert specified in subdivisions (a) and (b) of Section 10089,
26pursuant to a rate application approved by the commissioner in
27accordance with subdivision (c) of Section 10089,begin delete and an offer of no further or other offer
28one of those policies has been accepted,end delete
29of earthquake coverage meeting the minimum coverage
30requirementsbegin delete is required at a renewal if the insurer has offered a
31renewal of that policy and has provided written notice with that
32renewal regarding additional earthquake coverage that is available.end delete
33begin insert and no further or other notice of
noncoverage is required by the
34insurer if both of the following apply:end insert
35(A) A renewal of that policy is offered.
end insertbegin insert
36(B) A written notice is provided with that renewal regarding
37additional earthquake coverage that is available.
38(2) The form of the written notice in paragraph (1) shall be filed
39with the commissioner at least 30 days before its first use. The
40form shall not be used if the commissioner disapproves the form
P5 1of the written notice within that period for being misleading or
2incomplete.
3(g) This section shall remain in effect only until January 1, 2019,
4and as of that date is repealed, unless a later enacted statute, that
5is enacted before January 1, 2019, deletes or extends that date.
Section 10083 of the Insurance Code, as added by
7Section 13 of Chapter 369 of the Statutes of 2013, is amended to
8read:
(a) The offer of coverage required by Section 10081
10may be made prior to, concurrent with, or within 60 days following
11the issuance or renewal of a residential property insurance policy.
12If the offer of coverage is mailed to the named insured or applicant,
13it shall be mailed to the mailing address shown on the policy of
14residential property insurance or on the application. The offer of
15earthquake coverage shall contain the following language in at
16least 10-point boldface type:
18YOUR POLICY DOES NOT PROVIDE COVERAGE
19AGAINST THE PERIL OF EARTHQUAKE.
20CALIFORNIA LAW REQUIRES THAT EARTHQUAKE
21COVERAGE BE OFFERED TO YOU AT YOUR
OPTION.
22WARNING: THESE COVERAGES MAY DIFFER
23SUBSTANTIALLY FROM AND PROVIDE LESS
24PROTECTION THAN THE COVERAGE PROVIDED BY YOUR
25HOMEOWNERS’ INSURANCE POLICY. THERE ARE
26EXCLUSIONS AND LIMITATIONS SUCH AS
27OUTBUILDINGS, SWIMMING POOLS, MASONRY FENCES,
28AND MASONRY CHIMNEYS. THIS DISCLOSURE FORM
29CONTAINS ONLY A GENERAL DESCRIPTION OF
30COVERAGES AND IS NOT PART OF YOUR EARTHQUAKE
31INSURANCE POLICY. ONLY THE SPECIFIC PROVISIONS
32OF YOUR POLICY WILL DETERMINE WHETHER A
33PARTICULAR LOSS IS COVERED AND, IF SO, THE
34AMOUNT PAYABLE.
35THE COVERAGE, SUBJECT TO POLICY PROVISIONS,
36MAY BE PURCHASED AT ADDITIONAL COST ON THE
37FOLLOWING TERMS:
38(A) AMOUNT OF DWELLING COVERAGE: ____
P6 1(B) APPLICABLE DEDUCTIBLE: ____ IF YOUR LOSS IS
2BELOW THIS AMOUNT, YOU MAY NOT RECEIVE ANY
3PAYMENT FROM YOUR COVERAGE.
4YOUR INSURANCE COMPANY OR AGENT WILL
5PROVIDE WRITTEN NOTICE AS TO HOW THE
6DEDUCTIBLE APPLIES TO THE MARKET VALUE OF YOUR
7COVERAGE, THE INSURED VALUE OF YOUR COVERAGE,
8OR THE REPLACEMENT VALUE OF YOUR COVERAGE.
9(C) CONTENTS COVERAGE: ____
10IF YOUR LOSS DOES NOT EXCEED THE DEDUCTIBLE
11FOR THE DWELLING, YOU WILL NOT RECEIVE ANY
12PAYMENT FOR THIS COVERAGE.
13YOUR INSURANCE COMPANY OR AGENT WILL
14PROVIDE WRITTEN NOTICE AS TO HOW THE
15DEDUCTIBLE APPLIES TO THE AMOUNT YOU RECEIVE
16PURSUANT TO THIS COVERAGE.
