California insurers would offer more home coverage and support disaster claims

Insurers must include original-location building code costs when calculating covered costs for a total loss. This applies to a total loss of an insured home when the policyholder chooses to rebuild elsewhere or buy an existing home elsewhere. The policy must cover those costs; the amount remains capped by the cost of rebuilding at the original location and the policy limits. Insurers may restrict payment if they suspect fraud. This rule applies to policies issued, changed, or renewed on or after January 1, 2028.

Insurers must offer extra replacement cost coverage and provide expanded living expense coverage. The offers apply to eligible residential property policies. Living expense coverage applies to an insured’s primary home when a covered event makes it unlivable. The extra dwelling coverage offer applies only to properties eligible for replacement cost coverage; the offer must include its price, and a declined offer must be recorded. Living expense rules apply to a primary home made unlivable by a covered event. They are subject to policy terms and limits, and do not cover utility shutoffs used to reduce wildfire risk. An insurer may offer monthly fair rental value instead of repayment for itemized expenses; the insured chooses whether to accept it. These rules take effect January 1, 2028. For a covered total loss tied to an emergency, living expense, loss of use, or similar coverage must last at least 24 months and continue 15 days after the home is deemed livable.

Insurers must assign a primary claim contact and report later contact changes. This applies when a residential property insurance claim involves one or more types of coverage and relates to a declared state of emergency, even if several adjusters handle different parts. The contact must be available to answer claim questions and stay assigned until the claim closes or litigation begins. If the insured asks, the insurer must refer them to a supervisor with authority over claim handling. The contact must be assigned within 30 calendar days after the insurer receives notice of the claim. A written report is due within 15 calendar days after a later contact is assigned. These rules start January 1, 2028.

Residential property insurers must file and update disaster response plans and report disaster claim information. This applies to residential property insurers doing business in California and to their covered claims related to a declared emergency. The plan must describe how the insurer will handle disaster claims, including communication, staffing, adjuster training, and tracking claims. The commissioner may ask for progress reports or a performance review and decide how often claims data should be updated. Submitted plans and information are confidential, though the commissioner may publish aggregated information that does not identify insurers or claimants. The first plan is due before April 1, 2028, and must be updated every two years or when the commissioner asks. Emergency loss and claim information is due within 30 calendar days after the emergency is declared.

The insurance commissioner may impose higher penalties for unfair insurance practices tied to a state of emergency. This applies to a person who commits an unfair or deceptive insurance practice related to a declared state of emergency. The commissioner sets the penalty for each act; willful acts carry a higher range. Restitution for an unfair claims settlement practice requires notice and a chance for a hearing, and is limited to a claimant’s direct financial loss caused by the violation. These provisions take effect January 1, 2028.