text:
(a) The commissioner shall ensure that the Fraud Division aggressively pursues all reported incidents of probable workers’ compensation fraud, as defined in Sections 11760 and 11880, and in subdivision (a) of Section 1871.4, and in Section 549 of the Penal Code, and forwards to the appropriate disciplinary body the names, along with all supporting evidence, of any individuals licensed under the Business and Professions Code who are suspected of actively engaging in fraudulent activity. The Fraud Division shall forward to the Insurance Commissioner or the Director of Industrial Relations, as appropriate, the name, along with all supporting evidence, of any insurer, as defined in subdivision (c) of Section 1877.1, suspected of actively engaging in the fraudulent denial of claims.

(b) To fund increased investigation and prosecution of workers’ compensation fraud, and of willful failure to secure payment of workers’ compensation, in violation of Section 3700.5 of the Labor Code, there shall be an annual assessment as follows:

(1) The aggregate amount of the assessment shall be determined by the Fraud Assessment Commission, which is hereby established. The commission shall be composed of seven members consisting of two representatives of organized labor, two representatives of self-insured employers, one representative of insured employers, one representative of workers’ compensation insurers, and the President of the State Compensation Insurance Fund, or their designee.

The Governor shall appoint members representing organized labor, self-insured employers, insured employers, and insurers. The term of office of members of the commission shall be four years, and a member shall hold office until the appointment of a successor. The President of the State Compensation Insurance Fund shall be an ex officio, voting member of the commission. Members of the commission shall receive one hundred dollars ($100) for each day of actual attendance at commission meetings and other official commission business, and shall also receive their actual and necessary traveling expenses incurred in the performance of commission duties. Payment of per diem and travel expenses shall be made from the Workers’ Compensation Fraud Account in the Insurance Fund, established in paragraph (4), upon appropriation by the Legislature.

(2) In determining the aggregate amount of the assessment, the Fraud Assessment Commission shall consider the advice and recommendations of the Fraud Division and the commissioner.

(3) The aggregate amount of the assessment shall be collected by the Director of Industrial Relations pursuant to Section 62.5 of the Labor Code. The Fraud Assessment Commission shall annually advise the Director of Industrial Relations, not later than March 15, of the aggregate amount to be assessed for the next fiscal year.

(4) The amount collected, together with the fines collected for violations of the unlawful acts specified in Sections 1871.4, 11760, and 11880, Section 3700.5 of the Labor Code, and Section 549 of the Penal Code, shall be deposited in the Workers’ Compensation Fraud Account in the Insurance Fund, which is hereby created, and may be used, upon appropriation by the Legislature, only for enhanced investigation and prosecution of workers’ compensation fraud and of willful failure to secure payment of workers’ compensation as provided in this section.

(c) For each fiscal year, the total amount of revenues derived from the assessment pursuant to subdivision (b) shall, together with amounts collected pursuant to fines imposed for unlawful acts described in Sections 1871.4, 11760, and 11880, Section 3700.5 of the Labor Code, and Section 549 of the Penal Code, not be less than three million dollars ($3,000,000). Any funds appropriated by the Legislature pursuant to subdivision (b) that are not expended in the fiscal year for which they have been appropriated, and that have not been allocated under subdivision (f), may be applied to satisfy for the immediately following fiscal year the minimum total amount required by this subdivision or, subject to appropriation by the Legislature, may be used to augment funding in the immediately following fiscal year. The money shall not be transferred to the General Fund.

(d) After incidental expenses, at least 40 percent of the funds to be used for the purposes of this section shall be provided to the Fraud Division of the Department of Insurance for enhanced investigative efforts, and at least 40 percent of the funds shall be distributed to district attorneys, pursuant to a determination by the commissioner with the advice and consent of the division and the Fraud Assessment Commission, as to the most effective distribution of moneys for purposes of the investigation and prosecution of workers’ compensation fraud cases and cases relating to the willful failure to secure the payment of workers’ compensation. Each district attorney seeking a portion of the funds shall submit to the commissioner an application setting forth in detail the proposed use of any funds provided. A district attorney receiving funds pursuant to this subdivision shall submit an annual report to the commissioner with respect to the success of their efforts. Upon receipt, the commissioner shall provide copies to the Fraud Division and the Fraud Assessment Commission of any application, annual report, or other documents with respect to the allocation of money pursuant to this subdivision. Both the application for moneys and the distribution of moneys shall be public documents. Information submitted to the commissioner pursuant to this section concerning criminal investigations, whether active or inactive, shall be confidential.

(e) If a district attorney is determined by the commissioner to be unable or unwilling to investigate and prosecute workers’ compensation fraud claims or claims relating to the willful failure to secure the payment of workers’ compensation, the commissioner shall discontinue distribution of funds allocated for that county and may redistribute those funds according to this subdivision.

(1) The commissioner shall promptly determine whether any other county could assert jurisdiction to prosecute the fraud claims or claims relating to the willful failure to secure the payment of workers’ compensation that would have been brought in the nonparticipating county, and, if so, the commissioner may award funds to conduct the prosecutions redirected pursuant to this subdivision. These funds may be in addition to any other fraud prosecution funds or claims relating to the willful failure to secure the payment of workers’ compensation prosecution otherwise awarded under this section. Any district attorney receiving funds pursuant to this subdivision shall first agree that the funds shall be used solely for investigating and prosecuting those cases of workers’ compensation fraud or claims relating to the willful failure to secure the payment of workers’ compensation that are redirected pursuant to this subdivision and submit an annual report to the commissioner with respect to the success of the district attorney’s efforts. The commissioner shall keep the Fraud Assessment Commission fully informed of all reallocations of funds under this paragraph.

(2) If the commissioner determines that no district attorney is willing or able to investigate and prosecute the workers’ compensation fraud claims or claims relating to the willful failure to secure the payment of workers’ compensation arising in the nonparticipating county, the commissioner, with the advice and consent of the Fraud Assessment Commission, may award to the Attorney General some or all of the funds previously awarded to the nonparticipating county. Before the commissioner may award any funds, the Attorney General shall submit to the commissioner an application setting forth in detail their proposed use of any funds provided and agreeing that any funds awarded shall be used solely for investigating and prosecuting those cases of workers’ compensation fraud or claims relating to the willful failure to secure the payment of workers’ compensation that are redirected pursuant to this subdivision. The Attorney General shall submit an annual report to the commissioner with respect to the success of the fraud prosecution efforts of their office.

(3) Neither the Attorney General nor any district attorney shall be required to relinquish control of any investigation or prosecution undertaken pursuant to this subdivision unless the commissioner determines that satisfactory progress is no longer being made on the case or the case has been abandoned.

(4) A county that has become a nonparticipating county due to the inability or unwillingness of its district attorney to investigate and prosecute workers’ compensation fraud or the willful failure to secure the payment of workers’ compensation shall not become eligible to receive funding under this section until it has submitted a new application that meets the requirements of subdivision (d) and the applicable regulations.

(f) If in any fiscal year the Fraud Division does not use all of the funds made available to it under subdivision (d), any remaining funds may be distributed to district attorneys pursuant to a determination by the commissioner in accordance with the same procedures set forth in subdivision (d).

(g) The commissioner shall adopt rules and regulations to implement this section in accordance with the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code). Included in the rules and regulations shall be the criteria for redistributing funds to district attorneys and the Attorney General. The adoption of the rules and regulations shall be deemed to be an emergency and necessary for the immediate preservation of the public peace, health, and safety, or general welfare.

(h) The department shall report to the Governor, the Legislature, to the committees of the Senate and Assembly having jurisdiction over insurance, and the Fraud Assessment Commission on the activities of the Fraud Division and district attorneys supported by the funds provided by this section in the annual report submitted pursuant to Section 12922.

The annual report shall include, but is not limited to, all of the following information for the department and each district attorney’s office:

(1) All allocations, distributions, and expenditures of funds.

(2) The number of search warrants issued.

(3) The number of arrests and prosecutions, and the aggregate number of parties involved in each.

(4) The number of convictions and the names of all convicted fraud perpetrators.

(5) The estimated value of all assets frozen, penalties assessed, and restitutions made for each conviction.

(6) Any additional items necessary to fully inform the Fraud Assessment Commission and the Legislature of the fraud-fighting efforts financed through this section.

(i) In order to meet the requirements of subdivision (g), the department shall submit a biannual information request to those district attorneys who have applied for and received funding through the annual assessment process under this section.

