On Friday, October 2, Insurance Commissioner Ricardo Lara of the California Department of Insurance („Department“) published a Notice addressed to and making several „requests,“ detailed below, of both admitted and nonadmitted residential property insurers. We note that the Department repeatedly used the word „request,“ rather than „require,“ in the Notice.
First, residential property insurers are asked to provide relief to policyholders suffering a total loss in the recent California wildfires by waiving the requirement to complete a personal property inventory to collect all or a significant portion of their personal property (or contents) policy coverage limits. The Department has issued similar requests in years past.
The Notice also references two pieces of legislation, Senate Bill 872 and Assembly Bill 3012, signed into law by California Governor Gavin Newsom last week, that provide, among other things, protections for policyholders who suffered a covered total loss resulting from a wildfire state of emergency. Senate Bill 872 imposes certain obligations upon residential property insurers for the payment of additional living expenses, as well as the calculation of replacement cost value in the event of a total loss of an insured structure. Senate Bill 872 also requires insurers to offer a 60-day grace period for payment of premiums for policies on property located within an area defined in a declared state of emergency. Assembly Bill 3012 will require residential property insurers to offer a payment under their contents insurance in an amount no less than 30% of the policy limit applicable to the covered dwelling structure, up to a maximum of USD $250,000, without requiring the policyholder to file an itemized personal property inventory. Although this provision in AB 3012 will not become effective until July 1 of next year, in this Notice the commissioner is requesting that all residential property insurers, at a minimum, offer current wildfire claimants this same option now.
The Commissioner recognized that many residential property insurers have already agreed to the Voluntary and Expedited Claims Handling Procedures that he requested in a Notice issued on August 26, 2020 (which called upon insurers to provide leniency in the form of a 60-day billing grace period, advance payment of at least 4 months‘ additional living expenses, initial contents advance payment of at least 25% of policy limits for a total loss and other measures). After applauding those insurers that had provided such relief to policyholders, the commissioner requested that all other insurers provide a similar accommodation or, at a minimum, the amount that will be required to be paid once Assembly Bill 3012 goes into effect. Commissioner Lara noted that this request applies to all policyholder homes that suffered a total loss, unless an insurer has reason to believe a home was not furnished.
The Commissioner’s final request is for all residential property insurers to advise the Department by October 23, 2020, of the following:
Whether they will comply with the requests in this Notice; and
What percentage of total contents coverage they will provide without requiring a detailed personal property inventory.