Department of Insurance Bulletin Provides Notice to Insurance Companies and Useful Information for Wildfire Victims

Last month, the California Department of Insurance issued a notice to insurance companies, insurance agents, and public adjusters regarding the recent wildfires in the state. Although the notice is directed to insurance companies, agents, and adjusters, it provides useful information for policyholders affected by the wildfires. According to the Department of Insurance press release discussing the notice, Insurance Commissioner Dave Jones directed the Department to issue the notice following reports that insurance adjusters were giving wildfire victims incorrect information about their property insurance claims.

The notice, dated November 17, 2017, emphasizes that although Commissioner Jones’ emergency declaration in October authorizes insurers to use out-of-state adjusters to adjust claims in the wildfire areas, all claims adjusters (whether licensed in California or not) must be properly trained on the California Unfair Practices Act, Fair Claims Settlement Practices Regulations, and all other laws relating to property insurance claims handling. The notice points out that some laws and regulations are affected by the “state of emergency” declared by Governor Jerry Brown regarding the fires. For instance, because of the declared state of emergency, the time period for policyholders to complete repairs and collect the replacement cost coverage under their policy can be no less than 24 months, despite any policy language to the contrary. See Ins. Code § 2051.5(b)(1).

The notice listed important information for adjusters, as well as policyholders affected by the wildfires, including:

• Because of the declared state of emergency, coverage for additional living expenses (ALE) must be provided for at least 24 months, subject to other policy provisions, including the ALE coverage limits under the policy [Ins. Code § 2051.5(b)(2)]
• In the event of a total loss of the insured structure, the insurer may not limit or deny payment of the replacement cost in the event the insured decides to rebuild or replace the structure at a different location [Ins. Code § 2051.5(c)]
• If, within a six-month period, an insurer assigns three or more adjusters to be primarily responsible for handling a claim, the insurer must provide the insured with a written status report that includes various information regarding the disposition of the claim [citing Ins. Code § 2071]
• An appraisal may be requested by either the insured or the insurance company but may not be compelled [citing Ins. Code § 2071]
• In most instances, an insurer must provide a free copy of the insurance policy to the policyholder within thirty days of the insurer’s receipt of a request from the policyholder [Ins. Code § 2084]
• With respect to most homeowner’s policies, an insurer may not cancel coverage while the primary insured structure is being rebuilt, except in certain circumstances, such as when the policyholder fails to pay the premiums or has committed fraud in connection with the insurance application [Ins. Code § 675.1(b)]
• Also with respect to most homeowner’s policies, if the insured structure is a total loss and the loss is not due to the negligence of the policyholder, the insurance company must offer to renew the policy, subject to certain parameters [Ins. Code § 675.1(c)]

A copy of the Department of Insurance notice, as well as other useful information, is available on the California Department of Insurance website, www.insurance.ca.gov.