Four more Commissioner-sponsored bills to protect wildfire survivors pass Legislature
News: 2018 Press Release
"These bills will help consumers trying to get back on their feet after devastating wildfires," said Insurance Commissioner Dave Jones. "Fire survivors deserve maximum assistance in their insurance recovery efforts. I'd like to thank Senator Dodd and Assemblymembers Aguiar-Curry, Levine and Wood for all their efforts to help fire survivors."
SB 894 (Dodd) will help homeowners reduce the huge financial burden of being significantly underinsured and unable to afford to rebuild. Underinsurance is not only a financial blow to disaster survivors, it is economically devastating to communities because, as one of the most challenging obstacles to loss recovery, it delays claim settlements which delays rebuilding. Insurers have failed to address this significant issue through any efforts of their own. Some consumers have found themselves uninsured by hundreds and thousands of dollars.
The bill still provides survivors the option to combine some coverages within their homeowner policy to help offset some of the underinsured amount in their home, but only in a limited fashion after significant narrowing at the hands of much of the insurance industry. Consumers only qualify for this provision if they meet three tests: 1) It is following a declared disaster; 2) They suffer a total loss; 3) They are underinsured in their primary dwelling or Coverage A.
SB 894 also provides homeowners suffering a total loss from a fire two years of renewal offers, instead of the current one year of renewal. This provision reflects the reality that it takes most survivors more time than currently permitted to rebuild or replace their property. This provision of the bill would have applied retroactively to July 1, 2017 to help 2017 fire survivors; however, many insurance companies insisted SB 894 not help 2017 or 2018 wildfire survivors and they succeeded in getting the Assembly Insurance Committee to remove that provision.
"Ultimately, SB 894 makes important improvements that will help people rebuild their homes and help communities recover," Senator Dodd said. "While we fought for even greater protections for victims who've had to struggle with their insurers, this bill will help consumers going forward. I will continue fighting for reforms to stop insurance companies from stacking the deck against policyholders."
After losing a home or business in a fire resulting in a declared state of emergency, current law provides a policyholder at least two years to rebuild their property and receive the full replacement cost coverage they paid for. However, experience shows that two years is often insufficient time for families to rebuild the insured property. AB 1772 (Aguiar-Curry) extends the amount of time a home or business owner has to rebuild an insured property from two to three years after a declared wildfire emergency and receive the full replacement costs to which they are entitled.
The 2017 fires also revealed that some insurers were withholding the additional Extended Replacement Cost coverage purchased by policyholders unless the policyholder actually rebuilt on the same lot. This is against the law. In the event of a total loss, AB 1800 (Levine) would clarify the current law that an insurer must pay out the full extended replacement cost benefit covered under the provisions of a plan, regardless whether the policyholder chooses to rebuild at the same location, rebuild at a new location, or purchase an already built home.
AB 1875 (Wood) addresses confusion surrounding extended replacement cost coverage (ERC), which allows property owners to purchase limits above the estimated cost to replace their home. However, ERC limits can vary dramatically and many consumers are never provided these options by insurers nor are they told how the coverage options, would impact their premiums. AB 1875 would require an insurer who does not provide at least 50 percent ERC to help direct the consumer to an insurer that might. The bill also includes a provision creating a home insurance finder to help consumers locate possible residential property insurance options.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.