Insurance

Homeowners insurance changes in 2018

InsuranceCalifornia property insurance laws in California are changing from 2018 onward and four laws were recently passed that should help California homeowners, both to find homeowners insurance, and to get full use of their insurance when they most need it.

AB 1875: CA Home Insurance Finder

AB 1875 required the California Department of Insurance to establish the California Home Insurance Finder, an online tool for homeowners unable to find insurance through normal means to connect with potential insurers. [Calif. Insurance Code §10095.7(a)]

Each year, the Department will survey insurance agents and brokers licensed in California for inclusion in the Finder tool. [Ins C §10095.7(a)(1)]

The Department has until July 1, 2020 to update the Finder with the names, addresses, phone numbers and websites of the licensed insurance brokers and agents to be included. The brokers will be searchable on the Finder by zip code and by languages spoken. This information will need to be updated annually. [Ins C §10095.7(a)(2)]

Beginning July 1, 2020, insurers need to provide information about the Finder to any homeowner applicants who are denied insurance coverage in California. [Ins C §10095.7(b)]

Further, to make all homeowners aware of the Finder, the Department will publicize the tool on social media and by other means in English and other commonly used languages in California. [Ins C §10095.7(a)(3)]

SB 894: Policy continuance after a disaster

SB 894 increases the length of time a property insurer is required to continue a policy following the total loss of a property in a disaster or state of emergency.

Previously, when the total loss of an insured property was due to a disaster (rather than the homeowner’s negligence) the insurer was required to renew the homeowners insurance policy at least once. Going forward, under these circumstances an insurer is required to offer to renew the policy for the longer of at least:

  • the next two annual renewal periods; or
  • 24 months. [Ins C 675.1(a)(3); (c)]

Further, when the loss is related to a declared state of emergency in California, the policy needs to cover additional living expenses for no less than 24 months from the date of the loss. However, when a delay in reconstruction occurs beyond the homeowner’s control, the insurer is required to extend the coverage for up to 12 additional months for a total of 36 months total. On top of this initial extension, insurers are to provide additional six-month extensions when unavoidable construction delays occur, such as due to a lack of available labor or materials. [Ins C §2051.5(b)(2)]

AB 1797: Replacement cost coverage

AB 1797 will require property insurance providers that offer replacement cost coverage to provide the owner of residential property with an estimate of the cost to replace the property, including any extra costs the insurer will pay to bring the property up to existing codes or regulations. The insurer will need to give this updated information every other year at the time of renewal.

Insurers will be exempt from this requirement if within the previous two years the owner has increased their insurance coverage to be higher than the previous limits they had selected.

This bill will take effect on July 1, 2019.

AB 1772: Declared state of emergency

When a homeowner makes a claim for the destruction or loss of their property and they are insured for the full replacement cost, they have a limited amount of time to collect on the full insured amount. The insurer pays for the repairs or replacement until the property is fully repaired or replaced, which sometimes may exceed the time limit.

When the loss is related to a declared state of emergency, the time limit to collect is currently 24 months from the first payment made by the insurance company to fix or replace the property. AB 1772 will increase this limit to 36 months for the date of the first insurance payment.

Insurance policy forms will need to be updated to reflect this change by July 1, 2019. However, policy changes take effect immediately.

Credit: Carrie B Reyes, First Tuesday, Dec 3, 2018

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