California Gov. Arnold Schwarzenegger has signed into law new rules designed to make it easier for understand their choices when purchasing homeowners insurance.
AB2022 will, on July 1, 2011, revise the mandatory language of the California Residential Property Insurance Disclosure to simplify and rearrange the description of types of homeowners insurance coverage, and to include additional information concerning insurance limits. It would also revise and simplify the California Residential Property Insurance Bill of Rights.
The previous law required required that residential property insurance policies do not become effective unless the named insured is provided with a copy of the California Residential Property Insurance Disclosure, which sets forth a description of types of coverage, such as actual cash value coverage, guaranteed replacement cost coverage, and related coverage, as specified. Existing law also required every California Residential Property Insurance Disclosure be accompanied by a California Residential Property Insurance Bill of Rights.
Insurance Commissioner Steve Poizner has been a proponent of the changes. He believes there is misunderstanding of insurance, which after major wildfires, resulted in homeowners being inadequately insured. “Existing disclosures are nearly two decades old, and reflect a market that has changed dramatically,” he said. “Consumers have many difficult choices to make when buying homeowners insurance, but they have to know what those choices are, and have reliable information to base their decision on. AB 2022 and [the] new regulations will give consumers greater confidence on both of those fronts.”
The bill mandates specific language that must be provided to anyone shopping for homeowners insurance, laying out a checklist of the major variables in insurance policies. In addition to this disclosure, the Department of Insurance is also drafting regulations that will help provide more accurate and reliable estimates of what it might cost to completely rebuild a destroyed home. Currently, such estimates are unregulated.
“When I took office, I promised I would address the problem of underinsurance, and I am going to fulfill that promise,” said Poizner.
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