2019 Changes to Home Insurance in California

Understanding Coverage A

The California Department of Insurance describes Coverage A – Dwelling as providing
“major property coverage that protects your house and attached structures if it is
damaged by a covered peril”. If damage is caused by one of the following events, the
peril is typically covered by a homeowners policy:

 Fire or lighting  Vandalism & malicious mischief
 Windstorm or hail  Theft
 Explosion  Volcanic eruption
 Riot or civil commotion  Falling objects
 Aircraft  Weight of ice, snow, sleet
 Vehicles  Sudden and accidental water damage
 Smoke  Breakage of glass

(Flood & Earthquake damage is excluded on un-endorsed Homeowners policies)

A number of laws affecting property insurance claims were passed during the California
2018 legislative sessions. These laws became effective either during the legislative
session or as of January 1, 2019. The most significant changes are as follows:

SB 894, adding Insurance Code § 10103.7:
Policyholders who suffer a total loss relating to a state of emergency and who are
under-insured may combine the dwelling and other structures limits and they are entitled
to payment of full replacement cost without a requirement to actually replace.

SB 894 and AB 1772, both amending Insurance Code § 2051.5:
Along with the ability for the under-insured to combine dwelling and structure, SB 894
extended the replacement period. For non-state of emergency loss, the minimum
replacement time frame is 12 months, while state-of-emergency loss is now 36 months
(One or more extensions of six months for good cause will be provided, if the
policyholder acts in good faith and with reasonable diligence but encounters delays in
the reconstruction process that are beyond their control).

AB 2594, amending Insurance Code § 2071:
“The one-year suit time period clause in the statutory fire policy is extended to two years
when the loss “is related to a state of emergency.”

Finally, CIC § 10103.4 (and corresponding regulation 10 CCR § 2695.183) places the
onus for insurance-to-value (ITV) criteria on the insurance carrier in lieu of the insured.

What does this all mean to you? – As informed insurance brokers we stand ready to fight for you to make sure you are treated fairly and paid properly when you have a serious claim. It’s simply what we do and we wear it on our name proudly, Total Client Satisfaction Insurance Brokers “Insurance the way it’s meant to be!

Give us a call, or chat right on this website!

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