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AB-2402 Residential property insurance.(2019-2020)

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Date Published: 02/18/2020 09:00 PM
AB2402:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 2402


Introduced by Committee on Insurance (Assembly Members Daly (Chair), Mayes (Vice Chair), Berman, Bigelow, Calderon, Chen, Cooley, Cooper, Frazier, Gipson, Kamlager, Voepel, and Wood)

February 18, 2020


An act to amend Section 10102 of, and to repeal Section 10105 of, the Insurance Code, relating to insurance.


LEGISLATIVE COUNSEL'S DIGEST


AB 2402, as introduced, Committee on Insurance. Residential property insurance.
Existing law requires a named insured on a residential property insurance policy be provided with a copy of the California Residential Property Insurance Disclosure, which sets forth a description of certain types of insurance coverage, such as actual cash value coverage and guaranteed replacement cost coverage. Under an open policy that requires payment of actual cash value, existing law requires the measure of the actual cash value recovery for either a total or partial loss to the structure or its contents to be the amount it would cost the insured to repair, rebuild, or replace the thing lost or injured less a fair and reasonable deduction for physical depreciation based upon its condition at the time of the injury or the policy limit, whichever is less. Under existing law, a deduction for physical depreciation under actual cash value coverage applies only to components of a structure that are normally subject to repair and replacement during the useful life of that structure.
This bill would amend the description of actual cash value coverage on the California Residential Property Insurance Disclosure to conform to the existing statutory requirements of an open policy that requires payment of actual cash value. The bill would also make nonsubstantive, technical changes.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 10102 of the Insurance Code is amended to read:

10102.
 (a) The disclosure required by Section 10101 shall be in no less than 10-point typeface and shall be provided prior to or concurrent with, the application for a policy of residential property insurance. In the event that an application is made by telephone, an insurer that mails a copy of the disclosure within three business days shall be in compliance with this section. For policies issued on or after July 1, 1993, the agent or insurer shall obtain the applicant’s signature acknowledging receipt of the disclosure form within 60 days of the date of the application. When the insurer or agent establishes delivery of the disclosure form by obtaining the signature of the applicant or insured, or when an insurer or agent 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 shall be a conclusive presumption that the insurer or agent has complied with the disclosure requirement of this chapter. The insurer or agent shall have the burden of demonstrating in accordance with California Rules of Evidence that the disclosure was provided to the applicant or insured. A signature shall not be required at the time of renewal.
If the disclosure is mailed to the named insured or applicant, it shall be mailed to the mailing address shown on the policy of residential property insurance or to the address requested by the applicant. First-class mail shall be deemed adequate for proof of mailing. The insurer shall have the burden of demonstrating in accordance with California Rules of Evidence that the disclosure was mailed to the applicant or insured.
The disclosure shall contain the following language:
PRINTER PLEASE NOTE: TIP-IN MATERIAL TO BE INSERTED
(b) The agent or insurer shall indicate on the disclosure form which coverages the applicant or insured has selected or purchased.
(c) The disclosure statement may contain additional provisions not conflicting with, annulling, or detracting from the foregoing.
(d) Following the issuance of the policy of residential property insurance, the insurer shall provide the disclosure statement to the insured on an every-other-year basis at the time of renewal. The disclosure required by this section may be transmitted with the material required by Section 10086.1.
(e) No policy of residential property insurance may be initially issued on and after January 1, 1993, as guaranteed replacement cost coverage if it contains any maximum limitation of coverage based on any set dollar limits, percentage amounts, construction cost limits, indexing, or any other preset maximum limitation for covered damage to the insured dwelling. The limitations referred to in this section are solely applicable to dwelling structure coverages. Endorsements covering additional risks to the insurer’s dwelling structure coverage may have internal limits as long as those endorsements are not called guaranteed replacement cost coverage.
(f) On and after July 1, 1993, no policy of residential property insurance may be renewed as guaranteed replacement cost coverage if it contains any maximum limitation of coverage based on any set dollar limits, percentage amounts, construction cost limits, indexing, or any other preset maximum limitation for covered damage to the insured dwelling. The limitations referred to in this section are solely applicable to dwelling structure coverages. Endorsements covering additional risks to the insurer’s dwelling structure coverage may have internal limits as long as those endorsements are not called guaranteed replacement cost coverage.
(g) Coverage provided for building code upgrades by a policy of residential property insurance shall be applicable to building codes, ordinances, standards, or laws only to the extent that those codes, ordinances, standards, or laws do not impose stricter standards on the property on the basis of the level of insurance coverage applicable to the property.
(h) The disclosure required by Section 10101 shall also be provided to the mortgagor in the event that a policy is forced placed by an insurer at the request of a mortgagee. In those cases, neither the insurer nor the mortgagee shall be required to obtain a signature from the mortgagor. No disclosure shall be required to be provided with respect to blanket policies issued to a mortgagee, and designed to provide interim coverage for losses occurring prior to the mortgagee obtaining knowledge of the lapse of the policy and prior to placement of a policy on behalf of the mortgagor.
(i) A disclosure required by Section 10101 that is provided on and after January 1, 2020, shall include any fire safety-related discounts offered by the insurer.

SEC. 2.

 Section 10105 of the Insurance Code is repealed.
10105.

Nothing in this chapter is intended to expand, contract, modify, or otherwise affect the coverage provided under any policy of residential property insurance issued and in effect prior to July 1, 1993. The provisions of this chapter shall apply to those policies upon the first renewal of those policies following January 1, 1994.