Insurance business practices.

Plain English Breakdown

The bill summary text does not provide detailed information on the exact penalties for corporate officers who knowingly provide false information in reports, only that there would be an administrative penalty.

Insurance Rules for Fire Claims

The bill sets deadlines and penalties for insurance companies handling fire claims after January 1, 2027, and requires them to report their compliance with these rules.

What This Bill Does

• Sets specific time limits for insurance companies to respond to fire claim notices, accept or deny claims, and pay out accepted claims.
• Makes insurance companies liable for interest on the amount of an accepted claim at a rate of 20% per year if they do not meet these deadlines.
• Requires insurance companies that offer fire insurance in California to submit quarterly reports about their compliance with these rules starting January 1, 2028.
• Allows the Department of Insurance to publish these reports on its website starting July 1, 2028.
• Imposes penalties for corporate officers who provide false information in these reports.

Who It Names or Affects

• Insurance companies that offer fire insurance in California
• People or businesses with fire insurance policies

Terms To Know

Prompt-payment compliance data report

A report by an insurance company showing how well it follows the deadlines for handling fire claims.

Perjury

The act of lying under oath, which can be a crime if someone signs a false statement as true when asked to do so under penalty of perjury.

Limits and Unknowns

• Does not specify the exact penalties for corporate officers who provide false information in reports.
• Does not include details about how insurance companies will calculate interest on claims.
• The bill's effectiveness depends on enforcement by the Department of Insurance and compliance from insurance companies.

Official Summary Text

SB 878, as amended, Pérez.
Insurance business practices.
Existing law creates the Department of Insurance, headed by the Insurance Commissioner, and generally regulates the business of insurance in the state. Existing regulations prescribe specified deadlines by which an insurer is required to, among other things, respond to a notice of claim, accept or deny a claim, in whole or in part, and, upon acceptance of a claim in whole or in part, tender payment or otherwise take action to perform its obligation, as specified.
This bill, with respect to fire insurance claims arising after January 1, 2027, would codify specified provisions of the regulations prescribing the deadlines above. The bill would also make an insurer that does not comply with the deadlines liable to the insured for interest on the amount of the accepted claim, in whole or in part, at the rate of 20% per
year as damages,
year,
together with reasonable and necessary attorney’s fees, in addition to the amount the insured is entitled to under the policy.
This bill would require, by January 2028, and quarterly thereafter, an insurer
that offers or sells fire insurance in this state
to provide a prompt-payment compliance data report in accordance with the above-described provisions to the department, as provided. The bill would require a corporate officer of the insurer to sign the report
under penalty of perjury. By expanding the crime of perjury, this bill would impose a state-mandated local program.
and would subject a corporate officer who knowingly provides false information in
the report to an administrative penalty, as specified.
Commencing July 1, 2028, the bill would require the department to compile the information and publish a quarterly report on its internet website that details each insurer’s prompt-payment compliance data, as specified.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures
for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

Current Bill Text

Download Bill PDF