citation: INS § 7013

text: The term of any such loan shall not be greater than twelve months nor shall the date of maturity be in excess of thirty days beyond the date of the next annual meeting of the insurer.

article: 8. Assessments


kind: section

code: INS

citation: INS § 7014

text: The board of directors may at its annual meeting levy an assessment not to exceed twenty-five cents on the $100 of the first class of insurance and a pro rata amount on lower classes. The sum so raised shall constitute a reserve fund to be used in emergency cases only. Another assessment for this fund shall not be made while this reserve fund remains intact.

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

division: 2. CLASSES OF INSURANCE

part: 1. FIRE AND MARINE INSURANCE

chapter: 5. County Mutual Fire Insurers

article: 8. Assessments

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 5. County Mutual Fire Insurers > 8. Assessments


citation: INS § 7015

text:
(a) No assessment or assessments may be levied upon any policy in excess of three times the amount of the premium named therein. The liability to assessment on any policy may be further reduced or eliminated as provided in subdivisions (b), (c), (d), and (e).

(b) Upon written request, and if the commissioner finds that an insurer has a surplus of admitted assets over liabilities of at least:

(1) Seventy-five thousand dollars ($75,000) but less than one hundred fifty thousand dollars ($150,000).

(2) One hundred fifty thousand dollars ($150,000) but less than two hundred fifty thousand dollars ($250,000), or

(3) Two hundred fifty thousand dollars ($250,000); he or she shall issue his or her certificate stating that the insurer has a surplus of at least $____, but less than $____, filling in the applicable amounts, or of at least two hundred fifty thousand dollars ($250,000), as the case may be.

(c) If, when a policy is issued, there is in force an unrevoked certificate issued by the commissioner stating that the insurer has a surplus of admitted assets over liabilities of at least:

(1) Seventy-five thousand dollars ($75,000), but less than one hundred fifty thousand dollars ($150,000), no assessment or assessments may be levied on the policy in excess of twice the amount of the premium named therein.

(2) One hundred fifty thousand dollars ($150,000), but less than two hundred fifty thousand dollars ($250,000), no assessment or assessments may be levied on the policy in excess of a sum equal to the amount of the premium stated therein.

(3) Two hundred fifty thousand dollars ($250,000), no assessment or assessments may be levied on the policy.

(d) Whenever the commissioner finds that the surplus of the insurer is less than the minimum specified in an outstanding certificate he or she shall revoke the certificate.

(e) Upon revocation of the certificate no policy shall thereafter be issued nor be permitted to remain in force beyond the date fixed for the next payment of premium without provision therein or endorsement thereon providing for that assessment liability as may be applicable at the time of issuance or at the time for the payment of the premium.

(f) As used in this section “liabilities” includes liabilities for losses reported, expenses, taxes and all other indebtedness, and provision for reinsuring all outstanding risks.

history: (History: Amended by Stats. 1997, Ch. 315, Sec. 20. Effective January 1, 1998.)

article: 8. Assessments


text: The commissioner shall charge and collect in advance a fee of one hundred seventy-seven dollars ($177) for issuing a certificate under this article, or for reissuing and amending or changing an obsolete certificate at the request of an insurer.

history: (History: Amended by Stats. 2017, Ch. 534, Sec. 55. (AB 1699) Effective January 1, 2018.)

article: 8. Assessments


citation: INS § 7016

text:
The secretary, whenever such an assessment is made, shall immediately notify every policyholder in such insurer either personally, by agent, or by letter directed to the policyholder’s usual post-office address, stating:

(a) The amount of the loss.

(b) The sum due from the policyholder as his share.

(c) To whom such payment is to be made.

(d) The time when the payment is to be made. Such time shall not be less than thirty days nor more than ninety days from the date of mailing notice.

article: 8. Assessments


citation: INS § 7017

text: The insurer may bring an action against any member who neglects or refuses to pay an assessment made upon him under the provisions of this chapter, or to pay other liabilities due the insurer.

article: 8. Assessments


citation: INS § 7018

text: A director of any such insurer who wilfully refuses or neglects to perform the duties imposed upon him by law or by the insurer’s by-laws shall be liable in his individual capacity to the person sustaining a loss.

article: 8. Assessments


citation: INS § 7030

text: The secretary shall prepare an annual statement, showing the condition of such insurer on December thirty-first preceding the annual meeting. He shall present the statement at the annual meeting.

article: 9. Reports and Statements

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 5. County Mutual Fire Insurers > 9. Reports and Statements


citation: INS § 7031

text: The president and secretary shall, on or before the first day of March of each year, prepare, under oath, and transmit to the commissioner a statement of the condition of the insurer as of the thirty-first day of December then next preceding.

history: (History: Amended by Stats. 1941, Ch. 117.)

article: 9. Reports and Statements


citation: INS § 7040

text: Notwithstanding the provisions of Section 900 of the Corporations Code, any two or more of such insurers may merge. The plan and agreement by which any such merger is to be effected shall be submitted to the commissioner who shall examine the same and may require such provisions to be inserted in the agreement and such actions to be taken in connection with the merger (including but not limited to: (1) the terms of the merger, (2) the terms of the notice of the vote by the members of each such insurer on the merger, and (3) the manner and form of voting thereon by the members of each such insurer) as he may deem necessary in order that the transaction shall be mutually fair and equitable between the respective members and policyholders of the companies parties to the merger. The commissioner shall not approve any such plan and agreement if the bylaws of any insurer party to the merger have been amended within one year prior to the date of filing of such plan and agreement with the commissioner.

history: (History: Amended by Stats. 1978, Ch. 349.)

article: 9.5. Merger

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 5. County Mutual Fire Insurers > 9.5. Merger


citation: INS § 7041

text: When any such plan and agreement shall have been approved by the commissioner, with changes, if any required by him, the same shall be approved by a vote of not less than two-thirds of the members voting at a meeting of the members of each such insurer involved at which there shall be present in person or by proxy at least 10 percent of the members entitled to vote.

history: (History: Added by Stats. 1959, Ch. 1963.)

article: 9.5. Merger


citation: INS § 7042

text:
If the vote is in the affirmative a certified copy of all proceedings relating to the proposed merger shall be filed with the commissioner. If the commissioner finds that the proceedings have been in accordance with the law and his or her requirements, he or she shall issue his or her certificate approving the plan and agreement and the merger shall become effective when the certificate, the agreement, and any other documents required by law have been filed with the Secretary of State.

The fee for issuing a certificate approving the merger shall be three hundred nine dollars ($309) for the original certificate, payable in advance, with the filing of the first merger papers with the commissioner; and nine dollars ($9) shall be charged for each signed and sealed or certified copy thereof issued as part of the same transaction in which the original certificate is issued.

history: (History: Amended by Stats. 2017, Ch. 534, Sec. 56. (AB 1699) Effective January 1, 2018.)

article: 9.5. Merger


citation: INS § 7043

text: After any merger made under the provisions of this article shall have been completed, the surviving corporation shall be deemed, for the purpose of the territorial limit provided in Section 6048, to have been organized not only in its county of organization but also in the county of organization of the county mutual insurer which was merged into it.

article: 9.5. Merger


citation: INS § 7044

text: Any plan of merger under this article shall provide that all rights and properties of the parties to the plan of merger shall accrue to and become the rights and properties of the surviving corporation, which surviving corporation shall succeed to and assume all the obligations and liabilities of the merged corporations in the same manner as if incurred or contracted by the surviving corporation.

article: 9.5. Merger


text:
Any one or more county mutual fire insurers, by following the procedure of this article, may merge into a general mutual insurer described in Chapter 4 (commencing with Section 4010) of Part 1, Division 2 of this code. Such general mutual insurer shall become the surviving corporation.

Any two or more county mutual fire insurers may merge, concurrently with the transformation of one of the constituent corporations under Article 9.6 (commencing with Section 7045) of Chapter 5, Part 1, Division 2 into a general mutual insurer. The constituent transformed into a general mutual insurer shall be the surviving corporation.

history: (History: Added by Stats. 1967, Ch. 455.)

article: 9.5. Merger


citation: INS § 7045

text: The board of directors of any county mutual fire insurer that desires to commence proceedings for transformation of that insurer to a general mutual insurer shall adopt a resolution to that effect and submit to the commissioner a plan for effecting that transformation accompanied by an application for approval thereof and a fee of four hundred ninety-four dollars ($494).

history: (History: Amended by Stats. 2017, Ch. 534, Sec. 57. (AB 1699) Effective January 1, 2018.)

article: 9.6. Transformation

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 5. County Mutual Fire Insurers > 9.6. Transformation


citation: INS § 7046

text: After the commissioner has granted tentative approval of any such application, a county mutual fire insurer that shall meet the financial requirements applicable to other insurers under Article 3 (commencing with Section 699), Chapter 1, Part 2, Division 1, may by the majority vote of those of its policyholders voting at a meeting duly called for the purpose, elect to transform itself into a general mutual insurer as defined in Chapter 4 (commencing with Section 4010) of Part 1, Division 2 and amend its articles of incorporation and bylaws to conform to, cover, and enjoy any or all of the provisions, powers, rights, and privileges of such a mutual insurer, notwithstanding the restrictions or limitations of any other provision of law, including, but not limited to, Section 900 of the Corporations Code. No such transformed county mutual fire insurer may engage in the business of life, title, mortgage, or mortgage guarantee insurance.

article: 9.6. Transformation


citation: INS § 7047

text: The meeting called for the purpose of transformation, shall be preceded by a written or printed notice of the meeting and its purpose addressed to each policyholder of record on the date of the notice, mailed at least 30 days before that date fixed for the meeting. The presence in person or by proxy of 5 percent of the policyholders entitled to vote shall constitute a quorum unless a higher percentage is required by the bylaws or articles of incorporation of the insurer.

