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AB-188 Fire insurance: valuation of loss.(2019-2020)

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Date Published: 07/09/2019 09:00 PM
AB188:v96#DOCUMENT

Assembly Bill No. 188
CHAPTER 59

An act to amend Section 2051 of the Insurance Code, relating to insurance.

[ Approved by Governor  July 09, 2019. Filed with Secretary of State  July 09, 2019. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 188, Daly. Fire insurance: valuation of loss.
Existing law generally regulates classes of insurance, including fire insurance. Existing law provides that the measure of indemnity in fire insurance under an open policy is the expense to replace the thing lost or injured in its condition at the time of the injury, with the expense computed as of the start of the fire. Existing law also provides that under an open policy that requires payment of actual cash value, the measure of the actual cash value recovery is the policy limit or the fair market value of the structure, whichever is less, in the case of a total loss to the structure. In the case of a partial loss to the structure or loss to its contents, the actual cash value recovery under existing law is 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, in the case of a partial loss to the structure, a deduction for physical depreciation 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 delete the provisions regarding the actual cash value of the claim of total loss to the structure and would instead require that the actual cash value of the claim, for either a total or partial loss to the structure or its contents, 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. The bill would extend the restrictions that apply to a deduction for physical depreciation to a total loss to a structure.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

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


SECTION 1.

 Section 2051 of the Insurance Code is amended to read:

2051.
 (a) Under an open policy, the measure of indemnity in fire insurance is the expense to the insured of replacing the thing lost or injured in its condition at the time of the injury, the expense being computed as of the time of the commencement of the fire.
(b) Under an open policy that requires payment of actual cash value, the measure of the actual cash value recovery, in whole or partial settlement of the claim, for either a total or partial loss to the structure or its contents, shall 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. A deduction for physical depreciation shall apply only to components of a structure that are normally subject to repair and replacement during the useful life of that structure.