(j) Assessments levied or collected to fight workers’ compensation fraud and insurance fraud are not taxes. Those funds are entrusted to the state to fight fraud and the willful failure to secure the payment of workers’ compensation by funding state and local investigation and prosecution efforts. Accordingly, any funds resulting from assessments, fees, penalties, fines, restitution, or recovery of costs of investigation and prosecution deposited in the Insurance Fund shall not be deemed “unexpended” funds for any purpose and, if remaining in that account at the end of any fiscal year, shall be applied as provided in subdivision (f) and to offset or augment subsequent years’ program funding.

history: (History: Amended by Stats. 2025, Ch. 23, Sec. 3. (SB 129) Effective June 30, 2025.)

article: 2. Bureau of Fraudulent Claims


kind: section

code: INS

text: The commissioner shall ensure that the Fraud Division forwards to the appropriate disciplinary body, in addition to the names and supporting evidence of individuals described in subdivision (a) of Section 1872.83, the names, along with all supporting evidence, of any individuals licensed under the Chiropractic Initiative Act who are suspected of actively engaging in fraudulent activity.

history: (History: Added by Stats. 2005, Ch. 415, Sec. 2. Effective January 1, 2006.)

division: 1. GENERAL RULES GOVERNING INSURANCE

part: 2. THE BUSINESS OF INSURANCE

chapter: 12. The Insurance Frauds Prevention Act

article: 2. Bureau of Fraudulent Claims

path: 1. GENERAL RULES GOVERNING INSURANCE > 2. THE BUSINESS OF INSURANCE > 12. The Insurance Frauds Prevention Act > 2. Bureau of Fraudulent Claims


text:
(a) Every admitted disability insurer or other entity liable for any loss due to health insurance fraud doing business in this state shall pay an annual special purpose assessment to be determined by the commissioner, but not to exceed twenty cents ($0.20) annually for each person in this state covered under an individual or group insurance policy regardless of the situs of the contract or master group policyholder, and regardless of whether the insured has been issued an individual certificate of coverage, and including blanket insurance as defined in Section 10270.2, in order to fund increased investigation and prosecution of fraudulent disability insurance claims. The data supporting the special purpose assessment shall not be required to be submitted more often than once each calendar year, except that responses to questions from the commissioner and clarifying information regarding the data shall not be considered as additional submissions of data. For group and blanket insurance contracts, insurers may rely on information requested from and provided by the group policyholder after a reasonable effort to obtain timely and accurate information. After incidental expenses, 30 percent of those funds received from the assessment per insured shall be distributed to the Fraud Division of the Department of Insurance for enhanced investigative efforts, and 70 percent of the funds shall be distributed to local district attorneys, pursuant to subdivisions (b) and (c), for investigation and prosecution of disability insurance fraud cases. The funds received pursuant to this section shall be deposited into the Disability Insurance Fraud Account, which is hereby created in the Insurance Fund, and shall be expended and distributed, when appropriated by the Legislature, only for enhanced investigation and prosecution of disability insurance fraud.

In the course of its investigation, the Fraud Division shall aggressively pursue all reported incidents of probable fraud and, in addition, shall forward to the appropriate disciplinary body the names of any individuals licensed under the Business and Professions Code who are convicted of engaging in fraudulent activity along with all relevant supporting evidence.

(b) The commissioner shall distribute funds pursuant to subdivision (a) to district attorneys who are able to show a likely positive outcome that will enhance the prosecution of disability insurance fraud in their jurisdiction based on specific criteria promulgated by the commissioner. A district attorney desiring funds pursuant to subdivision (a) shall submit to the commissioner an application that includes, but is not limited to, all of the following:

(1) The proposed use of the moneys and the anticipated outcome.

(2) A list of all prior cases or projects in the district attorney’s jurisdiction that have been funded under the provisions of this section, and a copy of the final accounting for each case or project. If a case or project is ongoing, the most recent accounting shall be provided.

(3) A detailed budget for the moneys, including salaries and general expenses, that specifically identifies the purchase or rental cost of equipment or supplies.

(c) (1) A district attorney who receives moneys pursuant to this section shall submit a final detailed accounting at the conclusion of each case or project funded. For a case or project that continues for longer than six months, an interim accounting shall be submitted every six months, or as otherwise directed by the commissioner.

(2) A district attorney who receives moneys pursuant to this section shall submit a final report to the commissioner, which may be made public, as to the success of each case or project funded by this section. The report shall provide information and statistics on the number of active investigations, arrests, indictments, and convictions associated with a case or project. The applications for moneys, the distribution of moneys, and the annual report required by Section 1872.9 shall be public documents.

(3) Notwithstanding any other provision of this section, information submitted to the commissioner pursuant to this section concerning criminal investigations, whether active or inactive, shall be confidential.

(4) The commissioner may conduct a fiscal audit of the programs administered under this subdivision. The fiscal audit shall be conducted by an internal audit unit of the department. The cost of fiscal audits shall be paid from the Disability Insurance Fraud Account, upon appropriation by the Legislature.

(5) If the commissioner determines that a district attorney is unable or unwilling to investigate or prosecute a relevant disability insurance fraud case, the commissioner may discontinue distribution of moneys allocated for that matter pursuant to this section, and may redistribute moneys to other eligible district attorneys.

(d) Activities of the Fraud Division with regard to investigating and prosecuting fraudulent disability insurance claims pursuant to this section shall be included in the report required by Section 1872.9.

(e) This section shall not apply to policies issued by a reciprocal or interinsurance exchange, as defined by Sections 1303 and 1350, or coverage provided by or through a motor club, as defined by Section 12142, affiliated with a reciprocal or interinsurance exchange, if the annual premium charged for the coverage or the annual cost to the insurer for providing that coverage does not exceed one dollar ($1) per insured.

(f) The commissioner shall adopt regulations to implement this section in accordance with the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).

history: (History: Amended by Stats. 2014, Ch. 251, Sec. 1. (SB 1142) Effective January 1, 2015.)

article: 2. Bureau of Fraudulent Claims


text:
(a) An insurer doing business in this state shall pay an annual special purpose assessment to be determined by the commissioner, not to exceed five thousand one hundred dollars ($5,100), to be used exclusively for the support of the Fraud Division. All moneys received by the commissioner from insurers pursuant to this section shall be transmitted to the Treasurer to be deposited in the State Treasury to the credit of the Insurance Fund.

(b) The Fraud Division shall report annually, on the department’s Internet Web site, all of the following information:

(1) The number of suspected fraudulent claim referrals made to the Fraud Division pursuant to Section 1872.4, by line of insurance.

(2) The number of investigations opened by the Fraud Division, by line of insurance, at the local, state, and federal levels.

(3) The number of investigations referred by the Fraud Division for criminal prosecution, by line of insurance, at the local, state, and federal levels.

(4) The number of insurer fraud cases investigated by the department’s Enforcement Branch.

(5) The number of criminal complaints filed by prosecutors at the local, state, and federal levels.

(6) The number of convictions at the local, state, and federal levels.

(7) The total amount of court-ordered restitution, and the amount collected by the courts for the victims.

(8) The number of training presentations focusing on the current schemes and trends, investigative tools and techniques, and proper reporting requirements needed to increase the quality of suspected fraudulent referrals by insurance industry special investigation units.

(9) The number of vacant peace officer positions, including information on the number and rate of vacancies for which an employment commitment has been made and on the number and rate of vacancies required to meet budgeted salary savings requirements.

history: (History: Amended by Stats. 2008, Ch. 179, Sec. 172. Effective January 1, 2009.)

article: 2. Bureau of Fraudulent Claims


text:
(a) Each insurer required to pay special purpose assessments pursuant to Sections 1872.8, 1872.81, 1872.85, 1874.8, or subdivision (a) of Section 1872.86 may, over a reasonable length of time, but in no event later than the calendar year in which the assessment is paid, recoup the special purpose assessments by way of a surcharge on premiums charged for the insurance policies to which those sections apply or by including the assessments within the insurer’s rates. Amounts recouped shall not be considered premiums for any purpose, including the computation of gross premium tax or agents’ commission.

(b) The amount of the surcharge shall be separately stated on either a billing or policy declaration sent to an insured.

history: (History: Amended by Stats. 2013, Ch. 321, Sec. 22. (AB 1391) Effective January 1, 2014.)

article: 2. Bureau of Fraudulent Claims


text:
(a) Within existing resources, the Medical Board of California, the Board of Chiropractic Examiners, and the State Bar shall each designate employees to investigate and report on possible fraudulent activities relating to workers’ compensation, motor vehicle insurance, or disability insurance by licensees of the board or the bar. Those employees shall actively cooperate with the Fraud Division in the investigation of those activities.

(b) The Medical Board of California and the Board of Chiropractic Examiners shall each report annually, on or before March 1, to the committees of the Senate and Assembly having jurisdiction over insurance on their activities established pursuant to subdivision (a) for the previous year. The State Bar shall include this report in its Annual Discipline Report on or before April 30. That report shall specify, at a minimum, the number of cases investigated, the number of cases forwarded to the Fraud Division or other law enforcement agencies, the outcome of all cases listed in the report, and any other relevant information concerning those cases or general activities conducted under subdivision (a) for the previous year. The report shall include information regarding activities conducted in connection with cases of suspected automobile insurance fraud.

history: (History: Amended by Stats. 2018, Ch. 659, Sec. 149. (AB 3249) Effective January 1, 2019.)

article: 2. Bureau of Fraudulent Claims


text: The commissioner shall prepare an annual report, which shall be a public record, with respect to the receipts, expenditures, and activities of the Fraud Division for the year just ended. The report shall be submitted to the Governor and to the Legislature, no later than January 31 of the following year. This report shall not contain any individually identifiable information.

history: (History: Amended by Stats. 2005, Ch. 717, Sec. 12. Effective January 1, 2006.)

article: 2. Bureau of Fraudulent Claims


citation: INS § 1873

text:
(a) Upon written request to an insurer by officers designated in subdivisions (a) and (b) of Section 830.1 and subdivision (a) of Section 830.2, and subdivisions (a), (c), and (i) of Section 830.3 of the Penal Code, an insurer, or agent authorized by that insurer to act on behalf of the insurer, shall release to the requesting authorized governmental agency any or all relevant information deemed important to the authorized governmental agency that the insurer may possess relating to any specific insurance fraud. Relevant information may include, but is not limited to, all of the following:

(1) Insurance policy information relevant to the insurance fraud under investigation, including, but not limited to, any application for a policy.

(2) Policy premium payment records which are available.

(3) History of previous claims made by the insured.

(4) Information relating to the investigation of the insurance fraud, including statements of any person, proof of loss, and notice of loss.

(5) Complete copies of both sides of payment drafts.

