Existing law provides that a policy of residential property insurance may not be issued or delivered or, under certain circumstances, initially renewed by an insurer unless the named insured is offered coverage for loss or damage caused by an earthquake. The required offer of earthquake coverage is authorized to be made prior to, concurrent with, or within 60 days following the issuance or renewal of a residential property insurance policy and must contain certain disclosure language. Existing law provides that when the insurer, agent, or broker establishes delivery of the disclosure form by obtaining the signature of the applicant or insured, or when an insurer, agent, or broker provides the applicant with the disclosure form and the applicant does not return a signed acknowledgment of receipt within 60 days of the date it was provided, there is a conclusive presumption that the insurer, agent, or broker has complied with the disclosure requirements.

This bill would delete the above presumption.

Existing law requires that if an offer of earthquake coverage is accepted, the coverage continues at the applicable rates and conditions for the policy term, provided the policy of residential property insurance is not terminated by the named insured or insurer. At any renewal, an insurer is authorized to modify the terms and conditions of an existing earthquake insurance policy, rider, or endorsement as long as the modified terms and conditions provide the minimum insurance coverages required and the insurer provides the insured with a stand-alone document disclosing the changes, as specified.

This bill would, among other things, instead require an insurer modifying the terms and conditions of an existing earthquake insurance policy, rider, or endorsement at renewal to provide the insured with the stand-alone document disclosing the changes when the modification of the terms and conditions reduces or substantially differs from the coverage previously provided to the insured.

Existing law provides that proof of mailing of the offer by first-class mail addressed to a named insured or applicant at the mailing address shown on the policy or application, or proof that the offer of coverage was sent to the named insured or applicant by electronic transmission, creates a conclusive presumption that the offer was made.

This bill would, among other things, add that if an offer, disclosure, or document required to be delivered is not mailed, but hand delivered to the insured, the insured’s signed receipt would create a conclusive presumption that the offer was provided or that the disclosure or document was delivered as required.

This bill would also make technical and clarifying changes.

This bill would provide that specified provisions of the act would only become operative if AB 2591 is enacted and takes effect on or before January 1, 2017.