The California Insurance Commissioner published a bulletin reminding insurers of the protections provided by California insurance law designed to aid policyholders in situations like the current wildfires.
Under California insurance law, insureds who suffered a total loss should receive advance payments on their claim. If a property loss is determined to be a total loss, the law requires an additional living expense (ALE) advance payment and a payment of contents without inventory.
The ALE advance payment should be for a minimum of four months of living expenses, and additional payments after proper proof is provided after the advance period. The contents payment should be for a minimum of 30 percent of the policy limit, with a max of $250,000, without the requirement for an itemized inventory. The insured can file an itemized claim at a later date for additional payments.
The Department has received feedback that many policyholders have received these advance payments, but many have not. Insurers are urged to use tools such as satellite imagery or direct inspection by adjusters to promptly determine if there has been a total loss.
There are other protections provided by California insurance law following a state of emergency. One such protection is policyholders have a minimum of 36 months after their actual cash value payment is made to collect the full replacement cost of the loss. Another is policyholders may combine the policy limits for dwelling and other structures in order to rebuild the dwelling if the dwelling limit has been reached.
Policyholders have ALE coverage for a minimum of 24 months after a state of emergency and up to an additional 12 months if there has been a delay due to circumstances beyond the insured’s control. The final protection is insurers must renew a policy for at least 24 months following a total loss due to a declared disaster.
After a total loss, insurers must offer to renew an insured’s policy for at least the next two renewal periods for at least 24 months. The department also reminds insurers that all adjusters should be made aware of these and other laws regulating claims handling.
The bulletin can be found here.