Calif. State Sen. Speier Unveils Homeowner’s Reform Bill

At a recent Senate Insurance Committee hearing California State Sen. Jackie Speier soaked up the stories of dozens of burned-out homeowners as they detailed the many ways the insurance system failed them after San Diego’s 2003 wildfires. Last week, Speier introduced one of the first bills of the 2005 legislative session—homeowner’s insurance reform—when the legislature convened to swear in its new members.

“This legislation is born from the moving testimony of fire survivors at our November 15 San Diego hearing and another last year in San Bernardino,” said Speier (D-San Francisco/San Mateo). “Losing your home is bad enough. To learn that there isn’t enough money to reconstruct it—especially in cases when coverage is based on your insurance company’s recommendation—compounds the tragedy. We must make the claims-paying process simpler and fairer.”

Specifically, the bill says:

•No personal property inventory would be required from a homeowner when the home is a total loss.

•Policy limits for personal property would be paid if a total loss is declared.

•In cases of a “state of emergency” as already defined by law, loss of use/additional living expense funds would be offered for at least 24 months, and debris removal performed by any person/entity at no charge or at a rate below fair market value would be reimbursed to the policyholder at fair market value, subject to policy limits.

•No insurer, agent or broker may use any computer software product marketed or intended to be used as an aid in discussions with insureds, or applicants for insurance, regarding the estimated cost of replacing, in whole or in part, a structure under a homeowners policy unless the product has been approved for use by the state Insurance Commissioner. The commissioner must develop criteria for approval.

•The commissioner must adopt a curriculum to educate agents and brokers in the proper methods of estimating the replacement value of a structure and of making recommendations to insureds. Within 18 months of when the commissioner adopts the curriculum, an agent or broker must pass an exam on the subject. Failure to pass the exam would result in suspension of the agent or broker’s license to sell insurance and the person would have to pass a new exam in order to be able to continue to sell insurance. Any other person who prepares estimates (typically office personnel) would also be required to pass an exam on this topic developed by the commissioner.