Bill Text: CA AB1557 | 2017-2018 | Regular Session | Introduced

California Assembly Bill 1557 (Prior Session Legislation)

Introduced

Bill Title: Fire insurance: indemnity.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2018-02-01 - Died at Desk. [AB1557 Detail]

Download: California-2017-AB1557-Introduced.html

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill

No. 1557

Introduced by Assembly Member Cristina Garcia

February 17, 2017

An act to amend Section 2051.5 of the Insurance Code, relating to fire insurance.

LEGISLATIVE COUNSEL'S DIGEST

AB 1557, as introduced, Cristina Garcia. Fire insurance: indemnity.

Existing law defines the measure of indemnity for a loss under an open fire insurance policy and specifies time limits under which an insured must collect the full replacement cost of the loss. Existing law prohibits a fire insurance policy issued or delivered in the state from limiting or denying payment of the replacement cost of property in the event the insured decides to rebuild or replace the property at a location other than the insured premises.

This bill would make technical, nonsubstantive changes to those provisions.

Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

Section 2051.5 of the Insurance Code is amended to read:

2051.5.

(a) (1) Under an open policy that requires payment of the replacement cost for a loss, the measure of indemnity is the amount that it would cost the insured to repair, rebuild, or replace the thing lost or injured, without a deduction for physical depreciation, or the policy limit, whichever is less.

(2) If the policy requires the insured to repair, rebuild, or replace the damaged property in order to collect the full replacement cost, the insurer shall pay the actual cash value of the damaged property, as defined in Section 2051, until the damaged property is repaired, rebuilt, or replaced. Once the property is repaired, rebuilt, or replaced, the insurer shall pay the difference between the actual cash value payment made and the full replacement cost reasonably paid to replace the damaged property, up to the limits stated in the policy.

(b) (1) Except as provided in paragraph (2), no time limit of less than 12 months from the date that the first payment toward the actual cash value is made shall be placed upon an insured in order to collect the full replacement cost of the loss, subject to the policy limit. Additional extensions of six months shall be provided to policyholders for good cause. In the event of a loss relating to a “state of emergency,” as defined in Section 8558 of the Government Code, no time limit of less than 24 months from the date that the first payment toward the actual cash value is made shall be placed upon the insured in order to collect the full replacement cost of the loss, subject to the policy limit. Nothing in this section ~~shall prohibit~~ prohibits the insurer from allowing the insured additional time to collect the full replacement cost.

(2) In the event of a covered loss relating to a state of emergency, as defined in Section 8558 of the Government Code, coverage for additional living expenses ~~shall be~~ is for a period of 24 months, but ~~shall be~~ is subject to other policy provisions, provided that ~~any~~ an extension of time required by this paragraph beyond the period provided in the policy ~~shall not act to~~ does not increase the additional living expense policy limit in force at the time of the loss. This paragraph shall become operative on January 1, 2007.

(c) In the event of a total loss of the insured structure, no a policy issued or delivered in this state ~~may~~ shall not contain a provision that limits or denies payment of the replacement cost in the event the insured decides to rebuild or replace the property at a location other than the insured premises. However, the measure of indemnity shall be based upon the replacement cost of the insured property and shall not be based upon the cost to repair, rebuild, or replace at a location other than the insured premises.

(d) ~~Nothing in this section shall prohibit~~ This section does not prohibit an insurer from restricting payment in cases of suspected fraud.

(e) The changes made to this section by the act that added this subdivision shall be implemented by an insurer on and after the effective date of that act, ~~except that~~ but an insurer ~~shall not be~~ is not required to modify policy forms to be consistent with those changes until July 1, 2005. On and after July 1, 2005, all policy forms used by an insurer shall reflect those changes.