(b) The provisions of subdivision (a) shall not operate to authorize disclosure of medical information not otherwise authorized for disclosure pursuant to law.

history: (History: Amended by Stats. 2000, Ch. 843, Sec. 3. Effective January 1, 2001.)

article: 3. Insurance Fraud Reporting

path: 1. GENERAL RULES GOVERNING INSURANCE > 2. THE BUSINESS OF INSURANCE > 12. The Insurance Frauds Prevention Act > 3. Insurance Fraud Reporting


text: Any information acquired pursuant to this article shall not be a part of any public record. Except as otherwise provided by law, any authorized governmental agency, an insurer, or an agent authorized by an insurer to act on its behalf, which receives any information furnished pursuant to this article, shall not release that information to public inspection until the time that its release is required in connection with a criminal or civil proceeding.

history: (History: Added by Stats. 1989, Ch. 1119, Sec. 3.)

article: 3. Insurance Fraud Reporting


text: In the absence of fraud or malice, no insurer, or any employee or agent authorized by an insurer to act on behalf of the insurer, and no authorized governmental agency or its respective employees, shall be subject to any civil liability for libel, slander, or any other relevant cause of action by virtue of releasing or receiving any information pursuant to Section 1873 or 1873.1. Nothing in this article is intended to, nor does in any way or manner, abrogate or lessen the existing common law or statutory privileges and immunities of an insurer, or any employee or agent authorized by the insurer to act on behalf of the insurer, or of any authorized governmental agency or its respective employees.

article: 3. Insurance Fraud Reporting


text:
(a) For purposes of this article and Article 2 (commencing with Section 1872), “insurance fraud” does not include motor vehicle theft and motor vehicle insurance fraud reporting subject to the provisions of Article 4 (commencing with Section 1874), or workers’ compensation insurance fraud reporting subject to Article 7 (commencing with Section 1877).

(b) As used in this article, “authorized governmental agency” means the Department of the California Highway Patrol, the Department of Motor Vehicles, the Department of Insurance, the Department of Justice, the police department of a city, or a city and county, the sheriff’s office or department of a county, the district attorney of any county, or city and county, those agencies employing officers designated in subdivisions (a) and (b) of Section 830.1, subdivision (a) of Section 830.2, and subdivisions (b), (d), and (k) of Section 830.3 of the Penal Code, any other law enforcement agency of this state or any city or county, or city and county, and any licensing agency governed by the Business and Professions Code.

history: (History: Amended by Stats. 1991, Ch. 116, Sec. 18.)

article: 3. Insurance Fraud Reporting


text: Any or all information released or received by an authorized governmental entity pursuant to Section 1873 or 1873.1 shall be provided by that agency to the Fraud Division within 10 days of the agency’s receipt of the information.

history: (History: Amended by Stats. 2005, Ch. 717, Sec. 13. Effective January 1, 2006.)

article: 3. Insurance Fraud Reporting


citation: INS § 1874

text: This article shall be known and may be cited as the Motor Vehicle Theft and Motor Vehicle Insurance Fraud Reporting Act.

path: 1. GENERAL RULES GOVERNING INSURANCE > 2. THE BUSINESS OF INSURANCE > 12. The Insurance Frauds Prevention Act > 4. Motor Vehicle Theft and Motor Vehicle Insurance Fraud Reporting


text:
The following definitions govern the construction of this article, unless the context requires otherwise:

(a) “Authorized governmental agency” means the Department of the California Highway Patrol, the Department of Insurance, the Department of Justice, the Department of Motor Vehicles, the police department of a city, or a city and county, the sheriff’s office or department of a county, a law enforcement agency of the federal government, the district attorney of any county, or city and county, and any licensing agency governed by the Business and Professions Code or the Chiropractic Initiative Act.

(b) “Relevant” means having a tendency to make the existence of any fact that is of consequence to the investigation or determination of an issue more probable or less probable than it would be without the information.

(c) Information shall be deemed important if, within the sole discretion of the authorized governmental agency, that information is requested by that authorized governmental agency.

(d) “Insurer” means the automobile assigned risk plan established pursuant to Section 11620 of the Insurance Code, as well as any insurer writing insurance for motor vehicles or otherwise liable for any loss due to motor vehicle theft or motor vehicle insurance fraud.

(e) “Motor vehicle” means motor vehicle as defined in Section 415 of the Vehicle Code.

history: (History: Amended by Stats. 2005, Ch. 415, Sec. 3. Effective January 1, 2006.)

article: 4. Motor Vehicle Theft and Motor Vehicle Insurance Fraud Reporting


text:
(a) Upon written request to an insurer by an authorized governmental agency, an insurer or agent authorized by that insurer to act on behalf of the insurer, shall release to the requesting authorized governmental agency any or all relevant information deemed important to the authorized governmental agency that the insurer may possess relating to any specific motor vehicle theft or motor vehicle insurance fraud. Relevant information may include, but is not limited to, all of the following:

(1) Insurance policy information relevant to the motor vehicle theft or motor vehicle insurance fraud under investigation, including, but not limited to, any application for a policy.

(2) Policy premium payment records that are available.

(3) History of previous claims made by the insured.

(4) Information relating to the investigation of the motor vehicle theft or motor vehicle insurance fraud, including statements of any person, proof of loss, and notice of loss.

(b) (1) When an insurer knows or reasonably believes it knows the identity of a person whom it has reason to believe committed a criminal or fraudulent act relating to a motor vehicle theft or motor vehicle insurance claim or has knowledge of the criminal or fraudulent act that is reasonably believed not to have been reported to an authorized governmental agency, then, for the purpose of notification and investigation, the insurer, or an agent authorized by an insurer to act on its behalf, shall notify the local police department, sheriff’s office, the Department of the California Highway Patrol, or district attorney’s office, and may notify any other authorized governmental agency of that knowledge or reasonable belief and provide any additional information in accordance with subdivision (a).

(2) When an insurer provides the local police department, sheriff’s office, Department of the California Highway Patrol, or district attorney’s office with notice pursuant to this section, it shall be deemed sufficient notice to all authorized governmental agencies for the purpose of this chapter. Nothing in this section shall relieve an insurer of its obligations under Section 1872.4.

(3) Nothing in this subdivision shall abrogate or impair the rights or powers created under subdivision (a).

(c) The authorized governmental agency provided with information pursuant to subdivision (a) or (b) may release or provide that information to any other authorized governmental agency.

(d) An authorized governmental agency shall notify the affected insurer in writing when it has reason to believe that a fraudulent act relating to a motor vehicle theft or motor vehicle insurance claim has been committed. The agency shall provide this notice within a reasonable time, not to exceed 30 days. The agency may also release more specific information pursuant to this section when it determines that an ongoing investigation would not be jeopardized. The agency may require a fee from the insurer equal to the cost of providing the notice or the information specified in this section.

(e) An insurer providing information to an authorized agency pursuant to this section shall provide the information within a reasonable time, but not to exceed 30 days from the day on which the duty arose.

history: (History: Amended by Stats. 2006, Ch. 538, Sec. 461. Effective January 1, 2007.)


text:
(a) Any information acquired pursuant to this article shall not be a part of any public record. Except as otherwise provided by law, any authorized governmental agency, an insurer, or an agent authorized by an insurer to act on its behalf, which receives any information furnished pursuant to this article shall not release that information to public inspection.

(b) The evidence or information described in this section shall be privileged and shall not be subject to subpoena or subpoena duces tecum in a civil or criminal proceeding unless, after reasonable notice to any insurer, agent authorized by an insurer to act on its behalf, and an authorized governmental agency which has an interest in the information, and a hearing, the court determines that the public interest and any ongoing investigation by the authorized governmental agency, insurer, or an agent authorized by an insurer to act on its behalf will not be jeopardized by its disclosure, or by the issuance of and compliance with a subpoena or subpoena duces tecum.


text: In the absence of fraud or malice, no insurer, or agent authorized by an insurer to act on behalf of the insurer, and no authorized governmental agency or its employees, shall be subject to any civil liability in a cause of action of any kind for releasing or receiving any information pursuant to Section 1874.1 or 1874.2. Nothing in this chapter is intended to, nor does in any way or manner, abrogate or lessen the existing common law or statutory privileges and immunities of an insurer, agent authorized by that insurer to act on behalf of the insurer, or of any authorized governmental agency or its employees.


text:
Every insurer shall report covered private passenger automobiles involved in theft and salvage total losses, including the vehicle identification number and any other information as may be required, to the National Automobile Theft Bureau or a similar central organization engaged in automobile loss prevention approved by the commissioner, in accordance with regulations promulgated by the commissioner.

Prior to the payment of total theft losses, insurers shall comply with verification procedures in accordance with regulations adopted by the commissioner.

No insurer, the National Automobile Theft Bureau, or a similar central organization, engaged in automobile loss prevention approved by the commissioner, or their employees or agents, shall be liable for damages in a civil action when the insurer or person acts pursuant to this section in good faith, without malice, and in reasonable belief that the action taken is warranted by the known facts after a reasonable effort to obtain the facts.

As used in this section “private passenger automobile” a motor vehicle of the private passenger or station wagon type, any other four-wheel vehicle with a load capacity of 1,500 pounds or less, or a motorcycle.

history: (History: Added by Stats. 1990, Ch. 948, Sec. 2.)


text:
(a) Each insurer doing business in this state shall pay an annual special purpose assessment to be determined by the commissioner in an amount not to exceed fifty cents ($0.50) for each vehicle insured under an insurance policy it issues in this state, in order to fund the Fraud Division and the Organized Automobile Fraud Activity Interdiction Program.

(b) (1) From the funds to be distributed to district attorneys under this section, the commissioner shall fund between three and 10 grants at any one time for a coordinated program targeted at the successful prosecution and elimination of organized automobile fraud activity. These grants may be awarded only to district attorneys.

(2) In determining whether to award a district attorney a grant pursuant to this subdivision, the commissioner shall consider factors indicating organized automobile fraud activity in the district attorney’s county, including, but not limited to, the county’s level of general criminal activity, population density, automobile insurance claims frequency, number of suspected fraudulent claims, and prior and current evidence of organized automobile fraud activity. Funding priority shall be given to those grant applications with the potential to have the greatest impact on reducing organized automobile insurance fraud activity committed by an insurer’s employees or agents, brokers, insureds, and others, and lessening the economic losses realized by insurers from that fraud.

(3) All participants of a grant under this subdivision shall coordinate their efforts and work in conjunction with the Fraud Division, other participating agencies, and all interested insurers in this regard.

