California Considers New Laws For Disaster Insurance Claims

New laws to make insurance claims easier after fire disasters are being debated by the Legislature.  We explore these proposals in this article.

Senator Mike McGuire, D-Healdsburg authored SB 897 which would require insurers to offer policyholders 80% of their personal property coverage in a declared state of emergency.  The bill makes clear sense from both sides of the aisle.  It’s enough money to help the policyholder get back on their feet, and so much that they may not bother to go through the arduous itemization process to claim the rest.  

Senator Bill Dodd, D-Napa introduced SB 894, designed to allow policyholders to apply unused limits from one coverage to make up for insufficiencies in another.  For example, a policyholder whose dwelling limits are too low to purchase a replacement house can apply unused additional living expenses limits for that purpose.  Insurance companies should welcome this aspect of the bill since it has a significant chance of reducing underinsurance lawsuits.  However, the bill also requires insurers to continuing renewing homeowner policies for two years after a disaster, compared to one year under current law.  

Assembly Members Marc Levine and Jim Wood, both representing Northern California districts impacted by the fires, have introduced AB 1797, which builds on C.C.R. section 2695.180 et seq.  That regulation states that although insurers and agents do not have to provide replacement cost estimates when selling policies, if they do, they must consider a laundry list of important factors.  AB 1797seeks to make it mandatory for insurers to provide such an estimate when selling or renewing a policy.  The bill states that insurance companies that follow the regulations will be immune from underinsurance suits.  

Other proposed changes include extending the time limit for additional living expenses in declared states of emergency to 36 months (AB 1722) and making the law clear that insurers cannot deny extended replacement cost coverage for replacing in new locations (AB1800).

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