Existing law creates the Department of Insurance, headed by the Insurance Commissioner, and generally regulates classes of insurance, including fire and residential property insurance. 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, would codify specified provisions of the regulations prescribing the deadlines above.
Existing law specifies the measure of indemnity under an open fire insurance policy that requires payment of actual cash value or replacement cost. Under existing law, the measure of the actual cash value recovery is the amount it would cost the insured to repair, rebuild, or replace the thing lost or injured less a fair and reasonable deduction for physical depreciation based upon its condition at the time of the injury or the policy limit, whichever is less. If an open policy requires the insured to repair, rebuild, or replace the damaged property to collect the full replacement cost, under existing law the insurer is required to pay the actual cash value of the damaged property until the damaged property is repaired, rebuilt, or replaced, at which time the insurer is required to pay the difference between the actual cash value payment made and the full replacement cost reasonably paid to replace the damaged property.
If there is a total loss to the insured structure, this bill would require an insurer to pay the actual cash value associated with the primary structure and other insured structures within 30 calendar days from the date of loss. After this payment is made, the bill would require an insurer to pay the undisputed amount of replacement cost associated with the primary structure and other insured structures, up to the limits in the policy, within 30 calendar days from the occurrence of a specified event.
This bill would require interest to accrue if payments are not made within 30 calendar days, as specified.

Statutes affected:
04/27/26 - Amended Senate: 2051 INS, 2051 INS, 2051.5 INS, 2051.5 INS