(c) Of the funds collected pursuant to this section, upon appropriation by the Legislature, 42.5 percent shall be distributed to district attorneys, 42.5 percent shall be distributed to the Fraud Division, and 15 percent shall be distributed to the Department of the California Highway Patrol. Funds distributed pursuant to this section to the Fraud Division and to the Department of the California Highway Patrol shall be used to fund Fraud Division and Department of the California Highway Patrol investigators to work in conjunction with district attorneys who are awarded grants. Each grantee shall be notified by the Fraud Division of the identity of the investigators assigned to work with the grantee. In accordance with the terms and conditions of the applicable grant, each grantee shall provide the Fraud Division with information resulting from the investigations the grantee conducts pursuant to this section. This section does not prohibit the referral of any cases developed by the Fraud Division to any appropriate prosecutorial entity.

(d) A grant under this section shall be awarded on the basis of a single application for a period of three years and shall be subject where applicable to the requirements of subdivision (b) of Section 1872.8, except for the requirement that grants be awarded according to population. Continued funding of a grant shall be contingent upon a grantee’s successful performance, as determined by an annual review by the commissioner. Any redirection of grant funds under this section shall be made only for good cause. The Department of the California Highway Patrol shall submit to the commissioner, for informational purposes only, an annual report on its expenditure of funds under this section in the same format as is required of grantees under this section.

(e) Two or more district attorneys may submit a joint application for a grant award under this section.

(f) The Fraud Division shall report to the Governor, the Legislature, and to the committees of the Senate and Assembly having jurisdiction over insurance on the results of the grant program established by this section, including funding distributed to the Department of the California Highway Patrol in the annual report submitted pursuant to Section 12922.

(g) For purposes of this section, “organized automobile fraud activity” means two or more persons who conspire, aid and abet, or in any other manner act together, to engage in economic automobile theft as defined in subdivision (f) of Section 1872.8, or to violate any of the following sections in a manner that involved an automobile insurance claim:

(1) Section 650 or 6152 of the Business and Professions Code.

(2) Section 750.

(3) Section 549, 550, or 551 of the Penal Code.

history: (History: Repealed and added by Stats. 2013, Ch. 347, Sec. 5. (SB 476) Effective January 1, 2014.)


text: An insurer that issues automobile liability or collision policies shall inspect vehicles for which it has approved a claim for the cost of auto body repairs, either during the repair process or after the work has been completed, and the number of vehicles inspected shall be a statistical sampling sufficient to demonstrate to the department the insurer’s efforts to reduce fraudulent auto body work during a calendar year.

history: (History: Amended by Stats. 2002, Ch. 664, Sec. 154. Effective January 1, 2003.)

article: 4.5. Insurer Inspections

path: 1. GENERAL RULES GOVERNING INSURANCE > 2. THE BUSINESS OF INSURANCE > 12. The Insurance Frauds Prevention Act > 4.5. Insurer Inspections


text:
Each insurer subject to this article shall report, at the request of the commissioner, but not more than annually, to the department on the following:

(a) The number of vehicles inspected pursuant to Section 1874.85 and the percentage that this number represents of the total number of vehicles for which it paid a claim for the cost of auto body repairs in the prior calendar year.

(b) The results of the inspections, including the nature of any fraud uncovered, and whether or not legal action was pursued.

The department shall make the information provided pursuant to this section available to the California Highway Patrol and the Bureau of Automotive Repair.

history: (History: Amended by Stats. 2010, Ch. 400, Sec. 27. (AB 2782) Effective January 1, 2011.)

article: 4.5. Insurer Inspections


text:
(a) Each insurer subject to this article shall provide each insured with an Auto Body Repair Consumer Bill of Rights either at the time of application for an automobile insurance policy or following an accident that is reported to the insurer. If the insurer provides the insured with an electronic copy of a policy, the bill of rights may also be transmitted electronically.

(b) The bill of rights shall be a standardized form developed by the department with the purpose of presenting easy-to-read facts for auto insurance consumers. The content of the bill of rights shall be determined by the department, and at a minimum, shall contain information about all of the following:

(1) A consumer’s right to select an auto body repair shop for auto body damage covered by the insurance policy and that an insurer may not require this work to be done at a particular auto body repair shop.

(2) The consumer’s right to be informed about auto body repairs made with new original equipment crash parts, new aftermarket crash parts, and used crash parts.

(3) The consumer’s right to be informed about coverage for towing services, and for a replacement rental vehicle while a damaged vehicle is being repaired.

(4) Toll-free telephone numbers and Internet addresses for reporting suspected fraud or other complaints and concerns about auto body repair shops to the Bureau of Automotive Repair.

(5) A consumer’s right to seek and obtain an independent repair estimate directly from a registered auto body repair shop for repair of a damaged vehicle, even when pursuing an insurance claim for repair of that vehicle.

(c) The department shall consult with the Bureau of Automotive Repair in determining the information to be contained in the bill of rights.

history: (History: Amended by Stats. 2009, Ch. 141, Sec. 1. (AB 1179) Effective January 1, 2010.)

article: 4.5. Insurer Inspections


text: The commissioner may declare any region of the state as an auto insurance fraud crisis area upon making a finding that auto insurance fraud is endemic to the area. That declaration of an auto insurance fraud crisis area shall be in effect for not more than two years, unless extended or renewed by the commissioner. Auto insurance fraud is endemic to an area if the commissioner determines that organized automobile fraud activity exists in the area and contributes significantly to the cost of automobile insurance in that area.

history: (History: Added by Stats. 2000, Ch. 867, Sec. 19. Effective January 1, 2001.)

article: 4.6. Auto Insurance Fraud Crisis Areas

path: 1. GENERAL RULES GOVERNING INSURANCE > 2. THE BUSINESS OF INSURANCE > 12. The Insurance Frauds Prevention Act > 4.6. Auto Insurance Fraud Crisis Areas


citation: INS § 1875

text:
As used in this chapter:

(a) “Authorized agency” means any of the following officers or agencies, or their duly authorized representatives, when investigating or prosecuting arson in connection with a specific fire: the State Fire Marshal, the Director of the Department of Forestry and Fire Protection, the chief of any city or county fire department, the chief of any fire protection district, the Attorney General, any district attorney, or any peace officer, the Department of Insurance, and any federal agency.

(b) “Insurer” means any insurer admitted to write, or otherwise issuing, fire insurance covering property in this state and includes its agents, servants, investigators, and adjusters. “Insurer” includes the California FAIR Plan.

history: (History: Amended by Stats. 1991, Ch. 602, Sec. 2.)

article: 5. Arson Investigations

path: 1. GENERAL RULES GOVERNING INSURANCE > 2. THE BUSINESS OF INSURANCE > 12. The Insurance Frauds Prevention Act > 5. Arson Investigations


text:
An authorized agency may, when there is evidence or suspicion that the crime of arson has been committed, request any insurer to release all information in its possession that the authorized agency determines to be relevant to the crime. The insurer shall release the following:

(a) Any insurance policy or any application for such a policy.

(b) Policy premium payment records.

(c) History of previous claims made by the insured for fire loss.

(d) Material relating to the investigation of the loss, including the statement of any person, proof of loss, and any other relevant evidence.

article: 5. Arson Investigations


text:
If any insurer has reason to suspect that a fire loss was caused by incendiary means, the insurer shall furnish an authorized agency with all relevant information acquired during its investigation of the fire loss and cooperate in an investigation by an authorized agency.

The authorized agency provided with the information pursuant to this article may release that information to any of the other authorized agencies.

article: 5. Arson Investigations


text: An authorized agency shall notify the insurer, if known, and at the expense of the insurer, whenever it has reason to believe that a fire loss was not accidentally caused. The agency shall also release to the claimant’s insurer specific information regarding the fire loss at the earliest time possible unless it determines that an ongoing investigation would be jeopardized.

history: (History: Amended by Stats. 1991, Ch. 602, Sec. 3.)

article: 5. Arson Investigations


text:
In the absence of fraud or malice, no insurer or person acting in its behalf who (a) furnishes information whether oral or written, pursuant to this article, or (b) assists in any investigation conducted by an authorized agency, shall be liable for damages in a civil action, nor shall any authorized agency which releases information pursuant to this chapter be liable for damages in a civil action.

The act of furnishing information required pursuant to this article shall not constitute an act of fraud or malice.

article: 5. Arson Investigations


text: In any case in which an insurer willfully fails to comply with this article, the authorized agency may petition the superior court in an appropriate county for an order requiring compliance.

article: 5. Arson Investigations


text: Any authorized agency that receives any information furnished as required by this article shall not make the information public until the time that its release is required in connection with a criminal or civil proceeding.

history: (History: Amended by Stats. 1991, Ch. 602, Sec. 4.)

article: 5. Arson Investigations


text:
(a) There is hereby created the Arson Information Reporting System to permit insurers, law enforcement agencies, fire investigative agencies, and district attorneys to deposit arson case information in a common data base within the Department of Justice. The State Fire Marshal shall oversee the establishment, operation, and maintenance of the Arson Information Reporting System. The Department of Justice shall implement the Arson Information Reporting System in consultation with the State Fire Marshal.

(b) The purpose of the data base is to identify utilization patterns by individual claimants and the methods of operation of individuals, groups, or businesses engaged in the commission of arson, and to prevent the commission of insurance fraud by arson.

(c) The use of the information deposited pursuant to this article shall be made available to law enforcement agencies, fire investigative agencies, district attorneys, and insurers, via modem, for the purpose of investigating and prosecuting arson and arson-related insurance fraud, or evaluating the validity and payment of fire-related insurance claims. The State Fire Marshal shall establish rules governing the access to, and use of, information and the circumstances under which information may be accessed and corrected.