history: (History: Added by Stats. 1963, Ch. 1772.)

article: 9.6. Transformation


citation: INS § 7048

text: Such corporation shall be a continuance of the original corporation by the same name or by any other name approved by the commissioner. Such transformation, however, shall in no way annul, modify or change any of the existing contracts and liabilities of such corporations, and any and all such contracts and liabilities shall continue in force and effect the same as though such corporation had not transformed or qualified under this article, nor shall such transformation in any way prejudice, impede or impair any pending action or proceeding or any rights previously acquired. Certified copies of all proceedings in connection with such transformation, together with a certified copy of the articles of incorporation as amended, shall be filed with the commissioner.

article: 9.6. Transformation


citation: INS § 7049

text: After the policyholders have elected such a transformation a county mutual insurer shall submit to the insurance commissioner for final approval of the transformation a certified copy of all proceedings together with an application for a new certificate of authority accompanied by the necessary filing fee. The said transformation shall become effective upon the occurrence of the last of the three following events: (1) the final approval by the insurance commissioner, (2) the issuance of a new certificate of authority, and (3) the filing of certified copies of amended articles of incorporation with the Secretary of State.

article: 9.6. Transformation


citation: INS § 7050

text: Any such insurer may be proceeded against and dissolved in the same manner and upon the same conditions as in the case of other domestic incorporated insurers.

article: 10. Dissolution

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 5. County Mutual Fire Insurers > 10. Dissolution


citation: INS § 7060

text: The provisions of subdivision (f) of Section 381 and the provisions of Sections 382, 383, 384, 750, 751, 752, 753, 754, 755, 756, 757, 758, 759, 761, 762, 763, 764, 765, 766, 800, 801, 802, 803, 804, 805, 806, 807, 808, 809, 980, 981, 982, 983, 984, 985, 986, 987, 988, 989, 990, 991, 992, and 993 shall not apply to county mutual fire insurers.

history: (History: Amended by Stats. 1979, Ch. 461.)

article: 11. Exemptions

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 5. County Mutual Fire Insurers > 11. Exemptions


citation: INS § 7080

text: Five or more insurers, operating under Chapter 5 of this part and having insurance liabilities exceeding a total of $150,000 which they wish to reinsure, may incorporate for the purpose of mutual reinsurance against any loss or damage by any hazard which county mutual fire insurers may insure.

history: (History: Amended by Stats. 1939, Ch. 932.)

chapter: 6. County Mutual Fire Reinsurers

article: 1. Formation and Organization

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 6. County Mutual Fire Reinsurers > 1. Formation and Organization


citation: INS § 7081

text: Upon payment in advance of two hundred fifty dollars ($250) cash, lawful money of the United States, to the commissioner for all services to be rendered by him in the matter of the organization of the reinsurer, such insurers shall first file with the commissioner a declaration of their intention to incorporate such a reinsurer.

history: (History: Amended by Stats. 1963, Ch. 1917.)

article: 1. Formation and Organization


citation: INS § 7082

text: The declaration shall be signed by the president and secretary of each of the incorporators. It shall be accompanied by a certified copy of a resolution passed by the board of directors of each incorporator stating that it is the desire of the particular insurer to become one of the incorporators. Such declaration shall also contain a copy of the articles of incorporation proposed to be adopted.

article: 1. Formation and Organization


citation: INS § 7083

text: The articles shall be executed by each incorporator through its president or secretary, each signature being acknowledged as required by the general corporation law.

article: 1. Formation and Organization


citation: INS § 7084

text: The commissioner shall examine the proposed articles of incorporation, and if they conform to this chapter, he shall deliver to such incorporators a certificate permitting them to incorporate as such reinsurer. The certificate shall contain the proposed articles of incorporation.

article: 1. Formation and Organization


citation: INS § 7085

text: Upon filing with the Secretary of State of the articles of incorporation and the certificate provided for in Section 7084, the incorporation of the reinsurer shall be complete and it may engage in business as such reinsurer upon applying for and obtaining from the commissioner a certificate of authority. The term and nature of such certificate of authority, annual renewal fee therefor, the due date and delinquent date of such fee shall be the same as provided by Article 3, Chapter 1, Part 2, Division 1, of this code for stock and mutual insurers governed by said article. No county mutual fire reinsurer shall transact business in this State without a valid and subsisting certificate of authority as provided for herein; provided, however, that any such reinsurer presently authorized to conduct such business shall not be required to pay the first ten dollars ($10) annual certificate of authority fee until April 1, 1964.

article: 1. Formation and Organization


citation: INS § 7086

text: Three delegates shall be elected by each member at its regular annual meeting to represent it at all meetings of the reinsurer.

article: 1. Formation and Organization


citation: INS § 7087

text: The delegates shall be elected by ballot and shall hold office for one year, or until their successors have been elected and qualified.

article: 1. Formation and Organization


citation: INS § 7088

text: The annual meeting of the members of the reinsurer shall be held on the third Monday in February of each year.

article: 1. Formation and Organization


citation: INS § 7089

text: At such meeting one director shall be elected from the delegates of each member so that the number of directors is equal to the number of members of the reinsurer. The by-laws shall fix the manner of, and time for, increasing or diminishing the number of member insurers and, correspondingly, of directors. A majority of the directors shall constitute a quorum for the transaction of business.

article: 1. Formation and Organization


citation: INS § 7090

text: In the election of the first board of directors each member insurer shall be entitled to one vote. At every subsequent election, each delegate from each member shall have as many votes as there are directors to be elected, and he may cast the votes in person or by proxy, distributing them among the directors to be elected or among a less number of directors, or cumulating them upon one candidate as he sees fit.

article: 1. Formation and Organization


citation: INS § 7091

text: The directors of the reinsurer shall elect from their own number a president, a vice president, and an executive committee of three. They shall also elect a treasurer and a secretary, who need not be members of any member insurer nor natural persons.

article: 1. Formation and Organization


citation: INS § 7092

text: The directors and all of such officers shall hold office for one year from the date of their election, and until their successors are elected and qualified.

article: 1. Formation and Organization


citation: INS § 7093

text: The treasurer and secretary shall give bonds to the reinsurer in such amounts as are prescribed by the board of directors, conditioned upon the faithful performance of their duties.

article: 1. Formation and Organization


citation: INS § 8010

text: Upon organizing under its articles of incorporation, such reinsurer may carry on a fire reinsurance business as provided by this chapter.

article: 2. Powers and Duties

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 6. County Mutual Fire Reinsurers > 2. Powers and Duties


citation: INS § 8011

text: Such reinsurer and its directors shall possess such of the usual powers, and be subject to such of the usual duties of corporations and directors thereof as are necessary for the management of its affairs in accordance with the provisions of this chapter, including the power to prescribe the duties of its officers and fix their compensation.

article: 2. Powers and Duties


citation: INS § 8030

text: Any county mutual fire insurer in this State may become a member of such a reinsurer and entitled to all the rights and privileges appertaining thereto.

article: 3. Additional Memberships

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 6. County Mutual Fire Reinsurers > 3. Additional Memberships


citation: INS § 8031

text: County mutual fire insurers, upon becoming members of such reinsurer, shall give it their written obligation binding themselves and their successors to pay their pro rata share of the necessary expenses and loss sustained by any member of the reinsurer during the time for which their respective policies are written. They shall also at the time of effecting the reinsurance pay such percentages and such other charges as are required by law or by the rules and by-laws of the reinsurer.

article: 3. Additional Memberships


citation: INS § 8050

text: Restrictions on risks as to “distances,” “city or town block,” “closely built up district,” “one risk,” and “clear space,” in chapter 5 of this part are binding upon such reinsurers and shall govern the writing of all reinsurance.

article: 4. Risks

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 6. County Mutual Fire Reinsurers > 4. Risks


citation: INS § 8051

text: All such reinsurers shall classify the reinsured subject matter at the time of issuing policies thereon, under rates corresponding as nearly as practicable to the several kinds of subject matter.

article: 4. Risks


citation: INS § 8052

text: Such reinsurer may write reinsurance on property which is located in this State and which is insured in any member insurer.

article: 4. Risks


citation: INS § 8053

text: Such reinsurer shall not at any time write reinsurance, subject to one risk, in excess of five per cent of the total amount of reinsurance on its books at the time of accepting the risk.

article: 4. Risks


citation: INS § 8070

text: A member of such reinsurer, upon sustaining loss covered by reinsurance, shall immediately notify the president or secretary, stating the amount of loss.

article: 5. Loss

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 6. County Mutual Fire Reinsurers > 5. Loss


citation: INS § 8071

text: The president and secretary shall proceed to ascertain the amount of such loss and make adjustment.

history: (History: Amended by Stats. 1945, Ch. 98.)

article: 5. Loss


citation: INS § 8072

text: If the claim is for more than five thousand dollars ($5,000), the secretary shall forthwith notify each member of the executive committee. At each regular meeting of the directors the secretary shall furnish them with a statement showing all claims filed since the previous regular meeting of the directors.

article: 5. Loss


citation: INS § 8073

text: If in any case there is a failure of the parties to agree upon the amount of such loss they may submit the question of the amount to arbitration. In that event the president of the reinsurer shall appoint one disinterested person to act as an arbitrator, and the member shall appoint another.

article: 5. Loss


citation: INS § 8074

text: If the two arbitrators thus appointed fail to agree upon the amount of such loss, they shall select a third disinterested person to act with them.

article: 5. Loss


citation: INS § 8075

text: Such arbitrators so appointed may examine witnesses and do all other things necessary to the proper determination of the amount of loss sustained by the claimant.

