SB 335: Earthquake insurance.
- Session Year: 2015-2016
- House: Senate
- Latest Version Date: 2015-07-15
Existing law prohibits an insurer who charges an additional earthquake insurance premium or deductible because a dwelling fails to meet certain building requirements relating to earthquake bracing from charging the additional premium or deductible if the dwelling is brought into compliance with those requirements, as specified. Existing law requires a copy of the approved inspection record for the building permit for work performed to bring the dwelling into compliance to be submitted by the insured to the insurer in order to verify that the retrofits have been performed.
This bill would require the additional premium or deductible paid to be refunded to the insured and prorated as of the date the approved inspection record is received by the insurer. The bill would also make technical, nonsubstantive changes by deleting obsolete portions of those provisions.
Existing law prohibits an insurer who charges an additional earthquake insurance premium or deductible because a dwelling fails to meet certain building requirements relating to earthquake bracing from charging the additional premium or deductible if the dwelling is brought into compliance with those requirements, as specified. Existing law requires a copy of the approved inspection record for the building permit for work performed to bring the dwelling into compliance to be submitted by the insured to the insurer in order to verify that the retrofits have been performed.
This bill would require the additional premium or deductible paid to be refunded to the insured and prorated as of the date the approved inspection record is received by the insurer. The bill would also make technical, nonsubstantive changes by deleting obsolete portions of those provisions.
Existing law prohibits an insurer who charges an additional earthquake insurance premium or deductible because a dwelling fails to meet certain building requirements relating to earthquake bracing from charging the additional premium or deductible if the dwelling is brought into compliance with those requirements, as specified. Existing law requires a copy of the approved inspection record for the building permit for work performed to bring the dwelling into compliance to be submitted by the insured to the insurer in order to verify that the retrofits have been performed.
This bill would require the additional premium or deductible paid to be refunded to the insured and prorated as of the date the approved inspection record is received by the insurer. The bill would also make technical nonsubstantive, changes by deleting obsolete portions of those provisions.
(a)If an insurer subject to this chapter charges an additional earthquake insurance premium or deductible because a dwelling fails to comply with paragraph (1), (2), or (3) and the dwelling is subsequently brought into compliance with any one of these paragraphs, then the additional premium or deductible attributed to noncompliance shall not be charged.
(1)Compliance with Section 19215 of the Health and Safety Code for the bracing, anchoring, or strapping all water heaters to resist falling or horizontal displacement due to earthquake motion.
(2)Compliance with the foundation anchor bolt requirements of the 2007 edition of the California Building Standards Code as specified in Title 24 of the California Code of Regulations, or a successor edition of that code, or with any local government modifications to those requirements.
(3)Compliance with the bracing requirements for cripple walls of the 2007 edition of the California Building Standards Code as specified in Title 24 of the California Code of Regulations, or a successor edition of that code, or with any local government modifications to those requirements.
(b) A copy of the approved inspection record for the building permit for work performed pursuant to this section shall be submitted by the insured to the insurer in order to verify that retrofits performed pursuant to this section have been performed. The additional premium or deductible paid shall be refunded to the insured and prorated as of the date the approved inspection record is received by the insurer.
(a)If an insurer subject to this chapter charges an additional earthquake insurance premium or deductible because a dwelling fails to comply with paragraph (1), (2), or (3) and the dwelling is subsequently brought into compliance with any one of these paragraphs, then the additional premium or deductible attributed to noncompliance shall not be charged.
(1)Compliance with Section 19215 of the Health and Safety Code for the bracing, anchoring, or strapping all water heaters to resist falling or horizontal displacement due to earthquake motion.
(2)Compliance with the foundation anchor bolt requirements of the 2007 edition of the California Building Standards Code as specified in Title 24 of the California Code of Regulations, or a successor edition of that code, or with any local government modifications to those requirements.
(3)Compliance with the bracing requirements for cripple walls of the 2007 edition of the California Building Standards Code as specified in Title 24 of the California Code of Regulations, or a successor edition of that code, or with any local government modifications to those requirements.
(b) A copy of the approved inspection record for the building permit for work performed pursuant to this section shall be submitted by the insured to the insurer in order to verify that retrofits performed pursuant to this section have been performed. The additional premium or deductible paid shall be refunded to the insured and prorated as of the date the approved inspection record is received by the insurer.