(d) Any information acquired pursuant to this section shall not be a part of any public record. Except as otherwise provided by law, any authorized governmental agency, an insurer, or an agent authorized by an insurer to act on its behalf, which receives any information furnished pursuant to this section, shall not release that information to public inspection until the time that its release is required in connection with a criminal or civil proceeding.

(e) Information submitted to the State Fire Marshal pursuant to this section concerning active cases shall be confidential.

(f) Nothing in this section shall prohibit the accumulation and public distribution by the bureau of statistical data if that data does not reveal the identity of specific claimants, injured parties, attorneys, physicians, or other service providers.

history: (History: Added by Stats. 1994, Ch. 420, Sec. 1. Effective January 1, 1995.)

article: 5. Arson Investigations


text:
The Legislature finds and declares as follows:

(a) That the business of insurance involves many transactions which have potential for abuse and illegal activities.

(b) That insurers and their policyholders ultimately pay the cost of fraudulent insurance claims.

(c) That the operation of insurance claims analysis bureaus would be to the benefit of the public, regulators, law enforcement, prosecutors, and insurers in suppressing and preventing insurance claims fraud.

(d) That the purpose of insurance claims analysis bureaus is to provide a data service to encourage the identification of utilization patterns by individuals or businesses who provide services in support of insurance claims, and by individual claimants themselves, in order to facilitate the identification and prevention of fraudulent activities.

(e) That promotion of an effective public-private partnership between the insurance industry and the commissioner to share data on suspected fraudulent claims is necessary to avoid unnecessary duplication and expense in reporting that data.

(f) It is the intent of the Legislature that, to promote a data-sharing partnership that is efficient and cost-effective, the commissioner and the bureau make every effort to obtain suspected fraudulent claims data from reporting and collection sources already in existence and supported by the insurance industry, by licensing those sources as claims analysis bureaus, as provided in this chapter.

history: (History: Amended by Stats. 1994, Ch. 1247, Sec. 4. Effective January 1, 1995.)

article: 5.5. Insurance Claims Analysis Bureaus

path: 1. GENERAL RULES GOVERNING INSURANCE > 2. THE BUSINESS OF INSURANCE > 12. The Insurance Frauds Prevention Act > 5.5. Insurance Claims Analysis Bureaus


text:
(a) No insurance claims analysis bureau shall conduct any operations in this state without first filing a written application with the commissioner and obtaining a license to act in that capacity.

(b) As used in this section, an insurance claims analysis bureau is an organization, duly licensed pursuant to this article, which collects claims information and data from and disseminates claims information and data to its members or subscribers which is utilized for the purpose of the prevention and suppression of insurance fraud.

history: (History: Added by Stats. 1991, Ch. 1222, Sec. 3.)

article: 5.5. Insurance Claims Analysis Bureaus


text:
(a) The commissioner may license an organization as an insurance claims analysis bureau if it meets the following qualifications:

(1) Is a nonprofit corporation organized for the purpose of fraud prevention or is a corporation that has made the filings required by Section 1855.2.

(2) Has at least two years of experience, or has a managing officer with at least two years of experience, determined by the commissioner to be relevant to operation of an insurance claims analysis bureau, or has at least two years’ experience collecting and compiling insurance statistical information.

(3) Has a member or subscriber base of sufficient size that is, in the opinion of the commissioner, adequate to assure uniformity in data collection and cost efficiency to the insurer.

(4) Maintains its records in a computerized format.

(b) An applicant seeking a license as an insurance claims analysis bureau shall file with the commissioner the following documents:

(1) A copy of its articles of incorporation, its bylaws, and any rules and regulations governing the conduct of its business.

(2) A list of members or subscribers.

(3) A description of its technical capacity to collect and serve the volume of data necessary to act as an insurance claims analysis bureau.

(4) A statement establishing that the applicant meets the conditions set forth in subdivision (a).

(5) A certificate signed by an officer of the applicant that it will permit any licensed insurer to become a member or subscriber to the insurance claims analysis bureau.

(6) A statement of all of the following:

(A) That it will provide admitted insurers subject to Article 6 (commencing with Section 1876) the ability to submit required information to the claims analysis bureau at no cost to the insurer, and also provide nonmember or nonsubscriber insurers, at no cost to the insurer, any software that is specifically designed for the purpose of submitting information electronically that the bureau requires its insurers to use.

(B) That information from its data base will be made available to state law enforcement agencies pursuant to existing law, and that it will be made available at no cost to those agencies.

(c) This section shall not be interpreted to provide any nonmember or nonsubscriber any rights of membership or subscription in an organization licensed as an insurance claims analysis bureau.

history: (History: Amended by Stats. 1997, Ch. 501, Sec. 2.8. Effective January 1, 1998.)

article: 5.5. Insurance Claims Analysis Bureaus


text:
The commissioner shall license an insurance claims analysis bureau by class of claims, if an insurance claims analysis bureau makes application and is appropriately qualified, for the following classes of claims:

(a) Automobile bodily injury, which shall include liability, uninsured motorist, and medical payment.

(b) Automobile physical damage.

(c) Automobile theft.

(d) Fire and allied lines property damage.

(e) General liability bodily injury.

(f) Disability.

(g) Life.

(h) Workers’ compensation.

article: 5.5. Insurance Claims Analysis Bureaus


text:
An insurance claims analysis bureau shall perform the following functions:

(a) Collect and compile information and data from members or subscribers concerning insurance claims.

(b) Disseminate information to members or subscribers relating to insurance claims for the purpose of preventing and suppressing insurance fraud.

(c) Promote training and education to further insurer investigation, suppression, and prosecution of insurance fraud.

(d) Provide, without fee or charge, to the commissioner, all California data and information contained in the records of the insurance claims analysis bureau in furtherance of the prevention and prosecution of insurance fraud.

article: 5.5. Insurance Claims Analysis Bureaus


text:
(a) A licensed insurance claims analysis bureau shall develop rules governing the kind, quality, and frequency of data reporting, which shall be binding on all subscribers or members. The commissioner may require development of new claims categories for the suppression and prevention of fraud.

(b) Every member or subscriber shall report, at a minimum, the following regarding any category of claims:

(1) Name of claimant.

(2) Address of claimant.

(3) Date of accident or incident.

(4) Identification of medical provider, if applicable.

(5) Identification of property repair vendor, if applicable.

(6) Identification of members or subscribers and, if applicable, adjusters.

(7) Identification of attorneys representing claimants, if applicable.

(8) Description of claim.

(9) Claimant’s driver license or California Identification card number, if applicable.

(10) Claimant’s social security number, if known to the insurer.

(11) Vehicle license numbers, if the claim involves automobile insurance.

(12) Vehicle identification numbers, if known and the claim involves automobile insurance.

history: (History: Amended by Stats. 1994, Ch. 1248, Sec. 2. Effective January 1, 1995.)

article: 5.5. Insurance Claims Analysis Bureaus


text: Unless otherwise provided by law, any authorized entity which receives any information furnished pursuant to this article shall not release that information to public inspection (1) until such time as its release is required in connection with a criminal or civil proceeding, or (2) is necessary to analyze and present information for release in an insurance claims analysis bureau’s annual report. Any information acquired pursuant to this article shall not be part of any public record nor subject to disclosure under the California Public Records Act.

article: 5.5. Insurance Claims Analysis Bureaus


text: On or before May 1, 1992, and on or before May 1 of each year thereafter, any licensed insurance claims analysis bureau shall file with the department a report on the scope and extent of its activities in this state for the preceding year.

article: 5.5. Insurance Claims Analysis Bureaus


text:
(a) Every bodily injury, medical payment, or uninsured motorist claim made under a policy of automobile insurance shall be available, upon request, to law enforcement agencies in this state, whenever that claim relates to an event that occurred within the state.

(b) Every claim subject to subdivision (a) shall be available without regard to any limitation in the Insurance Information and Privacy Protection Act (Article 6.6 (commencing with Section 791) of Chapter 1), or any other provision of law, whether or not the law enforcement agency has formed a reasonable belief that a violation of law may have occurred with regard to the claim.

(c) (1) A licensed insurance claims analysis bureau shall provide automobile claims information, upon request, to a law enforcement agency pursuant to the authority in subdivision (a).

(2) A licensed insurance claims analysis bureau, and any person employed therein, that provides information pursuant to this section shall have the same immunity provided under Section 791.21 as any person disclosing personal or privileged information under Article 6.6 (commencing with Section 791) of Chapter 1.

(d) (1) Claims information requested by law enforcement agencies, pursuant to the authority in this section, shall be used solely for the purpose of investigating and prosecuting automobile insurance fraud. Those requests shall be narrowly formulated in order to protect the privacy rights of citizens of this state, while obtaining the information necessary to conduct specific investigations.

(2) The commissioner shall establish rules governing the access to, and use of, any information requested or obtained pursuant to this section, and the circumstances under which that information may be inspected and corrected.

history: (History: Added by Stats. 1997, Ch. 501, Sec. 3. Effective January 1, 1998.)

article: 5.5. Insurance Claims Analysis Bureaus


text: Every insurer admitted to do business in this state, except those otherwise exempted in this code, shall provide for the continuous operation of a unit or division to investigate possible fraudulent claims by insureds or by persons making claims for services or repairs against policies held by insureds.

history: (History: Amended by Stats. 2005, Ch. 717, Sec. 15. Effective January 1, 2006.)

article: 5.6. Insurer Fraud Investigation

path: 1. GENERAL RULES GOVERNING INSURANCE > 2. THE BUSINESS OF INSURANCE > 12. The Insurance Frauds Prevention Act > 5.6. Insurer Fraud Investigation


text: Insurers may maintain the unit or division required by this article using its employees or by contracting with others for that purpose.

history: (History: Added by Stats. 1991, Ch. 1222, Sec. 4.)

article: 5.6. Insurer Fraud Investigation


text: Insurers shall establish the unit or division required by this article no later than July 1, 1992.

article: 5.6. Insurer Fraud Investigation


text: For purposes of this article, “unit or division” may include the assignment of fraud investigation to employees whose principal responsibilities are the investigation and disposition of claims. If an insurer creates a distinct unit or division, hires additional employees, or contracts with another entity to fulfill the requirements of this article, the additional cost incurred shall be included as an administrative expense for ratesetting purposes.

article: 5.6. Insurer Fraud Investigation


text:
(a) If after examination, or upon the basis of other information, the commissioner has good cause to believe that an insurer to whom the provisions of this article apply does not comply with the requirements of this article, or with the regulations set forth in Article 2 (commencing with Section 2698.30) of Subchapter 9 of Chapter 5 of Title 10 of the California Code of Regulations, the commissioner shall notify the insurer of its noncompliance. The notice shall state in what manner and to what extent the noncompliance is alleged to exist, shall specify a reasonable time, not less than 10 days thereafter, in which the noncompliance may be corrected, and shall set forth the amount of any penalty that may be due under subdivision (b).