article: 5. Loss


citation: INS § 8076

text: The arbitrators shall make their award in writing to the president of the reinsurer and to the member. Such award shall be final as to the amount of the loss sustained.

article: 5. Loss


citation: INS § 8077

text: The pay of each arbitrator shall be five dollars per day for each day’s services rendered, and five cents for each mile necessarily traveled in the discharge of his duties. Such compensation shall be paid by the claimant unless the award of the arbitrators exceeds the sum offered by the reinsurer in liquidation of the loss. In the latter case such expense shall be paid by the reinsurer.

article: 5. Loss


citation: INS § 8078

text: The president and secretary of the reinsurer may secure the services of an adjuster to represent it on any loss, subject to confirmation by its executive committee.

article: 5. Loss


citation: INS § 8090

text: When the amount of any ascertained loss exceeds the cash funds of the reinsurer and also exceeds one-eighth of one per cent of the total amount of the insurance in force in the reinsurer, the president shall convene its directors. On so convening, the directors shall assess each member in proportion to the member’s reinsurance, taken in connection with the rate of premium under which such reinsurance is classified.

article: 6. Assessments and Coverage of Loss

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 6. County Mutual Fire Reinsurers > 6. Assessments and Coverage of Loss


citation: INS § 8091

text: When the amount of such loss does not exceed one-eighth of one per cent of the total amount of insurance in force in the reinsurer, the directors may, by resolution in writing signed by two-thirds of all the directors while present at a meeting, borrow in the name of the reinsurer and give its evidence of indebtedness therefor, in an amount not exceeding one-eighth of one per cent of the total amount of such insurance in force.

article: 6. Assessments and Coverage of Loss


citation: INS § 8092

text: The term of such loan shall not be longer than twelve months, and the date of maturity shall not be more than thirty days beyond the date of the next annual meeting of the reinsurer.

article: 6. Assessments and Coverage of Loss


citation: INS § 8093

text: The board of directors may at their annual meeting levy an assessment not exceeding twenty-five cents on the $100 of reinsurance. The sum so raised shall constitute a reserve fund to be used in emergency cases only. Another assessment for this purpose shall not be made while this reserve fund remains intact.

article: 6. Assessments and Coverage of Loss


citation: INS § 8094

text:
Whenever an assessment is made, the secretary shall immediately notify every member by registered letter addressed to the secretary of the member at its usual post-office address, stating:

(a) The amount of such loss.

(b) The sum due from the member as its share.

(c) To whom payment is to be made.

(d) The time, not less than thirty nor more than ninety days from the date of mailing notice, when payment is to be made.

article: 6. Assessments and Coverage of Loss


citation: INS § 8095

text: An action may be brought against any member of such reinsurer that neglects or refuses to pay the liabilities due such reinsurer.

article: 6. Assessments and Coverage of Loss


citation: INS § 8096

text: The directors of any such reinsurer who wilfully refuse or neglect to perform the duties imposed upon them by law or by the by-laws of the reinsurer are liable in their individual capacity to the reinsurer sustaining loss.

article: 6. Assessments and Coverage of Loss


citation: INS § 8097

text: An action may also be brought and maintained against any such reinsurer by members thereof to recover sums owing them for losses sustained when payment is withheld after the amount of such losses is determined and is due by the terms of the policy.

article: 6. Assessments and Coverage of Loss


citation: INS § 9010

text: Any member of such reinsurer may cancel any policy of reinsurance at any time while the reinsurer continues its reinsurance business.

article: 7. Cancellation of Membership

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 6. County Mutual Fire Reinsurers > 7. Cancellation of Membership


citation: INS § 9011

text:
The cancellation may be accomplished only by complying with all of the following requirements:

(a) Surrender of policy for cancellation.

(b) Giving ten days’ notice in writing to the secretary of the reinsurer.

(c) Payment of the member’s share of all claims that exist against the reinsurer.

article: 7. Cancellation of Membership


citation: INS § 9012

text: The reinsurer may cancel or terminate any policy by giving the member ten days’ written notice and returning to it any excess of premium paid during the term of the policy over the cost of its reinsurance as measured by the rules or methods of admitted fire insurers issuing nonassessable policies on a reserve basis.

article: 7. Cancellation of Membership


citation: INS § 9030

text: The secretary shall prepare an annual statement, showing the condition of such reinsurer on December thirty-first and a supplemental report of the business of the reinsurer to January thirty-first and present both reports at the ensuing annual meeting.

article: 8. Reports and Statements

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 6. County Mutual Fire Reinsurers > 8. Reports and Statements


citation: INS § 9031

text: The president and secretary shall, on or before the first day of March of each year, prepare under oath, and transmit to the commissioner, a statement of the condition of the insurer as of the thirty-first day of December then next preceding.

article: 8. Reports and Statements


citation: INS § 9050

text: Any such reinsurer may be proceeded against and dissolved in the same manner and upon the same conditions as in the case of other domestic insurers.

article: 9. Dissolution

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 6. County Mutual Fire Reinsurers > 9. Dissolution


citation: INS § 9060

text: The provisions of Sections 980, 981, 982, 983, 984, 985, 986, 987, 988, 989, 990, 991, 992, and 993 shall not apply to county mutual fire reinsurers.

history: (History: Amended by Stats. 1951, Ch. 34.)

article: 10. Exemptions

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 6. County Mutual Fire Reinsurers > 10. Exemptions


citation: INS § 9080

text: Except as provided by this chapter, an association organized and operating on or before January 1, 1947, under this chapter is not governed by the provisions of this code or other insurance laws of this State. No other association shall be formed or transact insurance under this chapter.

history: (History: Amended by Stats. 1947, Ch. 1083.)

chapter: 7. Fraternal Fire Insurers

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 7. Fraternal Fire Insurers


text:
On and after January 1, 1954, no association shall transact insurance under this chapter unless it has theretofore received and continues to hold a certificate of exemption from the commissioner.

Before procuring such certificate such association shall file with the commissioner certified copies of the articles of incorporation, association, by-laws, rules and regulations or other organization or governing documents, together with certified copies of all evidences of insurance which it proposes to issue. It shall thereafter file with the commissioner certified copies of all amendments to such documents or evidences. The commissioner shall issue such certificate of exemption upon application by such association and a showing by it that it qualifies therefor under the provisions of this chapter.

Such certificate of exemption is subject to suspension or revocation by the commissioner if the organization fails to comply with the requirements of this chapter.

The proceedings shall be conducted in accordance with Chapter 5 of Part 1 of Division 3 of Title 2 of the Government Code and the commissioner shall have all the powers granted therein.

Such association is subject to Sections 1 to 41, inclusive, and to Articles 4 and 14 of Chapter 1, Part 2, Division 1 of this code.

history: (History: Added by Stats. 1953, Ch. 1564.)


text:
Any religious organization engaged in the business of writing fire insurance solely for its members and its churches on the effective date of this section, and which has been doing so continuously in California since January 1, 1925, is subject to all applicable provisions of this chapter.

Any religious organization described in this section shall not write insurance:

(a) In excess of 10 percent of its capital and surplus as shown in its last statement on file with the commissioner, on any one risk, or in excess of 20 percent of its capital and surplus as shown in its last statement on file with the commissioner in any one city block within an incorporated city without immediately reinsuring the excess over those amounts.

(b) On business property within any incorporated city.

history: (History: Amended by Stats. 1998, Ch. 392, Sec. 1. Effective January 1, 1999.)


citation: INS § 9081

text: Secret fraternal societies, having lodges, councils or granges in this State, conducting their business and securing their membership on the lodge, council or grange system exclusively, and having ritualistic work and ceremonies in their lodges, councils or granges, may form an insurer by association of the members of their order or society, binding themselves to contribute to each other’s loss by fire.

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


citation: INS § 9082

text:
Such association shall be formed by filing a certificate in the office of the Secretary of State and a like certificate in the office of the clerk of each county in which a member has property insured in said association. Each such certificate shall state:

(a) Generally, the objects of the association.

(b) Its principal place of business.

(c) The names of its officers.

Such certificates shall be signed by the officers of the association and verified by at least three of them.


citation: INS § 9083

text: The officers of the association shall be members of the association, having property insured therein.


citation: INS § 9084

text:
Such an association may insure the property of its members against loss or damage by fire for an amount not exceeding ten thousand dollars ($10,000) on any one risk, subject to the following conditions as to amount:

(a) A risk in excess of three thousand five hundred dollars ($3,500) shall not be binding as to such excess until risks to the amount of two hundred thousand dollars ($200,000) have been written and all premiums paid thereon.

(b) A risk of more than one thousand five hundred dollars ($1,500) shall not be binding as to such excess until risks to the amount of one hundred thousand dollars ($100,000) have been written and all premiums paid thereon.

(c) A risk regardless of amount, shall not be binding until risks to the amount of seventy-five thousand dollars ($75,000) have been written and all premiums paid thereon.

history: (History: Amended by Stats. 1965, Ch. 84.)


citation: INS § 9085

text: A risk shall not be written by such association except for members in good standing on the books of the society forming the association. A suspension or withdrawal from membership in such society shall suspend the insurance until the member is restored to good standing in the society and association. A restoration to membership after suspension therefrom shall not extend the term of the insurance.


citation: INS § 9086

text: All such associations shall classify the property insured by them at the time of issuing policies on such property. The classification shall be under different rates, corresponding as nearly as practicable to the greater or less risk from fire loss attached to the insured property.


citation: INS § 9087

text: No property within the corporate limits of any city or town shall be insured except dwellings and the contents thereof, grange halls and the contents thereof, other grange property, and any buildings appurtenant thereto.

history: (History: Amended by Stats. 1959, Ch. 167.)


text: Section 9087 is not applicable to insurance covering an insurable interest of a member in property which was insured by the association prior to the inclusion of the property within the corporate limits of a city.

history: (History: Added by Stats. 1947, Ch. 1083.)


citation: INS § 9088

text: Such association shall provide in its by-laws for the ascertainment of loss or damage by fire, and for the payment thereof.


citation: INS § 9089

text:
Such association by and in its own name may:

(a) Sue and be sued.

