Wildfire Insurance Bill Signed by California Governor

August 28, 2018

  • August 29, 2018 at 1:58 pm
    Reality Check says:
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    We had this problem over 10 years ago and presented the solution, but the DOI and the legislature turned a deaf ear and blind eye to it. Carriers and agents still engage in the practice of underinsuring homes. And consumers don’t read their mail.

    Too often we are told by a client, so what if AAA is only giving me $200K of coverage for my home (when a CoreLogic calculation shows the RC to be $285K), the agent said I actually have 150% of that or $300K. Manipulating coverage manipulates rate!

    Rates for dwelling coverage which have to be approved (due to Prostitution 103) by the DOI may be too high to be competitive or too low or profitable. Carriers can then use the Replacement Cost Tool of their liking to manipulate the amount of CVG A for the Insured Dwelling. This in turn lowers or raises the premium for the particular risk while underinsuring or over insuring it. 65% of homes being underinsured is the DOI’s fault for not requiring a single source RCT calculator to be used by carriers and consumers thereby insuring accurate estimates and resulting coverage A limits.

    If a carrier chooses to use a lower than standard RCE, they should be required to include the old “Guaranteed Replacement Cost Without Regard to Policy Limit” coverage.

  • August 29, 2018 at 5:22 pm
    Jstlsle says:
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    Agree with Reality Check; carriers use their own RC tool and none of the carriers come out with the same end replacement value, this is a huge problem. However, when we review our policyholders cost guide and if it indicated that coverage A should be increased the client is ok with it until they receive the bill for the additional premium then it is another story….this is a constant problem unfortunately it is only looked at when a catastrophic even takes place.

  • August 30, 2018 at 11:43 am
    truevalues says:
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    Reality Check is spot on, selling price point rather than true coverage is the problem. Manipulating the data points to hit predetermined coverage and costs. However, having a single source RCT calculator determined by politicians is not the answer.Who is to say that single tool is the only tool that is accurate? What if it is not? Then the problem is multiplied many times over.

    The answer is better public records to provide more accurate replacement cost data and the DOI to require full coverage. Carriers can compete on rates and coverage specifics but moving the coverage A number to manipulate the premium leads to disaster at the time of loss.

  • August 30, 2018 at 1:21 pm
    retired risk manager says:
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    The whole scenario in the wildfire areas violates the concept of insurance. Insurance is for transferring the risk when a claim MAY happen. When the chance of loss nears 100%, the risk is uninsurable. But how to value if that concept is ignored? Just like vintage collectible cars. The policy is written on an agreed amount, with substantial deductibles and the policy holder must make repairs prior to payment by the carrier. A reimbursement policy, not pay on behalf. Some things are just not meant to be insured.

    • December 2, 2018 at 7:02 pm
      leslie t higger says:
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      it would seem to me your uninsurable position would be fine if insurance companies refused to sell it.. but they do. likewise lenders would have a real problem if say a home could not be insured. ie property would not be bought or sold.



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