(a)If an insurer subject to this chapter charges an additional earthquake insurance premium or deductible because a dwelling fails to comply with paragraph (1), (2), (3), (4), or (5) or (3) and the dwelling is subsequently brought into compliance with any one of these paragraphs, then the additional premium or deductible attributed to noncompliance shall not be charged.
(1) Until December 31, 2008, compliance with the foundation anchor bolt requirements of subdivision (f) of Section 2907 of Chapter 29 of the 1991 edition of the Uniform Building Code of the International Conference of Building Officials, or a successor building code adopted by the State of California, or with any local government modifications to those requirements.
(2) Until December 31, 2008, compliance with the bracing requirements for cripple walls of paragraph (4) of subdivision (g) of Section 2517 of Chapter 25 of the 1991 edition of the Uniform Building Code of the International Conference of Building Officials, or a successor building code adopted by the State of California, and with any local government modifications to those requirements.
(3)
(1)Compliance with Section 19215 of the Health and Safety Code for the bracing, anchoring, or strapping all water heaters to resist falling or horizontal displacement due to earthquake motion.
(4)Commencing on January 1, 2009, compliance
(2)Compliance with the foundation anchor bolt requirements of the 2007 edition of the California Building Standards Code as specified in Title 24 of the California Code of Regulations, or a successor edition of that code, or with any local government modifications to those requirements.
(5)Commencing on January 1, 2009, compliance
(3)Compliance with the bracing requirements for cripple walls of the 2007 edition of the California Building Standards Code as specified in Title 24 of the California Code of Regulations, or a successor edition of that code, or with any local government modifications to those requirements.
(b) A copy of the approved inspection record for the building permit for work performed pursuant to this section shall be submitted by the insured to the insurer in order to verify that retrofits performed pursuant to this section have been performed. The additional premium or deductible paid shall be refunded to the insured and prorated as of the date the approved inspection record is received by the insurer.
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Date
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Status
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|---|---|
| May 14, 2015 | Referred to Com. on INS. |
| Jul 15, 2015 | Chaptered by Secretary of State. Chapter 97, Statutes of 2015. |
| Jul 15, 2015 | Approved by the Governor. |
| Jul 6, 2015 | Enrolled and presented to the Governor at 3 p.m. |
| Jul 2, 2015 | Read third time. Passed. (Ayes 78. Noes 0. Page 2232.) Ordered to the Senate. |
| Jul 2, 2015 | Read third time. Passed. Ordered to the Senate. |
| Jul 2, 2015 | In Senate. Ordered to engrossing and enrolling. |
| Jun 25, 2015 | Read second time. Ordered to consent calendar. |
| Jun 24, 2015 | From committee: Do pass. Ordered to consent calendar. (Ayes 13. Noes 0.) (June 24). |
| Feb 23, 2015 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
| Apr 30, 2015 | Read third time. Passed. (Ayes 34. Noes 0. Page 843.) Ordered to the Assembly. |
| Apr 30, 2015 | In Assembly. Read first time. Held at Desk. |
| Apr 23, 2015 | Read second time. Ordered to consent calendar. |
| Apr 22, 2015 | From committee: Do pass. Ordered to consent calendar. (Ayes 7. Noes 0. Page 727.) (April 22). |
| Mar 27, 2015 | Set for hearing April 22. |
| Mar 5, 2015 | Referred to Com. on INS. |
| Feb 24, 2015 | From printer. May be acted upon on or after March 26. |
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Date
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Description
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Location
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Votes
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|---|---|---|---|---|
| Jul 2, 2015 | SB 335 Roth Consent Calendar Second Day | Assembly Floor |
Passed |
|
| Jun 24, 2015 | Do pass. To Consent Calendar. | Assembly Standing Committee on Insurance |
Passed |
|
| Apr 30, 2015 | Consent Calendar 2nd SB335 Roth | Senate Floor |
Passed |
|
| Apr 22, 2015 | Do pass and be ordered to the Consent Calendar | Senate Standing Committee on Insurance |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
SB 335
Page 2
Date of Hearing: June 24, 2015
ASSEMBLY COMMITTEE ON INSURANCE
Tom Daly, Chair
SB 335
(Roth) – As Introduced February 23, 2015
SENATE VOTE: 34-0
SUBJECT: Earthquake insurance.
SUMMARY: Specifies that insurers must prorate earthquake insurance premium reductions based on seismic retrofitting to the date the inspection report is received by the insurer, and deletes obsolete statutory provisions.
EXISTING LAW:
Generally provides for the regulation of residential earthquake insurance.