(b) Loan such funds as it has on hand in such manner as its articles of association and its by-laws provide.

(c) Own sufficient real property for its business purposes, and such other real property as it becomes necessary to purchase on foreclosure of its mortgages. Real estate obtained by such foreclosure shall be sold and conveyed within five years from the time title vests in the association.

(d) Make such by-laws, not inconsistent with the laws of this State, as are necessary for its government and for the transaction of its business.


citation: INS § 9090

text: Such association creates a mutual agreement of its members to participate in each other’s loss by fire.


citation: INS § 9091

text: Every insured shall give to the association a written instrument binding him to pay his share, proportioned to his insurance in the association, of the expense of operation and of the fire loss sustained by it during the term of his policy. Such loss consists of amounts paid or owing to insureds by reason of losses under the terms of fire policies issued by the association, together with the necessary expenses of the association in respect to such losses.


citation: INS § 9092

text: Persons insuring property with the association shall, at the time of effecting the insurance, pay such a percentage in cash, and such other charges, as are required by the rules or by-laws of the association.


citation: INS § 9093

text: Policies of the association may be canceled by either party thereto. In such case settlement or adjustment shall be made in accordance with the terms of the by-laws of the association.


citation: INS § 9094

text: The secretary of each such association shall prepare an annual statement showing the financial condition of the association, including a statement of all assets and liabilities, as of the thirty-first day of December then next preceding. Such statement shall be verified under oath by the president and secretary of the association. A copy of the verified statement shall be transmitted to the commissioner on or before the first day of March of each year.


citation: INS § 9095

text:
(a) (1) An association may, if it has issued an insurance policy against fire, endorse that policy to extend the coverage thereof to include loss or damage caused by windstorm, cyclone, tornado and hail, explosion, riot, riot attending a strike, aircraft, vehicles and smoke, and to include waiver of the fallen building clause.

(2) An association may also insure against any or all of the following:

(A) Water damage from plumbing and heating systems.

(B) Rupture or bursting of steam or hot water heating system.

(C) Vandalism or malicious mischief.

(D) Glass breakage.

(E) Ice, snow, and freezing.

(F) Fall of trees.

(G) Collapse.

(H) Burglary and theft.

(I) Mysterious disappearance.

(J) Liability.

(b) As used in this section “explosion” does not include explosions (1) of any boiler, heater, or other fired pressure vessel, caused by pressure of contents, (2) of any unfired pressure vessel or of any piping caused by pressure of contents or vacuum, (3) of any engine, turbine, compressor, pump, or wheel, (4) of any electrical apparatus, or (5) of any other machine having moving or rotating parts. This restricted definition of “explosion” does not exclude loss or damage by fire only where fire ensues.

(c) As used in this section, the terms “boiler,” “heater,” and “pressure vessel,” do not include hot water heaters used solely to provide hot water for delivery to faucets for domestic purposes and having a storage capacity of not more than 50 gallons.

history: (History: Amended by Stats. 2017, Ch. 190, Sec. 2. (AB 407) Effective January 1, 2018.)


citation: INS § 9096

text: An association certificated under this chapter is hereby declared to be a charitable and benevolent institution, and all of its funds shall be exempt from all and every state, county, district, municipal, and school tax, other than taxes on real estate and office equipment.


citation: INS § 9097

text: An association or organization certified under this chapter may reinsure all of its policies with, and, upon the assumption of all of its liabilities, may transfer its assets to, any mutual insurer admitted to transact the classes of insurance embraced within the policies issued by such organization or association, upon compliance with Sections 9098 through 9103, inclusive.

history: (History: Added by Stats. 1967, Ch. 1262.)


citation: INS § 9098

text: The plan and agreement by which any transaction permitted by Section 9097 is to be effected shall be approved by the board of directors or other governing body of that organization or association and submitted to the commissioner accompanied by an application for approval thereof and a fee of four hundred ninety-four dollars ($494).

history: (History: Amended by Stats. 2017, Ch. 534, Sec. 58. (AB 1699) Effective January 1, 2018.)


citation: INS § 9099

text: The commissioner shall examine such plan and agreement and may require such provisions to be inserted in the agreement and such actions to be taken in connection with the transaction (including but not limited to: (1) the terms of the reinsurance, transfer and assumption, (2) the terms of the notice of the vote thereon by the members of such organization or association, and (3) the manner and form of voting thereon by such members) as he may deem necessary in order that the transaction shall be fair and equitable to the members of such organization or association.


citation: INS § 9100

text: When any such plan and agreement shall have been approved by the commissioner with such changes, if any, required by him, the same shall be approved by a vote of not less than two-thirds of those members of such organization or association voting in person or by proxy at a meeting of the members.


citation: INS § 9101

text: The meeting of members at which the transaction is voted upon shall be preceded by a written or printed notice of the meeting and of the purpose to vote thereat upon the plan or agreement for reinsurance, transfer and assumption, addressed to each member of record on the date of the notice and mailed at least 30 days before the date fixed for the meeting. The presence in person or by proxy of 5 percent of the members of such organization or association entitled to vote shall constitute a quorum unless a higher percentage is required by the articles of incorporation, association, bylaws, rules or regulations or other organization or governing documents. In the absence of a quorum, the members present at the meeting in person or by proxy may adjourn the meeting to a later date and no further notice need be given of the date to which the meeting is adjourned.


citation: INS § 9102

text: If the members vote to approve the plan of reinsurance, transfer and assumption, a certified copy of all proceedings relating thereto shall be filed with the commissioner. If the commissioner finds that the proceedings have been in accordance with the law and his requirements, he shall issue his certificate approving the plan and the agreement and the transaction shall become effective at that time or upon such later date as may be specified in the agreement.


citation: INS § 9103

text: The board of directors or other governing body of such organization or association shall file with the Secretary of State a duplicate original of the commissioner’s certificate approving the plan and agreement and thereupon such organization or association shall cease to exist except for the purpose of completing the winding up of its affairs.


text: As used in this chapter, an underwriters’ corps means a corps of men with proper officers and equipment, maintained to discover and prevent fires and save life and property from fire.

chapter: 8. Underwriters Fire Patrols

article: 1. Scope of Chapter and Definitions

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 8. Underwriters Fire Patrols > 1. Scope of Chapter and Definitions


text: This chapter shall not impair or interfere with the powers or duties of the regular fire department of any municipality.

article: 1. Scope of Chapter and Definitions


text: Any act of an underwriters’ corps shall not justify any owner of any property in abandoning such property.

article: 1. Scope of Chapter and Definitions


text: Any domestic corporation of insurance underwriters, organized to discover and prevent fires and save life and property from fire and doing business within any municipal corporation of this State, may at its own expense maintain an underwriter’s corps.

article: 2. Formation and Organization

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 8. Underwriters Fire Patrols > 2. Formation and Organization


text: For the effective discharge of such duties, an underwriter’s corps may enter any burning building or any building in which property is burning, or any building such corps or any officer thereof deems to be immediately exposed to an existing fire or in danger of taking fire from a burning building, and may remove or otherwise protect any property from fire or damage by water during and immediately after such fire.

article: 3. Powers

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 8. Underwriters Fire Patrols > 3. Powers


text: Such corporation, with its officers and corps, when going to a fire with its equipment, has the same right of way as the regular fire department of the municipality in which such corporation is operating, except as to such fire department.

article: 3. Powers


text: All ordinances passed by the municipal authorities of any city or town wherein such a corporation carries on business, and all laws of this State applicable to such municipality which provide for the punishment of any person or persons wilfully or carelessly obstructing the progress of the apparatus of the fire department of such municipality while going to a fire, or of any person or persons wilfully or carelessly injuring any animal or property of said fire department, shall likewise apply to such corporation to the same extent as to such fire department. Such laws and ordinances and their penalties, may be enforced in the same courts and in the same manner, and with equal force and effect in the case of such corporation as in the case of the fire department.

article: 3. Powers


text: In July of every year, there shall be held a meeting of every corporation created for the purpose specified in this chapter.

article: 4. Meetings and Assessments

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 8. Underwriters Fire Patrols > 4. Meetings and Assessments


text: Ten days’ notice of the meeting shall be inserted in at least one daily newspaper published in the municipality in which the corporation is established.

article: 4. Meetings and Assessments


text: At such meeting each insurer or insurance agent, doing a fire insurance business in the municipality, whether a member of the corporation or not, has a right to be represented and is entitled to one vote.

article: 4. Meetings and Assessments


text: A majority of the whole number so represented may decide the question of sustaining the fire patrol organized by the corporation and may fix the maximum amount of expenses to be incurred therefor during the ensuing fiscal year.

article: 4. Meetings and Assessments


text: The amount of expense so fixed shall not exceed two per cent of the aggregate premiums returned as received, as provided in section 10076. The whole of such amount, or so much thereof as is necessary, may be assessed upon all insurers or insurance agents who assume risks or accept premiums for fire insurance in said municipality. Such assessment shall be made in proportion to the several amounts of premiums returned as received by each in the statement required by section 10076.

article: 4. Meetings and Assessments


text: Such assessment is collectible by and in the name of the corporation, in any court of competent jurisdiction, in such manner and at such time or times as the corporation determines.