(b) Any insurer that fails to comply with the provisions of this article or with the regulations described in subdivision (a) shall be liable to the state for a civil penalty not to exceed five thousand dollars ($5,000) for each act, or, if the act was willful, a civil penalty not to exceed ten thousand dollars ($10,000) for each act. The commissioner shall have the discretion to determine what constitutes an act. However, when violations relative to the maintenance and operation of the unit or division are inadvertent, the violations shall be considered a single act for the purpose of this section. Any penalty imposed by the commissioner pursuant to this section shall be determined as provided in subdivision (d) of this section and Article 19 (commencing with Section 2591) of Subchapter 3 of Chapter 5 of Title 10 of the California Code of Regulations. Notwithstanding subdivision (c) of Section 2591.1 of Title 10 of the California Code of Regulations, enforcement of any provision of this section shall be deemed an enforcement action pursuant to Article 19 (commencing with Section 2591) of Subchapter 3 of Chapter 5 of that title.

(c) An insurer served with a notice of noncompliance described herein shall, within the time specified therein, do one or more of the following:

(1) Establish to the satisfaction of the commissioner that the noncompliance does not exist.

(2) Request a hearing, notice of which must be given at least 30 days prior to the date set for a hearing.

(3) Enter into a consent order with the commissioner to correct the specified noncompliance within the time period specified in the consent order.

(d) If, after hearing, the commissioner finds that the facts alleged in the notice of noncompliance are true, he or she shall issue an order requiring compliance with the provisions of this article within a reasonable time. An insurer that fails to comply with an order issued by the commissioner, including a consent order, shall be liable to the state for a civil penalty not to exceed ten thousand dollars ($10,000) for each day the insurer fails to comply with the provisions of the order. Any order, including any consent order, issued pursuant to this section shall specify the amount of the penalty due under subdivision (b), and shall indicate that an additional penalty shall be imposed for each day the insurer fails to comply with the order within the time specified therein. In addition to any other remedy provided by statute, regulation, or otherwise, the commissioner may direct the insurer to take any other corrective action that he or she may deem necessary and proper.

(e) The commissioner shall adopt regulations necessary to implement this section in accordance with the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).

history: (History: Added by Stats. 2004, Ch. 596, Sec. 1. Effective January 1, 2005.)

article: 5.6. Insurer Fraud Investigation


citation: INS § 1876

text: Every insurer who receives a bodily injury, medical payment, or uninsured motorist claim made under a policy of automobile liability insurance defined in Section 660 or Section 11622 shall within 20 days of the receipt of that claim deposit that claim information with a licensed insurance claims analysis bureau. The claims information deposited pursuant to this section shall include at least the following: (1) the claimant’s driver’s license number or California identification card number, if applicable; (2) the vehicle license number; (3) the vehicle identification number, if known; and (4) the claimant’s social security number, if known to the insurer.

history: (History: Added by renumbering Section 1876.2 by Stats. 1997, Ch. 501, Sec. 7. Effective January 1, 1998.)

path: 1. GENERAL RULES GOVERNING INSURANCE > 2. THE BUSINESS OF INSURANCE > 12. The Insurance Frauds Prevention Act > 6. Deposit of Automobile Insurance Claims Information


text:
Any information acquired pursuant to this article shall not be part of any public record except as follows: Except as otherwise provided by law, any authorized governmental agency, and insurer, or an agent authorized by an insurer to act on its behalf, which receives any information furnished pursuant to this article shall not release that information to public inspection until such time as its release is required in connection with a criminal or civil proceeding; to analyze and present information for release in the bureau’s annual report pursuant to subdivision (h) of Section 1872.9.

Nothing in this section shall prohibit the accumulation and public distribution by the bureau of statistical data if that data does not reveal the identity of specific claimants, injured parties, attorneys, physicians, or other service providers.

history: (History: Amended by Stats. 1991, Ch. 1222, Sec. 7.)

article: 6. Deposit of Automobile Insurance Claims Information


text: No insurer, or the employees or agents of any insurer, shall be subject to civil liability for libel, slander, or any other tort cause of action arising from the deposit or furnishing of any information or data pursuant to this article.

history: (History: Added by Stats. 1989, Ch. 1119, Sec. 3.)


text: As used in this article, “authorized governmental agency” and “insurer” have the same meaning as is given by Section 1874.1.


citation: INS § 1877

text: This article shall be known and may be cited as the Workers’ Compensation Insurance Fraud Reporting Act.

history: (History: Added by Stats. 1991, Ch. 116, Sec. 19.)

path: 1. GENERAL RULES GOVERNING INSURANCE > 2. THE BUSINESS OF INSURANCE > 12. The Insurance Frauds Prevention Act > 7. Workers’ Compensation Insurance Fraud Reporting


text:
The following definitions govern the construction of this article, unless the context requires otherwise:

(a) “Authorized governmental agency” means the district attorney of any county, any city attorney whose duties include criminal prosecutions, any law enforcement agency investigating workers’ compensation fraud, the office of the Attorney General, the Department of Insurance, the Department of Industrial Relations, the Employment Development Department, the Department of Corrections and Rehabilitation, the Public Employees’ Retirement System, and any licensing agency governed by the Business and Professions Code.

(b) “Relevant” means having a tendency to make the existence of any fact that is of consequence to the investigation or determination of an issue more probable or less probable than it would be without the information.

(c) “Insurer” means an insurer admitted to transact workers’ compensation insurance in this state, the State Compensation Insurance Fund, an employer that has secured a certificate of consent to self-insure pursuant to subdivision (b) or (c) of Section 3700 of the Labor Code, or a third-party administrator that has secured a certificate pursuant to Section 3702.1 of the Labor Code.

(d) “Licensed rating organization” means a rating organization licensed by the Insurance Commissioner pursuant to Section 11750.1.

(e) Information shall be deemed important if, within the sole discretion of the authorized governmental agency, that information is requested by that authorized governmental agency.

history: (History: Amended by Stats. 2008, Ch. 369, Sec. 6. Effective January 1, 2009.)

article: 7. Workers’ Compensation Insurance Fraud Reporting


text: For the purposes of this article, “authorized governmental agency” includes, in addition to the entities listed in subdivision (a) of Section 1877.1, any licensing agency governed by the Chiropractic Initiative Act.

history: (History: Added by Stats. 2005, Ch. 415, Sec. 4. Effective January 1, 2006.)


text:
(a) Upon written request to an insurer or a licensed rating organization by an authorized governmental agency, an insurer, an agent authorized by that insurer, or a licensed rating organization to act on behalf of the insurer, shall release to the requesting authorized governmental agency any or all relevant information deemed important to the authorized governmental agency that the insurer or licensed rating organization may possess relating to any specific workers’ compensation insurance fraud investigation.

(b) (1) When an insurer or licensed rating organization knows or reasonably believes it knows the identity of a person or entity whom it has reason to believe committed a fraudulent act relating to a workers’ compensation insurance claim or a workers’ compensation insurance policy, including any policy application, or has knowledge of such a fraudulent act, then, for the purpose of notification and investigation, the insurer, or agent authorized by an insurer to act on its behalf, or licensed rating organization shall notify the local district attorney’s office and the Fraud Division of the Department of Insurance, and may notify any other authorized governmental agency of that suspected fraud and provide any additional information in accordance with subdivision (a). The insurer or licensed rating organization shall state in its notice the basis of the suspected fraud.

(2) Insurers shall use a form prescribed by the department for the purposes of reporting suspected fraudulent workers’ compensation acts pursuant to this subdivision.

(3) This section does not abrogate or impair the rights or powers created under subdivision (a).

(c) The authorized governmental agency provided with information pursuant to subdivision (a), (b), or (e) shall, upon request, unless it would violate federal law or otherwise compromise an investigation, release or provide that information in a confidential manner to any other authorized governmental agency for purposes of investigation, prosecution, or prevention of insurance fraud or workers’ compensation fraud.

(d) An insurer or licensed rating organization providing information to an authorized governmental agency pursuant to this section shall provide the information within a reasonable time, but not exceeding 60 days from the day on which the duty arose.

(e) Upon written request by an authorized governmental agency, as specified in subdivision (o) of Section 1095 of the Unemployment Insurance Code, the Employment Development Department shall release to the requesting agency any or all relevant information that the Employment Development Department may possess relating to any specific workers’ compensation insurance fraud investigation. If an authorized governmental agency seeks to disclose this information to any other governmental agency that is not authorized to receive that information pursuant to subdivision (o) of Section 1095 of the Unemployment Insurance Code or subdivision (c) of Section 603.9 of Title 20 of the Code of Federal Regulations, that agency shall submit a request to the Employment Development Department for approval prior to disclosure. Relevant information may include, but is not limited to, all of the following:

(1) Copies of unemployment and disability insurance application and claim forms and copies of any supporting medical records, documentation, and records pertaining thereto.

(2) Copies of returns filed by an employer pursuant to Section 1088 of the Unemployment Insurance Code and copies of supporting documentation.

