Insurance industry 2, wildfire survivors 0
News: 2018 Press Release
SACRAMENTO, Calif. — Insurance Commissioner Dave Jones fired back at the insurance industry whose tactics have weakened another crucial piece of legislation aimed to strengthen consumer protections for wildfire survivors. Senate Bill 894, authored by Senator Bill Dodd (D-Napa) and sponsored by the department, is the last resort to help 2017 and 2018 wildfire survivors who discovered they were underinsured after losing their home.
Wildfire season already has California ablaze, as multiple wildfires burn throughout the state including the Pawnee Fire, which in four days has already destroyed 22 homes and 13,500 acres. Sadly, this appears to be only the beginning.
"Unfortunately, the insurance industry has chosen yet again to prioritize its insatiable appetite for profit over its own policyholders' who have and continue to suffer after losing everything in the devastating wildfires," said Commissioner Jones. "This common-sense proposal is the last resort for many wildfire survivors. It's a shame that the insurance industry, supposedly responsible for protecting California consumers, has chosen to neglect these survivors and significantly thwart the ability of many to rebuild and recover."
Despite the desperate need of many wildfire survivors to recover and rebuild, insurers pushed to inject into SB 894 a provision that takes a weakened version of a bill by Senator Mike McGuire that insurers previously killed last month. The language forced into SB 894 would be far weaker than current practice to help survivors avoid a dreaded inventory of all their possessions. Many survivors have described this process as a PTSD-like experience which adds insult to injury.
SB 894 is aimed at helping claimants avoid the huge financial burden of being underinsured by tens of thousands or hundreds of thousands of dollars 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.
The bill still provides survivors the option to combine various coverages within their homeowner policy to help offset some of the underinsured amount in their primary dwelling, but only in a limited fashion after narrowing at the hands 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 would have also extended policy renewal protections for survivors retroactively to July 1, 2017 to alleviate the burden on survivors who find it impossible to get new coverage during the planning and rebuilding phase of the recovery. However, the Assembly Insurance Committee insisted SB 894 not help 2017 or 2018 wildfire survivors and removed the retroactivity from this bill. This provision would still apply prospectively and reflects the reality that it takes most survivors more time than currently permitted to rebuild or replace the total loss property. Under the bill, survivors will be able to renew their insurance policy twice, which would cover two years after the loss.
Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.