article: 4. Meetings and Assessments


text: In order to pay persons employed by the corporation, and to maintain apparatus for saving life and property and suitable quarters the corporation may require a statement to be furnished, semiannually, by all persons mentioned in section 10074, setting forth the aggregate amount of premiums received for insuring property in the municipality during the six months next preceding July first and January first, respectively, of each year.

article: 4. Meetings and Assessments


text: Each statement shall be under oath and shall be handed to the secretary of the corporation within ten days after each first day of July and each first day of January. A statement covering the receipts of a natural person shall be sworn to by the person whose receipts it covers. Otherwise the statement shall be sworn to by the president, secretary or agent of the person whose receipts it covers.

article: 4. Meetings and Assessments


text: The secretary of such corporation shall, within the prescribed ten days, by written demand signed by him, require the statement from every person assessable under this chapter.

article: 4. Meetings and Assessments


text: The demand may be delivered personally at the office of every person required to furnish the statement. Every such person, or officer thereof, who, for fifteen days after said demand, neglects to render the statement forfeits fifty dollars for the use of the corporation, and also forfeits for its use twenty-five dollars in addition for every day such neglect is continued after the expiration of the fifteen days. Such additional penalty may be computed and collected up to the time of the trial of any action brought for its recovery.

article: 4. Meetings and Assessments


text: The corporation may bring action to recover such penalty, with costs, in any court of competent jurisdiction.

article: 4. Meetings and Assessments


text: No policy of residential property insurance may be issued or delivered or, with respect to policies in effect on the effective date of this chapter, initially renewed in this state by any insurer unless the named insured is offered coverage for loss or damage caused by the peril of earthquake as provided in this chapter. That coverage may be provided in the policy of residential property insurance itself, either by specific policy provision or endorsement, or in a separate policy or certificate of insurance which specifically provides coverage for loss or damage caused by the peril of earthquake alone or in combination with other perils.

history: (History: Added by Stats. 1984, Ch. 916, Sec. 1.)

chapter: 8.5. Earthquake Insurance

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 8.5. Earthquake Insurance


text:
(a) The offer required by Section 10081 shall include coverage against risk of loss or damage from the peril of earthquake, in accordance with the minimum coverages required by subdivisions (a) and (b) of Section 10089.

(b) The earthquake coverage shall be in accordance with the insurer’s rules and rating plan, provided, however, that nothing contained in this chapter shall require an insurer to issue a policy of residential property insurance except in accordance with the insurer’s usual underwriting standards. However, those standards shall not permit an insurer to provide a policy of residential property insurance unless the offer of coverage required by this chapter is made.

history: (History: Amended by Stats. 1996, Ch. 124, Sec. 77. Effective January 1, 1997.)


text:
Notwithstanding any other provision of law, the following provisions regarding loss requirements, appraisals, and adjusters shall apply to the following types of policies originated or renewed on and after January 1, 2002: all policies of residential property insurance, as defined in Section 10087, all policies, endorsements, or certificates of insurance providing coverage for loss or damage caused by the peril of earthquake issued pursuant to this chapter; and all policies of basic residential earthquake insurance issued pursuant to Chapter 8.6 (commencing with Section 10089.5). Requirements in case loss occurs The insured shall give written notice to this company of any loss without unnecessary delay, protect the property from further damage, forthwith separate the damaged and undamaged personal property, put it in the best possible order, furnish a complete inventory of the destroyed, damaged and undamaged property, showing in detail quantities, costs, actual cash value and amount of loss claimed; and within 60 days after the loss, unless the time is extended in writing by this company, the insured shall render to this company a proof of loss, signed and sworn to by the insured, stating the knowledge and belief of the insured as to the following: the time and origin of the loss, the interest of the insured and of all others in the property, the actual cash value of each item thereof and the amount of loss thereto, all encumbrances thereon, all other contracts of insurance, whether valid or not, covering any of said property, any changes in the title, use, occupation, location, possession or exposures of said property since the issuing of this policy, by whom and for what purpose any building herein described and the several parts thereof were occupied at the time of loss and whether or not it then stood on leased ground, and shall furnish a copy of all the descriptions and schedules in all policies and, if required and obtainable, verified plans and specifications of any building, fixtures or machinery destroyed or damaged. The insured, as often as may be reasonably required and subject to the provisions of Section 2071.1, shall exhibit to any person designated by this company all that remains of any property herein described, and submit to examinations under oath by any person named by this company, and subscribe the same; and, as often as may be reasonably required, shall produce for examination all books of account, bills, invoices and other vouchers, or certified copies thereof if originals be lost, at such reasonable time and place as may be designated by this company or its representative, and shall permit extracts and copies thereof to be made. The insurer shall inform the insured that tax returns are privileged against disclosure under applicable state law but may be necessary to process or determine the claim.

The insurer shall notify every claimant that they may obtain, upon request, copies of claim-related documents. For purposes of this section, “claim-related documents” means all documents that relate to the evaluation of damages, including, but not limited to, repair and replacement estimates and bids, appraisals, scopes of loss, drawings, plans, reports, third party findings on the amount of loss, covered damages, and cost of repairs, and all other valuation, measurement, and loss adjustment calculations of the amount of loss, covered damage, and cost of repairs. However, attorney work product and attorney-client privileged documents, and documents that indicate fraud by the insured or that contain medically privileged information, are excluded from the documents an insurer is required to provide pursuant to this section to a claimant. Within 15 calendar days after receiving a request from an insured for claim-related documents, the insurer shall provide the insured with copies of all claim-related documents, except those excluded by this section. Nothing in this section shall be construed to affect existing litigation discovery rights. Appraisal In case the insured and this company shall fail to agree as to the actual cash value or the amount of loss, then, on the written request of either, each shall select a competent and disinterested appraiser and notify the other of the appraiser selected within 20 days of the request. Where the request is accepted, the appraisers shall first select a competent and disinterested umpire; and failing for 15 days to agree upon the umpire, then, on request of the insured or this company, the umpire shall be selected by a judge of a court of record in the state in which the property covered is located. Appraisal proceedings are informal unless the insured and this company mutually agree otherwise. For purposes of this section, “informal” means that no formal discovery shall be conducted, including depositions, interrogatories, requests for admission, or other forms of formal civil discovery, no formal rules of evidence shall be applied, and no court reporter shall be used for the proceedings. The appraisers shall then appraise the loss, stating separately actual cash value and loss to each item; and, failing to agree, shall submit their differences, only, to the umpire. An award in writing, so itemized, of any two when filed with this company shall determine the amount of actual cash value and loss. Each appraiser shall be paid by the party selecting him or her and the expenses of appraisal and umpire shall be paid by the parties equally. In the event of a government-declared disaster, as defined in the Government Code, appraisal may be requested by either the insured or this company but shall not be compelled. Adjusters If, within a six-month period, the company assigns a third or subsequent adjuster to be primarily responsible for a claim, the insurer, in a timely manner, shall provide the insured with a written status report. For purposes of this section, a written status report shall include a summary of any decisions or actions that are substantially related to the disposition of a claim, including, but not limited to, the amount of losses to structures or contents, the retention or consultation of design or construction professionals, the amount of coverage for losses to structures or contents and all items of dispute.

history: (History: Added by Stats. 2001, Ch. 583, Sec. 6. Effective January 1, 2002.)


text:
(a) If an insurer subject to this chapter charges an additional earthquake insurance premium or deductible because a dwelling fails to comply with paragraph (1), (2), or (3) and the dwelling is subsequently brought into compliance with any one of these paragraphs, then the additional premium or deductible attributed to noncompliance shall not be charged.

(1) Compliance with Section 19215 of the Health and Safety Code for the bracing, anchoring, or strapping of all water heaters to resist falling or horizontal displacement due to earthquake motion.

(2) Compliance with the foundation anchor bolt requirements of the 2007 edition of the California Building Standards Code as specified in Title 24 of the California Code of Regulations, or a successor edition of that code, or with any local government modifications to those requirements.

(3) Compliance with the bracing requirements for cripple walls of the 2007 edition of the California Building Standards Code as specified in Title 24 of the California Code of Regulations, or a successor edition of that code, or with any local government modifications to those requirements.

(b) A copy of the approved inspection record for the building permit for work performed pursuant to this section shall be submitted by the insured to the insurer in order to verify that retrofits performed pursuant to this section have been performed. The additional premium or deductible paid shall be refunded to the insured and prorated as of the date the approved inspection record is received by the insurer.

history: (History: Amended by Stats. 2016, Ch. 86, Sec. 202. (SB 1171) Effective January 1, 2017.)


text:
(a) The offer of coverage required by Section 10081 may be made prior to, concurrent with, or within 60 days following the issuance or renewal of a residential property insurance policy. If the offer of coverage is mailed to the named insured or applicant, it shall be mailed to the mailing address shown on the policy of residential property insurance or on the application.

(1) If the offer is made by a nonparticipating insurer as defined in Section 10089.5, the offer of earthquake coverage shall contain all of the following language in at least 10-point boldface type: “Your residential property insurance policy does not cover earthquake damage to your home or its contents.

To cover earthquake damage to your home and its contents you need to purchase a separate earthquake insurance policy. The coverage provided by an earthquake insurance policy is different from, and typically more limited than, the coverage provided by your residential property insurance policy.

California law requires insurance companies to offer earthquake insurance in conjunction with a residential property insurance policy. If you do not accept the offer of earthquake insurance below within 30 days of the mailing of this notice, your insurance company shall presume that you have not accepted this offer of earthquake insurance.

You may purchase earthquake insurance coverage on the following terms:

(A) Amount of Dwelling/Building Coverage Limit: _______________

(B) Deductible: ______________

(C) Contents Coverage Limit: _______________

(D) Additional Living Expenses Coverage Limit: _____________

(E) Estimated Annual Premium:_______________

The deductible represents the amount of damage your covered property must incur before the earthquake insurance coverage begins. If your covered loss is less than the applicable deductible, you may not receive any payment.

