New regulations to strengthen homeowner insurance standards

SAN DIEGO (CNS) – The risk of homeowners in San Diego County and elsewhere in the state having inadequate insurance to protect against wildfires or other natural disasters should be reduced under new regulations unveiled Friday by the state insurance commissioner.

Steve Poizner, whose term ends Sunday, said he “witnessed the problem of under-insurance” early in his tenure when he toured the site of the devastating San Diego wildfires in the fall of 2007.

“I promised then that I would address the problem of under-insurance, and with the approval of these regulations, I believe I have fulfilled that promise,” he said.

“Consumers face several complicated choices when buying homeowner's insurance, and they need reliable and complete information in order to make good decisions,” Poizner said. “These new regulations deliver on both of those fronts.”

On Wednesday, the California Office of Administrative Law approved Poizner's proposals aimed at ensuring that property owners receive accurate, honest estimates on replacement value costs for homes destroyed by fire or other catastrophes.

The new regulations establish the following requirements:

— All fire and casualty broker-agents and personal lines broker agents must complete three-hour training courses on homeowner's insurance valuation prior to estimating replacement value costs.
— insurers, agents and brokers must document how replacement cost estimates are derived when presenting the information to applicants and insured customers, including the sources and methods used to arrive at the figures.
— all replacement cost estimates must be complete and based on the standards set forth by the Department of Insurance.

Poizner said the regulations are the final phase of a reform process that started after the California wildfires of 2007 and 2008, during which about one million people were forced to evacuate their homes, 1,500 of which were destroyed.

Previously, the Department of Insurance worked with the Legislature to draft a new law, AB 2022, that requires every consumer to receive a simplified checklist explaining their options in choosing homeowner's insurance and a user- friendly disclosure form that lays out all the terms with which prospective property owners need to be familiar.

All the new regulations take effect July 1.