(3) Copies of benefit payment checks issued to claimants.

(4) Copies of any documentation that specifically identifies the claimant by social security number, residence address, or telephone number.

history: (History: Amended by Stats. 2023, Ch. 204, Sec. 13. (AB 1140) Effective January 1, 2024.)


text:
(a) Any information acquired pursuant to this article shall not be a part of the public record. Except as otherwise provided by law, any authorized governmental agency, an insurer, or an agent authorized to act on its behalf, which receives any information furnished pursuant to this article shall not release that information to any person not authorized to receive the information under this article. Any person who violates the prohibition of this subdivision is guilty of a misdemeanor.

(b) The evidence or information described in this section shall be privileged and shall not be subject to subpoena or subpoena duces tecum in a civil or criminal proceeding, unless, after reasonable notice to any insurer, an agent authorized by an insurer to act on its behalf, licensed rating organization, or authorized governmental agency which has an interest in the information, and a hearing, the court determines that the public interest and any ongoing investigation by the authorized governmental agency, insurer, or an agent authorized by the insurer to act on its behalf, or licensed rating organization will not be jeopardized by its disclosure, or by the issuance of and compliance with a subpoena or subpoena duces tecum.

history: (History: Amended by Stats. 2003, Ch. 636, Sec. 3. Effective January 1, 2004.)


text: No insurer, agent authorized by an insurer to act on its behalf, or licensed rating organization who furnishes information, written or oral, pursuant to this article, and no authorized governmental agency or its employees who (a) furnishes or receives information, written or oral, pursuant to this article, or (b) assists in any investigation of a suspected violation of Section 1871.1, 1871.4, 11760, or 11880, or of Section 549 of the Penal Code, or of Section 3215 or 3219 of the Labor Code conducted by an authorized governmental agency, shall be subject to any civil liability in a cause or action of any kind where the insurer, authorized agent, licensed rating organization, or authorized governmental agency acts in good faith, without malice, and reasonably believes that the action taken was warranted by the then known facts, obtained by reasonable efforts. Nothing in this chapter is intended to, nor does in any way or manner, abrogate or lessen the existing common law or statutory privileges and immunities of an insurer, agent authorized by that insurer to act on its behalf, licensed rating organization, or any authorized governmental agency or its employees.

history: (History: Amended by Stats. 2003, Ch. 636, Sec. 4. Effective January 1, 2004.)


text:
(a) The Public Employees’ Retirement System may request information from an insurer for any specific investigation of eligibility for, and unlawful application or receipt of, benefits provided under Part 3 (commencing with Section 20000) of Division 5 of Title 2 of the Government Code.

(b) Information received by the Public Employees’ Retirement System pursuant to this article may be used for purposes of determining eligibility for, and unlawful application or receipt of, benefits provided under Part 3 (commencing with Section 20000) of Division 5 of Title 2 of the Government Code.

history: (History: Added by Stats. 2008, Ch. 369, Sec. 7. Effective January 1, 2009.)


citation: INS § 1879

text: The purpose of this article is to confront aggressively the problem of insurance fraud in this state by facilitating the detection of insurance fraud, eliminating the occurrence of fraud through the development of fraud prevention programs, requiring the restitution of fraudulently obtained insurance benefits, and reducing the amount of premium dollars used to pay fraudulent claims.

history: (History: Added by Stats. 1994, Ch. 1008, Sec. 1. Effective January 1, 1995.)

article: 8. Insurance Fraud Prevention

path: 1. GENERAL RULES GOVERNING INSURANCE > 2. THE BUSINESS OF INSURANCE > 12. The Insurance Frauds Prevention Act > 8. Insurance Fraud Prevention


text:
(a) The commissioner or their designated deputy commissioner may convene meetings with representatives of insurance companies or representatives of self-insured employers to discuss specific information concerning suspected, anticipated, or completed acts of insurance fraud.

(b) A district attorney may convene meetings with representatives of insurance companies or representatives of self-insured employers to discuss specific information concerning suspected, anticipated, or completed acts of insurance fraud. The commissioner, their designated deputy commissioner, or designated employees of the department from the department’s Fraud Division or the department’s legal division shall attend such a meeting. Only one meeting per month may be convened pursuant to this subdivision. If more than one district attorney seeks to convene a meeting in a given month or a district attorney seeks to convene more than one meeting in a given month, then the commissioner shall choose which meeting the commissioner, their designated deputy commissioner, or designated employees of the department shall attend.

(c) The party that convenes a meeting pursuant to this section may invite a district attorney to participate in the meeting if the suspected, anticipated, or completed acts of insurance fraud to be discussed at the meeting previously occurred or may occur in the county that the district attorney represents.

(d) Information shared at a meeting convened pursuant to this section regarding specific suspected, anticipated, or completed acts of insurance fraud shall not make a person subject to civil liability for libel, slander, or any other relevant cause of action provided that all of the following requirements are met at the meeting:

(1) The commissioner, their designated deputy commissioner, or designated employees of the department from the department’s Fraud Division or the department’s legal division are present at the meeting or meetings.

(2) The commissioner, their designated deputy commissioner, or a designated employee of the department from the department’s Fraud Division or the department’s legal division advises meeting participants, at the beginning of any meeting convened pursuant to this section, of guidelines to ensure compliance with federal and state antitrust laws.

(3) There is no fraud or malice on the part of any of the following attending the meeting:

(A) The representatives of the insurance companies.

(B) The representatives of the self-insured employers.

(C) The commissioner, their designated deputy commissioner, or designated employees of the department.

(D) Any district attorney or their employees.

(e) A report of a fraudulent claim made by an insurance company under Section 1872.4 or made by a self-insured employer under Section 1877.3 that is based on information obtained at a meeting convened pursuant to this section shall comply with all requirements set forth in Section 1872.4 or 1877.3, as applicable, as well as Article 2 of Subchapter 9 of Chapter 5 of Title 10 of the California Code of Regulations and all other applicable regulations.

(f) If the commissioner reasonably believes or knows that a fraudulent claim is being made based on information obtained at a meeting convened pursuant to this section, the commissioner may share this information with any district attorney with whom the department has entered into a written agreement for the investigation and prosecution of insurance fraud.

(g) A district attorney may be represented at a meeting convened pursuant to this section only by employees who are licensees of the State Bar of California.

history: (History: Repealed and added by Stats. 2022, Ch. 861, Sec. 3. (AB 1681) Effective January 1, 2023.)

article: 8. Insurance Fraud Prevention


text:
The commissioner shall appoint supervisory and investigatory personnel within the bureau. In addition, the commissioner shall assign staff counsel who are employed by the department and are under the supervision of the department’s general counsel to advise the department’s fraud division, and to further the purposes of this article and Article 1 (commencing with Section 1871). The attorneys’ duties may include representing the commissioner and the department in civil lawsuits pursuant to Article 1 (commencing with Section 1871). Those persons shall be qualified by training and experience to perform the duties of their position.

When so requested by the commissioner, the Attorney General may assign one or more deputy attorneys general to assist the commissioner in the performance of these duties.

history: (History: Amended by Stats. 2005, Ch. 380, Sec. 2. Effective January 1, 2006.)

article: 8. Insurance Fraud Prevention


text:
(a) The Chief of the Fraud Division and those investigators designated by him or her may expend funds to conduct undercover activities, employ civilian operatives, or in any other manner not prohibited by law to investigate insurance fraud or workers’ compensation fraud.

(b) The money expended pursuant to subdivision (a) shall be paid out of the funds appropriated or made available by law for the support or use of the department.

history: (History: Amended by Stats. 2005, Ch. 717, Sec. 17. Effective January 1, 2006.)

article: 8. Insurance Fraud Prevention


text:
(a) Any person who believes that a violation of this article has been or is being made may notify the department immediately after discovery of the alleged violation and may send to the department, on a form and in a manner prescribed by the commissioner, the information requested and any additional information relative to the alleged violation as the department may request. The division shall review the reports and select those alleged violations as may require further investigation. It shall then cause an independent examination or evaluation of the facts surrounding the alleged violation to be made to determine the extent, if any, to which fraud, deceit, or intentional misrepresentation of any kind exists.

(b) No person shall be subject to civil liability for libel, violation of privacy, or otherwise by virtue of the filing of reports or furnishing of other information, in good faith and without malice, provided pursuant to this section or requested by the department as a result of the authority conferred upon it by law.

(c) The commissioner may, by regulation, require admitted insurers to keep any records and other information as he or she deems necessary for the effective enforcement of this article.

article: 8. Insurance Fraud Prevention


text: The commissioner may adopt administrative regulations as he or she deems necessary for the effective implementation of this article.

article: 8. Insurance Fraud Prevention


text: The commissioner shall report annually to the Legislature as to the activities of the department and the cost-effectiveness of the programs established pursuant to this article.

article: 8. Insurance Fraud Prevention


text: Nothing in this article shall be construed to preclude the applicability of any other provision of civil or criminal law that applies to any act committed or alleged to have been committed by any person.

article: 8. Insurance Fraud Prevention


citation: INS § 1880

text: The owner of a ship has in all cases an insurable interest in it, even when it has been chartered by one who agrees to pay him its value in case of loss.

history: (History: Enacted by Stats. 1935, Ch. 145.)

division: 2. CLASSES OF INSURANCE

part: 1. FIRE AND MARINE INSURANCE

chapter: 1. The Marine Contract

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 1. The Marine Contract > 1. Insurable Interests Peculiar to Marine Insurance


citation: INS § 1881

text: The insurable interest of the owner of a ship hypothecated by bottomry is only the excess of its value over the amount secured by bottomry.

article: 1. Insurable Interests Peculiar to Marine Insurance


citation: INS § 1882

text: Freightage, in marine insurance, signifies all the benefit derived by the owner, either from the chartering of the ship or its employment for the carriage of his own goods or those of others.


citation: INS § 1883

text: The owner of a ship has an insurable interest in expected freightage which he would have certainly earned but for the intervention of a peril insured against.


citation: INS § 1884

text: The interest mentioned in the last section exists, in the case of a charter party, when the ship has broken ground on the chartered voyage. If a price is to be paid for the carriage of goods it exists when they are actually on board, or there is some contract for putting them on board, and both ship and goods are ready for the specified voyage.


citation: INS § 1885

text: In marine insurance, a person who has an interest in the thing from which profits are expected to proceed, has an insurable interest in the profits.


citation: INS § 1886

text: The charterer of a ship has an insurable interest in it, to the extent that he is liable to be damaged by its loss.


citation: INS § 1900

text:
In marine insurance each party is bound to communicate, in addition to what is required in the case of other insurance:

(a) All the information which he possesses and which is material to the risk, except such as is exempt from such communication in the case of other insurance.