Contact your insurance agent or your insurance company to obtain details regarding this offer of earthquake insurance and other coverage options.” (2) If the offer is made by a participating insurer as defined by Section 10089.5, the offer of earthquake coverage shall contain all of the following language in at least 10-point boldface type: “Your residential property insurance policy does not cover earthquake damage to your home or its contents.

To cover earthquake damage to your home and its contents you need to purchase a separate earthquake insurance policy. The coverage provided by an earthquake insurance policy is different from, and typically more limited than, the coverage provided by your residential property insurance policy.

California law requires insurance companies to offer earthquake insurance in conjunction with a residential property insurance policy. If you do not accept the offer of earthquake insurance below within 30 days of the mailing of this notice, your insurance company shall presume that you have not accepted this offer of earthquake insurance.

You may purchase earthquake insurance coverage on the following terms:

(A) Amount of Dwelling/Building Coverage Limit: _______________

(B) Deductible: ______________

(C) Contents Coverage Limit: _______________

(D) Additional Living Expenses Coverage Limit: _____________

(E) Estimated Annual Premium:_______________

The deductible represents the amount of damage your covered property must incur before the earthquake insurance coverage begins. If your covered loss is less than the applicable deductible, you may not receive any payment.

If you choose not to accept this offer within the 30-day period, you may apply for earthquake coverage at a later date.

Your insurance company contracts with the California Earthquake Authority (CEA) to offer earthquake insurance to its customers. For an additional premium, you can choose CEA coverage options such as higher limits for Contents or Additional Living Expenses, increased building code upgrade limits, or a lower deductible. You can also choose to buy certain CEA coverages separately.

Contact your insurance agent or your insurance company to obtain details regarding this offer of earthquake insurance and other coverage options.” (b) If the offer of earthquake coverage made pursuant to Section 10081 is not accepted, the insurer or any affiliated insurer shall be required on an every other year basis to offer earthquake coverage in connection with any continuation, renewal, or reinstatement of the policy following any lapse thereof, or with respect to any other policy that extends, changes, supersedes, or replaces the policy of residential property insurance.

(c) The offer may contain additional provisions not in conflict with or in derogation of this section.

(d) The commissioner may approve modifications to the language prescribed in subdivision (a) only if all of the following conditions are met:

(1) The modifications are not in conflict with or in derogation of any provision of this section or Section 10089.

(2) The modifications accurately describe the coverage provided by the policy being offered.

(3) The modifications are strictly limited to necessary changes so that the modified offer is otherwise identical to the offer prescribed in subdivision (a).

(e) Use of the language prescribed by this section, or modified language approved pursuant to subdivision (d), shall constitute compliance with the requirements of Section 10081 by an insurer subject thereto.

(f) (1) If an insurer issues or causes to be issued a policy with earthquake coverages other than the coverages specified in subdivisions (a) and (b) of Section 10089, pursuant to a rate application approved by the commissioner in accordance with subdivision (c) of Section 10089, no further or other offer of earthquake coverage as specified in subdivisions (a) and (b) of Section 10089 and no further or other notice of noncoverage is required by the insurer if both of the following apply:

(A) A renewal of that policy is offered.

(B) A written notice is provided with that renewal regarding additional earthquake coverage that is available.

(2) The form of the written notice in paragraph (1) shall be filed with the commissioner at least 30 days before its first use. The form shall not be used if the commissioner disapproves the form of the written notice within that period for being misleading or incomplete.

(g) This section shall become operative on January 1, 2019.

history: (History: Amended (as amended by Stats. 2014, Ch. 427, Sec. 2.5) by Stats. 2016, Ch. 549, Sec. 2. (AB 499) Effective January 1, 2017. Section operative January 1, 2019, by its own provisions.)


text:
An insurer which issues or delivers a policy of residential property insurance in this state may comply with the provisions of Section 10081 in any of the following ways:

(a) By offering to underwrite directly the risk of loss or damage caused by peril of earthquake.

(b) By arranging for earthquake coverage to be offered by an affiliated insurer.

(c) By arranging for the coverage to be offered through an insurance agent or broker under a policy or certificate of insurance issued by a nonaffiliated insurer.


text: If the insurer establishes proof of mailing or delivery of the required offer and the offer of earthquake coverage is not accepted by the named insured within 30 days from the date of mailing or delivery of the offer, there shall be a conclusive presumption that the named insured elected not to accept the coverage. An election, actual or presumed, by any named insured shall be binding upon any other person insured or any other party having an insurable interest in the insured property.


text:
(a) If an offer of earthquake coverage, made pursuant to Section 10081, is accepted, the coverage shall be continued at the applicable rates and conditions for the policy term, provided the policy of residential property insurance is not terminated by the named insured or insurer.

(1) At any renewal, an insurer may modify the terms and conditions of an existing policy, rider, or endorsement providing coverage against loss or damage caused by the peril of earthquake if the modified terms and conditions provide the minimum coverages required by Section 10089.

(2) If the modification referenced in paragraph (1) reduces or substantially differs from the coverage previously provided, an insurer shall provide the insured with the renewal offer required by Section 10083 and a stand-alone document stating the changes in the terms and conditions of the insured’s existing policy, rider, or endorsement.

(A) Before July 1, 2020, the stand-alone document shall include the following statement in 14-point boldface type:

“THE COVERAGE IN THE POLICY WE ARE OFFERING YOU WITH THIS RENEWAL HAS BEEN REDUCED, AND SUBSTANTIALLY DIFFERS FROM THE COVERAGES PROVIDED BY YOUR HOMEOWNERS’ POLICY. INSURANCE COMPANIES ARE ALLOWED TO RENEW EARTHQUAKE INSURANCE POLICIES WITH COVERAGE THAT IS REDUCED FROM THE COVERAGE YOU PREVIOUSLY PURCHASED. YOU MAY REQUEST A SAMPLE COPY OF THIS NEW POLICY TO REVIEW PRIOR TO MAKING A DECISION TO ACCEPT THIS RENEWAL, AND WE WILL MAIL OR DELIVER IT TO YOU WITHIN 14 DAYS OF YOUR REQUEST. A REQUEST FOR THE SAMPLE COPY SHALL NOT CHANGE OR EXTEND THE POLICY EXPIRATION DATE SPECIFIED IN THE RENEWAL NOTICE. A SUMMARY OF THE CHANGES IS INCLUDED WITH THIS NOTICE.”

(B) On and after July 1, 2020, the stand-alone document shall include the following statement in 14-point boldface type:

“IMPORTANT NOTICE:

• The extent of the coverage for earthquake damage has been reduced or substantially changed in this renewal.

• You may request a sample copy of this renewal policy for your review prior to making your decision to renew.

• We will mail or deliver that sample copy to you within 14 days. However, your renewal date will not be extended or changed.

• A summary of the changes to your coverage is included with this notice.

• Be aware that your earthquake coverage may have different limits, deductibles, and other limitations than your homeowners’ policy.” (3) The commissioner shall approve the form of the offer of renewal at the time the commissioner approves the policy. The offer of renewal shall include the information contained in subdivision (a) of Section 10083, and may be included with the renewal notice in standard type.

(4) The commissioner may approve a substantially similar form of the offer of renewal if necessary to accurately disclose relevant information to the policyholder.

(b) This section does not preclude the named insured from terminating the earthquake coverage at any time.

history: (History: Amended by Stats. 2019, Ch. 201, Sec. 10. (AB 1813) Effective January 1, 2020.)


text:
(a) Where the offer of earthquake coverage has not been accepted, the insurer shall notify the named insured that the policy does not provide that coverage. After the offer on an every other year basis, the notice of noncoverage shall be provided prior to or concurrent with the renewal of the policy of residential property insurance. This section shall not affect any other provisions of this chapter nor shall it affect coverage under the policy of residential property insurance.

(b) No further or other notice of noncoverage is required pursuant to subdivision (a) for policies subject to subdivision (f) of Section 10083, and the insurer has complied with the conditions of subdivision (f) of Section 10083.

history: (History: Amended by Stats. 2014, Ch. 427, Sec. 3. (AB 2735) Effective January 1, 2015.)


text:
(a) The Legislature hereby finds and declares that the continued regulation of the business practices of insurers and their products is in the interest of the citizens of the state and that the control and limitation of unlawful nonrenewal, rejection, or cancellation of residential property insurance after an offer of earthquake coverage is accepted is an essential component of that regulation which is necessary to effectuate an adequate and complete system and regulation of insurer and producer business practices. The Legislature finds that this chapter continues to provide critical protection to insureds in this state from the numerous consequences that would occur in the absence of that regulation.

(b) An insurer shall not refuse to renew, reject, or cancel a policy of residential property insurance after an offer of earthquake coverage is accepted solely because the insured has accepted that offer of earthquake coverage, except in cases in which the policy is terminated by the named insured.

(c) Underwriting standards applicable to residential property insurance shall not be applied in a discriminatory fashion against any person who accepts or elects to continue earthquake coverage.

history: (History: Amended by Stats. 1990, Ch. 1526, Sec. 1.)


text:
(a) (1) As used in this chapter, “policy of residential property insurance” means a policy insuring individually owned residential structures of not more than four dwelling units, individually owned condominium units, or individually owned mobilehomes, and their contents, located in this state and used exclusively for residential purposes or a tenant’s policy insuring personal contents of a residential unit located in this state.

(2) “Policy of residential property insurance,” does not include any of the following:

(A) Insurance for real property or its contents used for any commercial, industrial, or business purpose, except a structure of not more than four dwelling units rented for individual residential purposes.

