Residential property insurance: cancellations and nonrenewals.

Plain English Breakdown

The official source material does not provide specific details on how insurers will implement these policy renewals and cancellations, leaving this aspect open to interpretation.

Residential Property Insurance Protection

AB-2038 requires insurance companies to renew policies for at least three years after total losses due to disasters and extends the period during which insurers cannot cancel or refuse to renew policies in areas affected by wildfires.

What This Bill Does

• Requires an insurer to renew a residential property insurance policy for at least three annual renewal periods, but no less than 36 months of coverage from the date of loss if there is a total loss due to a disaster.
• Prohibits insurers from cancelling or refusing to renew policies for properties within or near fire-affected areas for two years after a state of emergency declaration.

Who It Names or Affects

• People who have residential property insurance and experience total losses due to disasters.
• Residents whose properties are located in or near areas affected by wildfires during a state of emergency.

Terms To Know

Total loss

When an insured structure is completely destroyed or damaged beyond repair, resulting in the need for full replacement or reconstruction.

Fire perimeter

The boundary around a wildfire that defines the area affected by the fire and its immediate surroundings.

Limits and Unknowns

• Does not specify how insurers will be required to implement these changes.
• Technical changes to crop insurance adjuster licensing requirements are nonsubstantive, meaning they do not change the core functions or responsibilities of the license.

Official Summary Text

AB 2038, as amended, Harabedian.
Insurance: crop insurance adjuster.
Residential property insurance: cancellations and nonrenewals.
Existing law generally regulates classes of insurance, including residential property insurance. Existing law requires an insurer, in the case of a total loss to the primary insured structure under a policy of residential property insurance, for at least the next two annual renewal periods, but no less than 24 months of coverage from the date of the loss, to renew the policy under certain circumstances, including that the total loss to the primary insured structure was caused by a disaster. Existing law prohibits an insurer from canceling or refusing to renew a policy of residential property insurance for a property located in a ZIP Code within or adjacent to a fire perimeter for one year after the declaration of a state of emergency, if the cancellation or nonrenewal is based solely on the fact that the
insured structure is located in an area in which a wildfire has occurred.
This bill would instead require an insurer to renew the policy of residential property insurance, under the above-described circumstances, for at least the next three annual renewal periods, but no less than 36 months of coverage from the date of the loss. The bill would also prohibit an insurer from canceling or refusing to renew a policy of residential property insurance for a property located in a ZIP Code within or adjacent to a fire perimeter for two years after the declaration of a state of emergency.
Existing law requires the Insurance Commissioner, upon application, to issue a crop insurance adjuster license to a person who has met specified requirements, including that they have satisfactorily completed the loss adjustment training curriculum and competency testing required by the Federal Crop Insurance Corporation Standard Reinsurance Agreement.
This bill would make technical, nonsubstantive changes to this provision.

Current Bill Text

Download Bill PDF