(b) The exact and whole truth in relation to all matters that he represents or, upon inquiry assumes to disclose.

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 1. The Marine Contract > 2. Concealment and Representations—Rules Peculiar to Marine Insurance


citation: INS § 1901

text: In marine insurance, information of the belief or expectation of a third person in reference to a material fact, is material.

article: 2. Concealment and Representations—Rules Peculiar to Marine Insurance


citation: INS § 1902

text: A person insured by a contract of marine insurance is presumed to have, at the time of insuring, knowledge of a prior loss, if the information might possibly have reached him in the usual mode of transmission and at the usual rate of communication.


citation: INS § 1903

text:
In marine insurance, concealment in respect to any of the following matters does not vitiate the entire contract, but merely exonerates the insurer from a loss resulting from the risk concealed:

(a) The national character of the insured.

(b) The liability of the subject matter to capture and detention.

(c) The liability to seizure from breach of foreign laws of trade.

(d) The want of necessary documents.

(e) The use of false and simulated papers.

history: (History: Amended by Stats. 2006, Ch. 538, Sec. 462. Effective January 1, 2007.)


citation: INS § 1904

text: In marine insurance, if a representation by the insured is intentionally false in any respect, whether material or immaterial, the insurer may rescind the entire contract.


citation: INS § 1905

text: The failure of subsequent circumstances to conform to a representation as to expectation does not, in the absence of fraud, avoid marine insurance.


citation: INS § 1920

text: In every marine insurance upon a ship or involving transportation by ship, a warranty is implied that the ship is seaworthy.

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 1. The Marine Contract > 3. Implied Warranties Peculiar to Marine Insurance


citation: INS § 1921

text: A ship is seaworthy when reasonably fit to perform the services and encounter the ordinary perils of the voyage contemplated by the parties to the policy.

article: 3. Implied Warranties Peculiar to Marine Insurance


citation: INS § 1922

text:
An implied warranty of seaworthiness is complied with if the ship is seaworthy at the time of the commencement of the risk, except in the following cases:

(a) When the insurance is made for a specified length of time, the implied warranty is not complied with unless the ship is seaworthy at the commencement of every voyage it undertakes during that time.

(b) When the insurance is upon the cargo and, by the terms of the policy, description of the voyage, or established custom of the trade, the cargo is to be transshipped at an intermediate port, the implied warranty is not complied with unless each vessel upon which the cargo is shipped or transshipped is seaworthy at the commencement of its particular voyage.


citation: INS § 1923

text:
A warranty of seaworthiness extends not only to the condition of the structure of the ship itself, but also requires that it be properly laden and provided with:

(a) A competent master.

(b) A sufficient number of competent officers and seamen.

(c) The requisite appurtenances and equipments.

(d) Other necessary or proper stores and implements for the voyage.


citation: INS § 1924

text: Where any portion of the voyage contemplated by a policy differs from other portions in respect to the things requisite to make the ship seaworthy therefor, a warranty of seaworthiness is complied with if, at the commencement of each portion, the ship is seaworthy with reference to that portion.


citation: INS § 1925

text: When a ship becomes unseaworthy during the voyage, an unreasonable delay in repairing the defect exonerates the insurer from liability on any loss arising from the defect.


citation: INS § 1926

text: A ship may be seaworthy for the purpose of insurance upon itself and, at the same time, unseaworthy for the purpose of insurance upon the cargo because of unfitness to receive the cargo.


citation: INS § 1927

text:
Where the nationality or neutrality of a ship or cargo is expressly warranted, it is implied that:

(a) The ship will carry the requisite documents to show such nationality or neutrality.

(b) It will not carry any documents which cast reasonable suspicion thereon.


citation: INS § 1940

text: When the voyage contemplated by marine insurance is described by the places of beginning and ending, the voyage insured is one which conforms to the course of sailing fixed by mercantile usage between those places.

article: 4. Effect of Course of Voyage

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 1. The Marine Contract > 4. Effect of Course of Voyage


citation: INS § 1941

text: If the course of sailing is not fixed by mercantile usage, the voyage insured by marine insurance is that way between the places specified which, to a master of ordinary skill and discretion, would seem the most natural, direct, and advantageous.

article: 4. Effect of Course of Voyage


citation: INS § 1942

text:
Deviation is:

(a) A departure from the course of the voyage insured.

(b) An unreasonable delay in pursuing the voyage.

(c) The commencement of an entirely different voyage.

article: 4. Effect of Course of Voyage


citation: INS § 1943

text:
A deviation is proper:

(a) When caused by circumstances over which neither the master nor the owner of the ship has any control.

(b) When necessary to comply with a warranty, or to avoid a peril, whether or not the peril is insured against.

(c) When made in good faith and upon reasonable grounds of belief in its necessity to avoid a peril.

(d) When made in good faith, for the purpose of saving human life or relieving another vessel in distress.

article: 4. Effect of Course of Voyage


citation: INS § 1944

text: Every deviation not specified in the last section is improper.

article: 4. Effect of Course of Voyage


citation: INS § 1945

text: An insurer is not liable for any loss happening to the subject matter of marine insurance after an improper deviation.

article: 4. Effect of Course of Voyage


citation: INS § 1960

text: A loss is either total or partial.

article: 5. Loss in Marine Insurance

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 1. The Marine Contract > 5. Loss in Marine Insurance


citation: INS § 1961

text: A total loss is either actual or constructive.

article: 5. Loss in Marine Insurance


citation: INS § 1962

text:
An actual total loss is caused by:

(a) A total destruction of the subject matter of insurance.

(b) The loss of the subject matter by sinking, or by being broken up.

(c) Any damage to the subject matter which renders it valueless to the owner for the purposes for which he held it.

(d) Any other event which entirely deprives the owner of the possession, at the port of destination, of the subject matter.

article: 5. Loss in Marine Insurance


citation: INS § 1963

text: A constructive total loss is one which gives to a person insured a right to abandon, under section 1971.

article: 5. Loss in Marine Insurance


citation: INS § 1964

text: An actual loss may be presumed from the continued absence of a ship without being heard of. The length of time which is sufficient to raise this presumption depends on the circumstances of the case.

article: 5. Loss in Marine Insurance


citation: INS § 1965

text: When a ship is prevented, at an intermediate port and by the perils insured against, from completing the voyage, the master shall make every exertion to procure, in the same or a contiguous port, another ship for the purpose of conveying the cargo to its destination. The liability of a marine insurer on the cargo continues after it is thus reshipped and such insurer is additionally liable as prescribed in section 1966.

article: 5. Loss in Marine Insurance


citation: INS § 1966

text: In addition to the liability mentioned in section 1965, a marine insurer is liable, up to the amount insured, for damages, expenses of discharging, storage, reshipment, extra freightage, and all other expenses incurred in saving cargo reshipped pursuant to section 1965.

article: 5. Loss in Marine Insurance


citation: INS § 1967

text: Upon an actual total loss, the insured is entitled to payment without notice of abandonment.

article: 5. Loss in Marine Insurance


citation: INS § 1968

text: Where it has been agreed that an insurance upon a particular subject matter, or class of subject matter, is to be free from particular average, a marine insurer is not liable for any particular average loss not depriving the insured of the possession, at the port of destination of the whole of such subject matter or class, even though the subject matter or class becomes entirely worthless; but such insurer is liable for his proportion of all general average loss assessed upon the subject matter insured.

article: 5. Loss in Marine Insurance


citation: INS § 1969

text: When insurance is confined in its terms to an actual total loss, it does not cover a constructive total loss, but it does cover any loss which necessarily results in depriving the insured of the possession, at the port of destination, of the entire subject matter insured.

article: 5. Loss in Marine Insurance


citation: INS § 1970

text: Abandonment, in marine insurance, is the act of the insured by which, after a constructive total loss, he declares the relinquishment to the insurer of the insured’s interest in the subject matter.

article: 5. Loss in Marine Insurance


citation: INS § 1971

text:
In marine insurance, after abandonment of the subject matter of insurance or of any particular portion thereof which is separately valued by the policy or otherwise separately insured, in a case where the cause of the loss is a peril insured against the insured may recover for a total loss, as described in section 1963, if:

(a) More than half in value of the subject matter is actually lost by such peril, or would have to be expended to recover it from the peril.

(b) The subject matter is injured to such an extent as to reduce its value more than half.

(c) The subject matter is a ship, and either the contemplated voyage can not be lawfully performed without incurring either an expense to the insured of more than half the value of the ship abandoned or a risk which a prudent man would not take under the circumstances.

(d) The subject matter is cargo or freightage and the voyage can not be performed, nor another ship procured by the master to forward the cargo, within a reasonable time, with reasonable diligence and without incurring an expense to the insured of more than half the value of the subject matter or a risk which a prudent man would not take under the circumstances. But freightage can not in any case be abandoned unless the ship also is abandoned.

article: 5. Loss in Marine Insurance


citation: INS § 1972

text: An abandonment can not be either partial or conditional.

article: 5. Loss in Marine Insurance