(B) A policy that does not include any of the perils insured against in a standard fire policy.

(C) A policy that provides, or is construed to provide, any coverage or indemnity for the payment of any fine, penalty, or restitution in any criminal, civil, or administrative action or proceeding, or any coverage or indemnity for the payment of any loss or liability, arising from the operation of either a recovery residence, as defined in Section 11833.05 of the Health and Safety Code, or an alcoholism or drug abuse recovery or treatment facility, as defined in Section 11834.02 of the Health and Safety Code. This subparagraph shall apply to policies issued, renewed, or amended on or after January 1, 2022.

(3) (A) Subparagraph (C) of paragraph (2) does not prohibit a recovery residence that is managed by its residents and operates on a not-for-profit basis from obtaining coverage under a policy of residential property insurance.

(B) For purposes of subparagraph (A), a recovery residence operates on a not-for-profit basis if it satisfies all of the following:

(i) It does not accept or require valuable consideration from or on behalf of residents other than a pro rata share of living expenses.

(ii) It is not owned by, or under contract with, an alcoholism or drug abuse recovery or treatment facility, as defined in Section 11834.02 of the Health and Safety Code.

(iii) It is not owned by, or under contract with, an affiliate, contractor, or intermediary of an alcoholism or drug abuse recovery or treatment facility, as defined in Section 11834.02 of the Health and Safety Code.

(b) Proof of mailing of any offer, disclosure, or document required to be delivered by this chapter by first-class mail addressed to a named insured or applicant at the mailing address shown on the policy or application shall create a conclusive presumption that the offer was made or that the disclosure or document was delivered as required. If an offer, disclosure, or document required to be delivered by this chapter is not mailed, but is hand delivered to the insured, the insured’s signed receipt creates a conclusive presumption that the offer was provided or that the disclosure or document was delivered as required.

history: (History: Amended by Stats. 2021, Ch. 443, Sec. 3. (AB 1158) Effective January 1, 2022.)


text:
(a) Every policy of residential property insurance which provides coverage for loss or damage to a structure from the peril of earthquake, but that provides for an uninsured deductible amount computed as a percentage, shall clearly disclose on the page setting forth the policy declarations the basis upon which the percentage is computed. This disclosure shall be printed in at least 10-point bold typeface.

(b) Every advertisement for a policy subject to subdivision (a) shall clearly disclose the deductible by stating the applicable percentage and the basis upon which the percentage is computed.

(c) Every policy of residential property insurance or policy endorsement covering an individual condominium unit for loss or damage from the peril of earthquake shall disclose on the policy declarations page, in at least 10-point bold typeface, if the policy or endorsement provides no coverage for loss assessment. If the policy or endorsement provides that loss assessment coverage is limited or changed as a result of any provision of the insurance policy or policy endorsement purchased by the corporation or association of property owners, or as a result of an assessment to pay a deductible amount under the corporation or association policy, the nature of the limitation or change shall also be disclosed on the policy declarations page. If because of lack of space or other practical limitations the policy declarations page cannot contain the disclosure required by this subdivision, the disclosure may be placed on the page immediately following the policy declarations page and shall be printed in at least 12-point bold typeface. Nothing in this subdivision shall be construed to require an insurer to provide a disclosure for loss assessment if the only limitations on loss assessment coverage are the policy limits.

(d) The commissioner shall issue a bulletin that specifies the language of the disclosure required by subdivision (c). The commissioner may specify different disclosures to explain more accurately different coverages offered by insurers.

history: (History: Amended by Stats. 1994, Ch. 658, Sec. 1. Effective January 1, 1995.)


text: Notwithstanding the provisions of Section 530, 532, or any other provision of law, and in the absence of an endorsement or an additional policy provision specifically covering the peril of earthquake, no policy which by its terms does not cover the peril of earthquake shall provide or shall be held to provide coverage for any loss or damage when earthquake is a proximate cause regardless of whether the loss or damage also directly or indirectly results from, or is contributed to, concurrently or in any sequence by any other proximate or remote cause, whether or not covered by the policy. The term “policy” as used in this section includes all policies of any nature, including, but not limited to, business and commercial forms providing coverage against loss due to damage to the property of the insured. Nothing in this section shall operate to affect the provisions of Section 2071 or preclude an insurer from specifically providing coverage for direct loss caused by explosion, theft, or glass breakage resulting from an earthquake.


text: Notwithstanding Section 2081, nothing in Section 10088 exempts an insurer from its obligation under a fire insurance policy to cover the losses of a fire which is caused by or follows an earthquake.

history: (History: Amended by Stats. 1990, Ch. 1166, Sec. 4.)


text:
(a) At a minimum, an offer of coverage of loss or damage caused by the peril of earthquake pursuant to Section 10081 shall include the following coverages: (1) dwelling, not including outbuildings, appurtenant structures, swimming pools, masonry fences and walls not necessary for the structural integrity of the dwelling, walkways and patios not necessary for regular ingress or egress from the dwelling, awnings or other patio coverings, decorative or artistic features including plaster if other covering would be more cost-effective, landscaping, or masonry chimneys, provided that the policy covers replacement of a damaged masonry chimney with a nonmasonry, earthquake resistant chimney. An insurer that provides earthquake coverage for the dwelling that is narrower than coverage provided under the policy of residential property insurance shall, upon approval of the commissioner, establish the premium for the earthquake coverage in a manner that reflects the exclusion of those items not covered by the earthquake policy, rider, or endorsement; (2) contents coverage either in an amount not less than 10 percent of the amount of the covered dwelling loss, or in an amount not less than five thousand dollars ($5,000), provided that if the underlying policy of residential property insurance does not cover structural loss, the amount of contents coverage after deductible shall be not less than five thousand dollars ($5,000). The insurer shall elect at the time the insurer files its rate application with the commissioner which of the two contents coverages it will use to satisfy the requirements of this chapter. Upon election, the option shall be required to be offered to every policyholder who receives an offer of earthquake coverage pursuant to this chapter. In the case of either coverage, the insurer may exclude from coverage glassware, china, porcelain, or ceramic items, artwork, or other decorative items; and (3) additional living expenses of an amount no less than one thousand five hundred dollars ($1,500) to cover expenses while the residential dwelling remains uninhabitable due to physical loss or damage from the peril of earthquake.

(b) Coverages provided in paragraphs (1) and (2) of subdivision (a) shall not contain a deductible of more than 15 percent of coverage provided for the dwelling.

(c) The commissioner may approve rate applications that allow the insurer to offer policies providing coverage other than the coverage specified in this section provided that at least one coverage offered meets the criteria provided in this section.

(d) In the case of a residential dwelling which is not owner occupied, the minimum coverage for additional living expenses may be waived by the applicant or policyholder, provided the insurer gives notice to the applicant or policyholder that coverage for additional living expenses is offered but may be waived, and the waiver is in writing.

history: (History: Amended by Stats. 1995, Ch. 939, Sec. 4. Effective January 1, 1996.)


text:
To the extent that the coverage is not already provided in the minimum offer of coverage, every insurer shall offer the following optional coverage as part of the offer of coverage as required by Section 10081 only after the insured has completed and the insurer has verified retrofitting of the residential dwelling as described in subdivision (a) of Section 10089.2:

Coverage in the amount of ten thousand dollars ($10,000) for the purpose of reconstruction costs required to bring the residential dwelling on the residential property up to required current local residential dwelling building code standards as required by the local entity as part of the approval of the reconstruction permit process after an earthquake.

history: (History: Added by renumbering Section 10089.15 (as added by Stats. 1990, Ch. 1166) by Stats. 1996, Ch. 967, Sec. 10. Effective September 27, 1996.)


text:
(a) (1) Subject to the approval of the commissioner, every insurer subject to this chapter shall, at the time of offering to issue or offer to renew coverage as part of the offer of coverage required by Section 10081, disclose to the applicant, in writing as a freestanding document or in the same document containing the offer of coverage required by Section 10081, which brings attention to the applicant, all discounts or surcharges, if any that are available from the insurer for that insurance and for any related insurance provided under that coverage as part of the offer of coverage required by Section 10081.

(2) The insurer shall provide and disclose in writing any discounts or surcharges, if any, for earthquake hazard reductions, which shall include, but not be limited to, retrofitting of the residential dwelling by tying the structure to the foundation or bracing the structure to the foundation, reinforcement of the fireplace chimney, or securing of the hot water heater, and any other discounts that are available from the insurer.

(b) Each insurer that offers earthquake insurance through licensed agents or brokers shall provide in writing the document required in subdivision (a) and any documents required by subdivision (a) of Section 10083 to the agents and brokers listing all of the discounts or surcharges, if any, that are required to be disclosed to the applicant under this section, and shall require its agents and brokers to make the disclosures required by this section.

(c) An insurer is not subject to this section where an insured has completed earthquake hazard reductions and the insurer has provided discounts or surcharges for the specific policy in the form of premium rate changes.

history: (History: Amended by Stats. 2011, Ch. 240, Sec. 2. (SB 596) Effective January 1, 2012.)


text:
(a) The department shall adopt regulations setting forth standards governing the training of insurance adjusters in evaluating damage caused by earthquakes. For purposes of this section, the California Earthquake Authority shall make available to the Department of Insurance the standards used by the authority in order for the department to develop regulations that are consistent with the authority’s standards. On or before December 31, 2004, insurers shall train and accredit adjusters in accordance with these standards. Thereafter, an insurer using one or more adjusters who are not trained and accredited in accordance with those standards shall submit the names of those adjusters to the department, along with the claim number of the claim adjusted by that adjuster. An adjuster trained and accredited by one insurer pursuant to this section shall not be required to receive training and accreditation again in order to adjust claims for a different insurer. An insurer using an adjuster who has been trained and accredited by another insurer pursuant to this section shall not be required to submit the name of that adjuster to the department.

