Residential property insurance.

Existing law generally regulates residential property insurance. Existing law requires specified information to be included on the declarations page of a residential property insurance policy, including limits of liability for the structure and personal property. Existing law requires an insurer to deliver or mail to the named insured an offer of renewal or a notice of nonrenewal of an insurance policy at least 45 days before the policy expiration, or 75 days before the policy expiration for a notice of nonrenewal for a policy that expires on or after July 1, 2020. Existing law requires an offer of renewal to include specified information, including any reduction of limits or elimination of coverage. Existing law prescribes the standard form of the California Residential Insurance Disclosure, which sets forth a description of certain types of insurance coverage, and explains that building code upgrade coverage covers additional costs to comply with building codes in effect at the time of loss or rebuilding. Existing law requires specified information, including whether or not the policy provides building code upgrade coverage for the increased costs of repairing or replacing damage because of building ordinances or laws, to be included on the declarations page of a residential property insurance policy. Under an open policy that requires payment of actual cash value, existing law requires the measure of the actual cash value recovery for either a total or partial loss to the structure or its contents to be 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. Under existing law, a deduction for physical depreciation under actual cash value coverage applies only to components of a structure that are normally subject to repair and replacement during the useful life of that structure. This bill would require an insurer to obtain a signed acknowledgment from an applicant or insured if the insurer issues a new residential property insurance policy on or after July 1, 2021, that does not provide coverage for the peril of fire. The bill would require the declarations page of a residential property insurance policy issued or renewed on or after July 1, 2021, that does not provide coverage for the peril of fire to prominently disclose a statement that the policy does not cover the peril of fire and information on the California FAIR Plan and the California Home Insurance Finder. This bill would require an offer of renewal stating a reduction of limits or elimination of coverage to identify the specific limits being reduced or the coverage being eliminated by the offer of renewal. This bill would require an open policy of residential property insurance, except as specified, that provides replacement cost coverage, issued or renewed on or after July 1, 2021, to provide additional building code upgrade coverage of no less than 10% of the dwelling coverage policy limits. The bill would require building code upgrade coverage to be based on the increased costs associated with building ordinances and laws at the time of loss or rebuilding. The bill would further require, also on or after July 1, 2021, a policy of residential property insurance that provides replacement cost coverage to include specific information relating to building code upgrade coverage on the declarations page of the policy. The bill would require a policy of residential property insurance that does not provide building code upgrade coverage to include a statement on the declarations page of the policy that the policy does not include building code upgrade coverage. The bill would also amend the description of actual cash value coverage in the California Residential Insurance Disclosure to conform to the existing statutory requirements of an open policy that requires payment of actual cash value. This bill would incorporate additional changes to Section 678 of the Insurance Code proposed by AB 3012 to be operative only if this bill and AB 3012 are enacted and this bill is enacted last.