Personal Insurance Foundation of California Opposed to Most of Homeowners Bill of Rights Package

May 5, 2004

The Personal Insurance Federation of California (PIFC) announced opposition to three of the four measures that make up the “Homeowners Bill of Rights” (HOBOR) package that will be heard in the California Assembly and Senate Insurance Committees on May 5.

PIFC, an insurance trade association comprised of insurance companies that write approximately 47 percent of the homeowners insurance in the state, said the legislation sponsored by the California Department of Insurance (CDI) will increase costs and reduce policy choices to homeowners throughout the state, and if passed, would do nothing to help Southern California fire victims.

“The Southern California fires of October/November, 2003 destroyed more than 3,500 homes, and have become the worst fires in recorded insurance history. Insurers have been on the scene for six months working expeditiously to get policyholders who suffered damage or lost their homes back on their feet,” noted Dan Dunmoyer, president of PIFC.

Two of the HOBOR bills will be heard in the Assembly Insurance Committee at 9:00 a.m., including AB 2962 (Pavley). PIFC opposes the bill, stating that it would partially turn actual cash value policies into replacement cost policies, thus increasing insurance cost and reducing insurance policy choices available to all homeowners. The other bill being discussed in the morning is AB 2199 (Kehoe). PIFC is reportedly neutral on this bill.

The other two HOBOR bills will be heard in the Senate Insurance Committee at 1:30 p.m. are SB 1474 (Escutia) and SB 1855 (Alpert). PIFC is opposed to SB 1474, stating that it would allow all homeowner policyholders the right to renewal and no increase in premiums unless they have three or more claims in three years. PIFC claims that it will add costs to a super-majority of policyholders who have one or fewer claims and that the measure takes away underwriting discretion of the insurers which could lead to promotion of fraudulent practices and higher costs to policyholders who do not have a claim every year.

PIFC is also opposed to SB 1855, claiming that it would add new disclosures to already existing disclosure requirements which may create confusion for policyholders and will certainly increase costs.

“Today, fires are raging again in the San Diego area, and PIFC does not want CDI’s inconsistent public messages about the fires to continue as these comments may confuse policyholders and, in some instances, delay the claims process,” Dunmoyer said.

Insurance companies are working with builders in the fire areas to create efficient ways to get a group of homeowners together to have their homes built by the same builder in order to save dollars, thereby getting the maximum out of their claims dollars, according to PIFC.

“PIFC and its member companies are prepared to work with the CDI and all interested parties to help policyholders get back on their feet as quickly as possible,” Dunmoyer concluded.

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