(b) For purposes of this section, “insurance adjuster” shall include the following persons:

(1) Persons licensed pursuant to Chapter 1 (commencing with Section 14000) of Division 5.

(2) Employees of persons licensed pursuant to Chapter 1 (commencing with Section 14000) of Division 5 who perform insurance adjusting activities as defined in Section 14021.

(3) Employees of an insurer who perform insurance adjusting activities as defined in Section 14021.

history: (History: Added by Stats. 2001, Ch. 727, Sec. 1. Effective January 1, 2002.)


text:
(a) No person may use a geographically based earthquake assessment system or program for the purpose of requiring earthquake insurance, or imposing a fee or any other condition in lieu of requiring earthquake insurance, in connection with a loan secured by a condominium project or an individual unit of a condominium project unless the system’s or program’s analytical assumptions and methodology used in the assessment have been submitted to and approved by the commissioner. In determining whether to approve a submission, the commissioner shall consult with and consider the input of the State Geologist.

(b) The department may charge a fee to defray the actual cost of reviewing earthquake risk assessment methods. Any costs incurred by the State Geologist or Department of Conservation as required by subdivision (a) shall be reimbursed by the department.

history: (History: Added by Stats. 1996, Ch. 54, Sec. 1. Effective June 6, 1996.)


text:
As used in this chapter:

(a) “Authority” means the California Earthquake Authority.

(b) “Available capital” means the sum of all moneys and invested assets actually held in the California Earthquake Authority Fund, less loss reserves and loss adjustment expense reserves under all of the authority’s policies of residential earthquake insurance, and less the unearned premium reserve. “Available capital” includes all interest or other income from the investment of money held in the California Earthquake Authority Fund. “Available capital” does not include unearned premium, the proceeds of contracts of reinsurance procured by or in the name of the authority pursuant to subdivision (a) of Section 10089.10, any funds realized on capital market contracts authorized by subdivision (b) of Section 10089.10, or the proceeds of bonds issued by or in the name of the authority.

(c) “Basic residential earthquake insurance” means that policy of residential earthquake insurance described in Section 10089 except as follows:

(1) (A) If one year after the authority commences operation the authority has available capital equal to or exceeding seven hundred million dollars ($700,000,000), any policy issued or renewed on or after that date shall provide, less any applicable deductible, not less than two thousand five hundred dollars ($2,500) in coverage for additional living expenses.

(B) If the authority met the available capital requirements of subparagraph (A) and two years after the authority commences operation the authority has available capital equal to or exceeding seven hundred million dollars ($700,000,000), any policy issued or renewed on or after that date shall provide, less any applicable deductible, not less than three thousand dollars ($3,000) in coverage for additional living expenses.

(2) (A) If the authority did not meet the available capital requirement of subparagraph (A) of paragraph (1) but, two years after the authority commences operation the authority has available capital equal to or exceeding seven hundred million dollars ($700,000,000), any policy issued or renewed on or after that date shall provide, less any applicable deductible, not less than two thousand five hundred dollars ($2,500) in coverage for additional living expenses.

(B) If the authority met the available capital requirements as provided by subparagraph (A) and three years after the authority commences operation the authority has available capital equal to or exceeding seven hundred million dollars ($700,000,000), any policy issued or renewed on or after that date shall provide, less any applicable deductible, not less than three thousand dollars ($3,000) in coverage for additional living expenses.

(d) “Board” means the governing board of the authority.

(e) “Bonds” means bonds, notes, commercial paper, variable rate and variable maturity securities, and any other evidence of indebtedness.

(f) “Capital market contract” means an agreement between the authority and a purchaser pursuant to which the purchaser agrees to purchase bonds of the authority.

(g) “Nonparticipating insurer” means an insurer that elects not to transfer or place any residential earthquake policies in the authority.

(h) “Panel” means the advisory panel of the authority.

(i) “Participating insurer” means an insurer that has elected to join the authority.

(j) “Policy of residential property insurance” means those policies described in Section 10087.

(k) “Private capital market” means one or more purchasers of bonds of the authority pursuant to a capital market contract.

(l) “Qualifying residential property” includes all those residential dwellings set forth in Section 10087.

(m) “Residential earthquake insurance market share” means an individual insurer’s total direct premium received for (1) residential earthquake policies and endorsements written or renewed by the insurer in California and (2) residential earthquake policies written or renewed by the authority for which the insurer has written or renewed an underlying policy of residential property insurance, divided by the total gross premiums received by all admitted insurers and the authority for their basic residential earthquake insurance in California.

(n) “Residential property insurance market share” means an individual insurer’s total gross premiums received for residential property insurance policies written or renewed by the insurer, divided by the total gross premiums received by all admitted insurers for residential property insurance in California.

(o) “Revenue” means all income and receipts of the authority, including, but not limited to, income and receipts derived from premiums, bond purchase agreements, capital contributions by insurers, assessments levied on insurers, surcharges applied to authority earthquake policyholders, and all interest or other income from investment of money in any fund or account of the authority established for the payment of principal or interest, or premiums on bonds, including reserve funds.

(p) “Unearned premium reserve” means an amount equal to the unearned portion of premiums due to, or received by, the authority on all of its policies of residential earthquake insurance, without deduction on account of reinsurance ceded. The unearned premium reserve shall be charged as a reserve liability in determining the authority’s financial condition. Because the unearned premium reserve is established and maintained to protect the interests of authority policyholders in their unexpired authority policies, authority assets in an amount equal to the unearned premium reserve shall not be subject to encumbrance by, or distribution to, creditors of or claimants against the authority unless and until the authority has paid in full all policyholder claims and policyholder liabilities.

history: (History: Amended by Stats. 2007, Ch. 303, Sec. 1. Effective January 1, 2008. Operative July 1, 2008, by second Sec. 8 of Ch. 303.)

chapter: 8.6. California Earthquake Authority

path: 2. CLASSES OF INSURANCE > 1. FIRE AND MARINE INSURANCE > 8.6. California Earthquake Authority


text:
(a) (1) There is hereby created the California Earthquake Authority, which shall be administered and governed by the governing board described in Section 10089.7 under the authority of the commissioner and overseen by the California Catastrophe Response Council solely with regard to any administrative or support services the authority may provide to, or for the benefit of, the Wildfire Fund created pursuant to Section 3284 of the Public Utilities Code or the Wildfire Fund Administrator appointed pursuant to Section 8899.72 of the Government Code. All other businesses or activities of the authority unrelated to the Wildfire Fund shall be governed solely by the board. The authority shall have the powers conferred by this chapter. The authority shall be authorized to transact insurance in this state as necessary to sell policies of basic residential earthquake insurance in the manner set forth in Sections 10089.26, 10089.27, and 10089.28. The authority shall have no authority to transact any other type of insurance business.

(2) The authority shall be authorized to exercise the powers of the Wildfire Fund Administrator as provided in Section 3281 of the Public Utilities Code until the appointment of the administrator by the council.

(b) (1) The investments of the authority shall be limited to those securities eligible under Section 16430 of the Government Code.

(2) The rights, obligations, and duties owed by the authority to its insureds, beneficiaries of insureds, and applicants for insurance shall be the same as the rights, obligations, and duties owed by insurers to its insureds, beneficiaries of insureds, and applicants for insurance under common law, regulations, and statutes. The authority shall be liable to its insureds, beneficiaries of insureds, and applicants for insurance as an insurer is liable to its insureds, beneficiaries of insureds, and applicants for insurance under common law, regulations, and statutes.

(c) The operating expenses of the authority shall be capped at not more than 6 percent of the premium income received by the authority. The funds shall be available to pay any advocacy fees awarded in a proceeding under subdivision (c) of Section 10089.11.

(d) For purposes of this section, the term “operating expenses of the authority” excludes solely the following:

(1) The costs of and transaction expenses associated with risk-transfer purchases, including the purchase of reinsurance and with capital-market contracts.

(2) The expense of securing and repaying bonds.

(3) The cost of repayment of bonds guaranteed, insured, or otherwise backed by any department or agency of the United States or of this state, or by any private entity.

(4) Payments to third parties for all of the following services provided to the authority:

(A) Investment.

(B) Loss-modeling.

(C) Legal services.

(5) Costs associated with the authority’s efforts to acquaint the public with and market authority products, promote earthquake preparedness, and earthquake-loss mitigation under the authority’s duly adopted strategic plan.

(6) Producer compensation.

(7) Participating insurer fees and reimbursement amounts arising under written contracts.

(8) Amounts paid by the authority to support research in seismic science and seismic engineering.

(9) Loans, grants, and expenses to support and maintain the authority’s earthquake loss-mitigation goals and programs, whether conducted by the authority alone or in collaboration with or by other persons.

(10) The costs of and loss-adjustment expenses associated with adjusting and paying policyholder claims for earthquake losses that are incurred by the authority under its earthquake insurance policies, including all costs and expenses associated with claim-related litigation, provided that all of those costs and expenses shall be reported to the Legislature in the manner required by subdivision (e) of Section 10089.13.

(11) Any cost incurred to provide administrative services and other support to or for the benefit of the Wildfire Fund created pursuant to Section 3284 of the Public Utilities Code, which cost shall be borne by the Wildfire Fund.

(e) The board may authorize the authority to contract with the Wildfire Fund created under Section 3284 of the Public Utilities Code to provide services and other support as the Wildfire Fund may require.

history: (History: Amended by Stats. 2019, Ch. 396, Sec. 10. (AB 1513) Effective January 1, 2020.)