Provides that no homeowners’ insurance policy may be offered or sold in California unless the homeowner is offered earthquake coverage, either as part of the homeowners’ policy, or as a separate policy.
Allows insurers to charge an additional earthquake premium or deductible if a dwelling fails to comply with specified uniform building codes.
Provides that if the dwelling is subsequently brought into compliance with the applicable building code, then the additional premium or deductible shall not be charged.
Requires a copy of the approved inspection record for the work performed to bring the dwelling into compliance be submitted by the insured to the insurer to verify that the retrofits have been performed.
Requires personal lines insurers, including but not limited to homeowners’ and automobile insurers, whenever a policy terminates or there is a reduction in coverage, to refund the gross unearned premium to the insured within 25 business days after the insurer receives notice of the event that generated the unearned premium.
FISCAL EFFECT: Undetermined
COMMENTS:
Purpose of the bill. According to the author, this bill ensures that homeowners who repair or retrofit their homes to meet required building codes get a refund of any surcharges for noncompliance they have pre-paid once their home is brought into compliance.
Background. Fewer than 11% of California homeowners purchase earthquake insurance. Current law allows earthquake insurers to charge an additional earthquake premium or deductible if a dwelling fails to meet building standards that reduce the risk and/or extent of earthquake damage. It also specifies that if the dwelling is subsequently brought into compliance, then the additional premium or deductible attributed to non-compliance shall not be charged. A copy of the approved inspection record must be submitted to the insurer to verify that the retrofits have been performed. This bill makes clear that a homeowner is entitled to a refund of any premium surcharge as of the date the reason for the surcharge is eliminated.
REGISTERED SUPPORT / OPPOSITION:
Support
California Association of Realtors
Opposition
None recevied
Analysis Prepared by: Paul Riches / INS. / (916) 319-2086
SB 335
Page 3
|
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 |
CONSENT
Bill No: SB 335
Introduced: 2/23/15
SENATE INSURANCE COMMITTEE: 7-0, 4/22/15
AYES: Roth, Gaines, Berryhill, Hernandez, Liu, Mitchell, Wieckowski
NO VOTE RECORDED: Hall
DIGEST: This bill requires additional earthquake insurance premium paid as a result of failure to comply with specified building code standards to be refunded to an insured that subsequently brings the dwelling up to code, pro-rated as of the date the approved inspection record is received by the insurer, and makes other technical and clarifying changes.
Existing law:
Generally provides for the regulation of residential earthquake insurance.
Provides that no homeowners’ insurance policy may be offered or sold in California unless the homeowner is offered earthquake coverage, either as part of the homeowners’ policy or as a separate policy.
Allows insurers to charge an additional earthquake premium or deductible if a dwelling fails to comply with specified uniform building codes.
Provides that if the dwelling is subsequently brought into compliance with the applicable building code, then the additional premium or deductible shall not be charged.
Requires a copy of the approved inspection record for the work performed to bring the dwelling into compliance be submitted by the insured to the insurer to verify that the retrofits have been performed.
Requires personal lines insurers, including but not limited to homeowners’ and automobile insurers, whenever a policy terminates or there is a reduction in coverage, to refund the gross unearned premium to the insured within 25 business days after the insurer receives notice of the event that generated the unearned premium.
This bill:
Requires additional earthquake insurance premium or deductible paid as a result of failure to conform with building codes to be refunded to an insured that brings the dwelling into compliance, prorated as of the date the approved inspection record is received by the insurer.
Makes other technical and clarifying changes.
Background
Current law allows earthquake insurers to charge an additional earthquake premium or deductible if a dwelling fails to meet specified building standards. It also specifies that if the dwelling is subsequently brought into compliance, then the additional premium or deductible attributed to non-compliance shall not be charged. A copy of the approved inspection record must be submitted to the insurer to verify that the retrofits have been performed. (Insurance Code §10082.5). Current law requires personal lines insurers, whenever a policy terminates, or there is a reduction in coverage, to refund the gross unearned premium to the insured within 25 business days after the insurer receives notice of the event that generated the unearned premium. (Insurance Code §481.5) This bill makes clear that a homeowner is entitled to a refund of any premium surcharge as of the date the reason for the surcharge is eliminated.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
California Association of Realtors
OPPOSITION: (Verified 4/22/15)
None received
ARGUMENTS IN SUPPORT: According to the author, individuals that make the necessary improvements and upgrades to their homes to meet building code standards to protect against earthquake damage should not have to pay the higher premiums charged to those who fail to comply with building code standards. Many homeowners who purchase earthquake insurance pay their premiums annually, or every six months, and they should be entitled to a quick refund of any excess paid. The California Association of Realtors supports SB 335 because it offers an equitable result for homeowners who bring their homes into compliance with recommended seismic reinforcements, and provides an additional incentive to be pro-active in addressing the seismic safety of their homes.