17(D) ADDITIONAL LIVING EXPENSES: ____
18(E) RATE OR PREMIUM: ____
19YOU MUST ASK THE COMPANY TO ADD EARTHQUAKE
20COVERAGE WITHIN 30 DAYS FROM THE DATE OF
21MAILING OF THIS NOTICE OR IT SHALL BE
22CONCLUSIVELY PRESUMED THAT YOU HAVE NOT
23ACCEPTED THIS OFFER.
24THIS COVERAGE SHALL BE EFFECTIVE ON THE DAY
25YOUR ACCEPTANCE OF THIS OFFER IS RECEIVED BY US.
27(b) When the insurer, agent, or broker establishes delivery of
28the disclosure form by obtaining the signature of the applicant or
29insured, or when an insurer, agent, or broker provides the applicant
30with the disclosure form and the applicant does not return a signed
31acknowledgment of receipt within 60 days
of the date it was
32provided, there shall be a conclusive presumption that the insurer,
33agent, or broker has complied with the disclosure requirements of
34this section.
35(c) The offer may contain additional provisions not in conflict
36with or in derogation of this section.
37(d) The commissioner may only approve modifications to the
38language prescribed in subdivision (a) if all of the following
39conditions are met:
P7 1(1) The modifications are not in conflict with or in derogation
2of any provision of this section or Section 10089.
3(2) The modifications are necessary to ensure that the disclosure
4statement accurately reflects the coverage actually provided by
5the
policy being offered.
6(3) The modifications are strictly limited to necessary changes
7so that the modified disclosure statement is otherwise identical to
8the disclosure statement prescribed in this section.
9(e) Use of the language prescribed by this section, or modified
10language approved pursuant to subdivision (d), shall constitute
11compliance with the requirements of Section 10081 by an insurer
12subject thereto.
13(f) (1) Ifbegin delete the insurer offers policies providing earthquake begin insert an insurer issues a policy with
14coverage, other than the coverageend delete
15earthquake coverage that
does not meet the minimum coverage
16requirementsend insert specified in subdivisions (a) and (b) of Section 10089,
17pursuant to a rate application approved by the commissioner in
18accordance with subdivision (c) of Section 10089,begin delete and an offer of no further or other offer
19one of those policies has been accepted,end delete
20of earthquake coverage meeting the minimum coverage
21requirementsbegin delete is required at a renewal if the insurer has offered a
22renewal of that policy and has provided written notice with that
23renewal regarding additional earthquake coverage that is available.end delete
24begin insert and no further or other notice of noncoverage is required by the
25insurer if both of the following apply:end insert
26(A) A renewal of that policy is offered.
end insertbegin insert
27(B) A written notice is provided with that renewal regarding
28additional earthquake coverage that is available.
29(2) The form of the written notice in paragraph (1) shall be filed
30with the commissioner at least 30 days before its first use. The
31form shall not be used if the commissioner disapproves the form
32of the written notice within that period for being misleading or
33incomplete.
34(g) This section shall become operative on January 1, 2019.
Section 10086.1 of the Insurance Code is amended to
36read:
(a) Where the offer of earthquake coverage has not
38been accepted, the insurer shall notify the named insured that the
39policy does not provide that coverage. After the offer on an every
40other year basis, the notice of noncoverage shall be provided prior
P8 1to or concurrent with the renewal of the policy of residential
2property insurance. This section shall not affect any other
3provisions of this chapter nor shall it affect coverage under the
4policy of residential property insurance.
5(b) (1) If the insurer offers
policies providing earthquake
6coverage, other than the coverage specified in subdivisions (a) and
7(b) of Section 10089, pursuant to a rate application approved by
8the commissioner in accordance with subdivision (c) of Section
910089, and an offer of one of those policies has been accepted, no
10further or other offer of earthquake coverage meeting the minimum
11coverage requirements is required at a renewal if the insurer has
12offered a renewal of that policy and has provided written notice
13with that renewal regarding additional earthquake coverage that
14is available.
15(2) The form of the written notice in paragraph (1) shall be filed
16with the commissioner at least 30 days before its first use. The
17form shall not be used if the commissioner disapproves the form
18of the written notice within that period for being misleading or
19incomplete.
20(b) No further or other notice of noncoverage is required
21pursuant to subdivision (a) for policies subject to subdivision (f)
22of Section 10083, and the insurer has complied with the conditions
23of subdivision (f) of Section 10083.
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