(Sacramento, CA – Insurance News 360) – On June 28, the California Department of Insurance announced that four bills sponsored by Insurance Commissioner Dave Jones had passed the state’s Senate Insurance Committee.
AB 1875 clarifies issues regarding extended replacement coverage (ERC) for wildfire survivors. ERC is offered by most insurance companies; it allows property owners to purchase coverage above replacement cost policy limits, typically based upon the insurance company’s estimated cost of replacement. ERC limits can vary dramatically, from 20 percent to 50, 75, even 100 percent. AB 1875 would require an insurer who does not provide at least 50 percent ERC to help direct the consumer to an insurer that does. This will give consumers reasonable options against underinsurance.
AB 2594 gives a consumer the right to sue their insurer after a declared disaster for up to 24 months, given that it now takes longer to rebuild after California’s significant fires in 2015 and 2017. Current law provides a policy holder at least two years to rebuild their property and reecieve replacement cost coverage they paid for, after losing a home or business due to fire. However, two years is often insufficient time for families to rebuild the insured property. Some insurers have refused consumer claims, citing the lack of a lawsuit within the 12-month timeframe.
AB 2634 requires insurers to disclose upcoming increases to the cost of administrative expenses charges or cost of insurance charges in a flexible premium life insurance policy. The notification is meant to allow the consumer to make an informed decision about whether they should pay the increase or not. Some increases from insurance companies have been as high as 67 percent of the previous amount the consumer had been paying. This bill improves the quantity and quality of information about how premium increases will affect premium increases on their life insurance policies. This bill would require an insurer to inform the policy owner of a flexible premium life insurance policy 90 days before the policy is subject to an increase in the cost of insurance charge or administrative expense charge and require the notice to include specified information about the increase.
Finally, AB 2802 strengthens consumer protections and addresses critical issues like
wildfire recovery, life insurance and child support. It creates the Insurance Payment Intercept Program to require insurance companies to participate in a program matching individuals behind on child support payments with their insurance claims to verify any insurance payments are used to pay past-due child support. It is expected to lead to payments in the tens of millions of dollars to parents across the state. In California alone, the total amount of unpaid child support is nearly $18 billion and over $116 billion in unpaid child support is due to families across the country.
“As Insurance Commissioner, my main priority is protecting California consumers while ensuring a healthy and vibrant insurance market,” said Commissioner Jones. “These bills strengthen laws to protect wildfire survivors and resolve other critical issues throughout the state. I thank Assemblymembers Wood, Friedman and Chau for authoring these consumer protection bills that will improve the lives of many Californians.”
Source: California Department of Insurance.