Prepared by: Erin Ryan / INS. / (916) 651-4110
4/24/15 15:45:03
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SB 335 (Roth) Page 3 of 3
SENATE COMMITTEE ON INSURANCE
Senator Richard Roth, Chair
2015 - 2016 Regular
Bill No: SB 335 Hearing Date: April 22, 2015
Author: |
Roth |
||
Version: |
February 23, 2015 |
||
Urgency: |
No |
Fiscal: |
No |
Consultant: |
Erin Ryan |
||
Subject: Earthquake insurance
SUMMARY
Requires additional earthquake insurance premium paid as a result of failure to comply with specified building code standards to be refunded to an insured that subsequently brings the dwelling up to code, pro-rated as of the date the approved inspection record is received by the insurer, and makes other technical and clarifying changes.
DIGEST
Existing law
Generally provides for the regulation of residential earthquake insurance;
Provides that no homeowners’ insurance policy may be offered or sold in California unless the homeowner is offered earthquake coverage, either as part of the homeowners’ policy, or as a separate policy;
Allows insurers to charge an additional earthquake premium or deductible if a dwelling fails to comply with specified uniform building codes; (§10082.5)
Provides that if the dwelling is subsequently brought into compliance with the applicable building code, then the additional premium or deductible shall not be charged;
Requires a copy of the approved inspection record for the work performed to bring the dwelling into compliance be submitted by the insured to the insurer to verify that the retrofits have been performed;
Requires personal lines insurers, including but not limited to homeowners’ and automobile insurers, whenever a policy terminates or there is a reduction in coverage, to refund the gross unearned premium to the insured within 25 business days after the insurer receives notice of the event that generated the unearned premium.
This bill
Requires additional premium or deductible paid as a result of failure to conform with building codes to be refunded to an insured that brings the dwelling into compliance, prorated as of the date the approved inspection record is received by the insurer;
Makes other technical and clarifying changes.
COMMENTS
Purpose of the bill To ensure that homeowners who repair or retrofit their homes to meet required building codes get a refund of any surcharges for noncompliance they have pre-paid once their home is brought into compliance.
Background Fewer than 11% of California homeowners purchase earthquake insurance, despite predictions that the state will experience a major earthquake sometime in the next 30 years. The low frequency of earthquake disasters, compared to other natural catastrophes, tends to shape the perception that earthquake risk is much lower than it actually is, even in places where there have been very deadly and damaging events like California. In addition, earthquake insurance policies can be expensive and carry large deductibles, making them unattractive to homeowners who are not mandated to carry such coverage by law or required to purchase it by their lenders.
Current law allows earthquake insurers to charge an additional earthquake premium or deductible if a dwelling fails to meet specified building standards. It also specifies that if the dwelling is subsequently brought into compliance, then the additional premium or deductible attributed to non-compliance shall not be charged. A copy of the approved inspection record must be submitted to the insurer to verify that the retrofits have been performed. (Insurance Code §10082.5). Current law requires personal lines insurers, whenever a policy terminates, or there is a reduction in coverage, to refund the gross unearned premium to the insured within 25 business days after the insurer receives notice of the event that generated the unearned premium. (Insurance Code §481.5) This bill makes clear that a homeowner is entitled to a refund of any premium surcharge as of the date the reason for the surcharge is eliminated.
Support According to the author, individuals that make the necessary improvements and upgrades to their homes to meet building code standards to protect against earthquake damage should not have to pay the higher premiums charged to those who fail to comply with building code standards. Many homeowners who purchase earthquake insurance pay their premiums annually, or every six months, and they should be entitled to a quick refund of any excess paid. The California Association of Realtors supports SB 335 because it offers an equitable result for homeowners who bring their homes into compliance with recommended seismic reinforcements, and provides an additional incentive to be pro-active in addressing the seismic safety of their homes.
Prior and Related Legislation SB 602 (Monning) allows the CEA to create a new voluntary financing tool for homeowners to mitigate and retrofit their homes against earthquake damage.
POSITIONS
Support
California Association of Realtors
Oppose
None received
-- END --
Bill Author
Bill Co-Author(s):