Insurance Commissioner, Ricardo Lara, recently announced new insurance protections with increased payouts and evacuation benefits for wildfire survivors. These larger payments, more generous, mandated benefits and less “red tape” will help people recover more quickly from the devastating loss of losing their home to wildfire.
These increased protections are the result of two Commissioner-sponsored bills passed and signed into law by Governor Newsom: Senate Bill 872, authored by Senator Bill Dodd, and AB 2756, authored by now-Senator Monique Limón and Assembly Member Richard Bloom.
Below are the summaries of the each bills new protections, as stated in Commissioner Lara’s recent press release.
Senate Bill 872 ensures that:
- Insurance companies can no longer deduct the land value when paying an insurance claim if a wildfire survivor chooses to relocate rather than rebuild their home at the same location — which will lead to higher payouts for consumers. After recent major wildfires, some insurance companies refused to include the value of land when paying a total loss claim, reducing the total payout by tens to hundreds of thousands of dollars. This change gives homeowners more choices in whether to rebuild or relocate their new home.
- Residents under mandatory evacuation for wildfire, even if they suffer no damage to their home, will receive additional living expenses for at least two weeks, with extensions for good cause.
- Insurance companies cannot restrict additional living expenses if a home is rendered uninhabitable due to a wildfire or other covered peril, even if the damage is not to the property itself. This addresses the problems after recent major fires when insurance companies denied benefits even though damaged power and water lines made homes uninhabitable. An insurance company may provide a reasonable alternative remedy that addresses the property condition, such as a portable generator in the case of downed power lines or a portable water source.
- In cases of a total loss related to a state of emergency, insurance companies must provide an advance payment of no less than four months of additional living expenses if the consumer requests it, with additional benefits due after the advance period upon proper documentation.
- Wildfire survivors do not have to use a company-specific inventory form for lost contents and can include groupings of categories such as clothing, shoes, books, food items, and DVDs rather than having to list individual items.
- Insurance companies must offer a 60-day grace period on payment of policy premiums for properties located within the affected area defined in the declared state of emergency.
And, Assembly Bill 2756 ensures that:
- Insurance companies must inform consumers in writing if the policyholder purchases a policy that does not cover the peril of fire or if the insurance company removes the peril of fire when the policy is renewed — which could leave the policyholder unprotected from a wildfire. Following recent fires, the Department of Insurance heard from consumers who thought they had coverage for fire, only to learn that their insurance did not cover this loss.
- Residential fire policies that provide dwelling structure coverage will be required to include a minimum of 10% of primary dwelling limits as an additional amount available to help consumers rebuild resiliently with upgraded building codes such as fire sprinklers and solar panels.
These new protections are effective now and are great news for Californians. For more information, read Insurance Commissioner, Ricardo Lara’s full press release.
If you come across any insurance companies not complying with the new laws, file a complaint with the California Department of Insurance. You can also call our California Senior Medicare Patrol for such complaints and/or any suspected Medicare fraud at 1-855-613-7080.