California Insurance Commissioner Dave Jones is irked that the insurance industry has worked to alter legislation he supports that he says is aimed at strengthening consumer protections for wildfire survivors.
Senate Bill 894, authored by Senator Bill Dodd, D-Napa, is designed to help 2017 and 2018 wildfire survivors who discovered they were underinsured after losing their home.
The California Assembly Insurance Committee approved the bill Wednesday to reform insurance rules in the aftermath of natural disasters, however committee members omitted language that Jones says would have benefited those affected by last year’s wildfires.
The bill as originally worded would enable insureds to combine policies for different coverage areas to pay for reconstruction of their homes.
It still provides survivors the option to combine various coverages within their homeowner policy to help offset some of the underinsured amount in their primary dwelling, but under limited circumstances.
The language added to SB 894 before it passed committee would be far weaker than current practice to help survivors, according to Jones.
Consumers only qualify for this provision if they meet three tests: 1) It is following a declared disaster; 2) They suffer a total loss; 3) They are underinsured in their primary dwelling or Coverage A.
“Unfortunately, the insurance industry has chosen yet again to prioritize its insatiable appetite for profit over its own policyholders’ who have and continue to suffer after losing everything in the devastating wildfires,” Jones said in a statement. “This common-sense proposal is the last resort for many wildfire survivors. It’s a shame that the insurance industry, supposedly responsible for protecting California consumers, has chosen to neglect these survivors and significantly thwart the ability of many to rebuild and recover.”
SB 894 would have also extended policy renewal protections for survivors retroactively to July 1, 2017 to alleviate the need for survivors who find it difficult to get new coverage during the planning and rebuilding phase of the recovery, however the Assembly Insurance Committee removed the retroactivity language from the bill.
Under the bill, survivors will be able to renew their insurance policy twice, which would cover two years after the loss.
Insurer groups working to alter the bills included the Property Casualty Insurers Association of America, Personal Insurance Federation of California, National Association of Mutual Insurance Companies and American Insurance Association.
They argued that the provision to combine policies for different coverage areas could require, for example, insurers to use the contents coverage limits to add on top of the rebuilding cost of the home.
Policies and limits are underwritten to cover specific losses, so that provision on limits or the retroactive provisions, could mean insurers would see greater losses than they planned for, they argued.
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