New Calif. Legislation Becomes Law on Jan. 1

A number of new insurance-related bills will go into law in California on Jan. 1, 2005. They include:

Auto Insurance

AB 2677 (Ridley-Thomas – Auto Insurance: Cost Estimates) requires insurers to provide personal auto insurance consumers with their lowest price quote for the coverages requested and for which the consumers are eligible. The bill requires an insurer to maintain a toll-free number or Internet Web site to meet this requirement.

AB 2139 (Maze – Vehicles: Child Restraint Systems) revises provisions of California law relating to child restraint systems to assure compatibility with federal safety standards.

SB 1696 (Torlakson – Vehicles: Driving Under the Influence: Sanctions) provides that a person whose driver’s license has been suspended or revoked because of a DUI conviction may not have his or her license reinstated until proof of attendance at a driving-under-the-influence program is received by the DMV.

Homeowners

AB 2962 (Pavley – Fire Insurance: Valuation of Loss) requires insurers to renew policies at least once if the home was totally destroyed in a disaster. If a policy is up for renewal during the rebuilding of a total loss, an insurer must consult with the policyholder about modifying coverage and must adjust the premium to reflect coverage changes.

SB 1369 (Kuehl – Fire Protection) requires any person who owns, leases, controls, operates, or maintains any occupied dwelling adjoining areas that are mountainous, forest covered, brush covered, grass covered or covered with flammable material to remove brush, etc. to a distance of 100 feet from the dwelling and authorizes the Director of Forestry to remove such vegetation at the owner’s cost.

SB 1855 (Alpert – Homeowners Insurance: Liability Limits: Disclosure) modifies the disclosure form that homeowners insurers must provide to their policyholders. In addition, the bill requires insurers to provide to policyholders the “California Residential Property Insurance Bill of Rights” which includes advice to consumers and a listing of information that insurers may make available to their policyholders.

Workers’ Compensation

AB 2866 (Frommer – Workers’ Compensation: Fraud) requires the Department of Insurance to post on its Internet Web site information relating to every case in which a person is convicted of a violation of specified workers’ compensation fraud statutes.

SB 899 (Poochigan – Workers’ Compensation) is Governor Arnold Schwarzenegger’s workers’ compensation reform law. The bill was signed into law in April and many of the provisions became effective immediately. Other provisions go into effect Jan 1, 2005. The bill authorizes insurers and employers on or after Jan. 1, 2005, to establish medical provider networks for treatment of injured workers. The bill also requires the administrative director of the Division of Workers’ Compensation (Dept. of Industrial Relations) to adopt a new schedule for rating permanent disabilities by Jan. 1.

SBX 4 No. 2 (Speier – Workers’ Compensation: Insurance) requires an insurer to provide a written warning, on or with a check for temporary workers’ compensation disability benefits, that states that the employee must report to the employer or the insurance company any money that the employee earned for work during the time covered by the check and that the failure to make the report may result in imprisonment. The warning must be in both English and Spanish. The new law also revises the penalties for workers’ compensation fraud.

Regulatory

AB 1227 (McCarthy – Insurance Fraud: Bureau of Automotive Repair) authorizes the Insurance Commissioner to assess penalties on insurers who do not comply with the existing law that requires insurers to have Special Investigative Units (SIU’s) to investigate and report suspected insurance fraud. Penalties against insurers for not complying with the law are up to $5,000 for an inadvertent violation and $10,000 for an intentional violation. However, when violations relative to the maintenance and operation of the unit are inadvertent, the violations are considered a single act.

AB 2208 (Kehoe – Health Care and Insurance Benefits) requires insurance policies to provide the same coverage to registered domestic partners of insureds that the policies provide to spouses of insureds.

AB 2557 (Koretz – Insurance: Licensing) increases the penalty for transaction of insurance without a valid license to 1 year rather than 6 months in a county jail and a fine of not more than $50,000 rather than $1,000. The bill also requires licensees to notify the Department of Insurance of changes in background information.

SB 1273 (Scott – Insurance Misrepresentation) expands the definition of insurance misrepresentation beyond misrepresentation of the terms of a policy to include any statement by an insurer or its agent that is known, or should have been known to be a misrepresentation. The bill will increase fines for violations from the $1,500 in existing law to up to $25,000 after Jan. 1, 2005.