SB 495

SB495:v94#DOCUMENT

Bill Start

Senate Bill No. 495

CHAPTER 542

An act to amend Sections 2051.5 and 10103.7 of, and to add Article 10.85 (commencing with Section 937) to Chapter 1 of Part 2 of Division 1 of, the Insurance Code, relating to insurance.

[ Approved by Governor October 10, 2025. Filed with Secretary of State October 10, 2025. ]

LEGISLATIVE COUNSEL'S DIGEST

SB 495, Allen. Insurance.

(1) Existing law establishes the Department of Insurance, headed by the Insurance Commissioner, which regulates insurers and insurance practices. When an insurer obtains reinsurance, existing law requires them to communicate all the representations of the original insured, and also all the knowledge and information they possess, as specified, which are material to the risk.

This bill would require, on or before March 1, 2026, and on or before March 1 every year thereafter, an admitted insurer in a group with written premiums in the prior year from specified lines of insurance totaling $50,000,000 to submit a report to the commissioner that includes data and information necessary to understand its reinsurance program placement data and use of probabilistic catastrophic models for the previous year. The bill would require the report to include data from the latest available reinsurance treaty year. The bill would require the insurer to promptly respond to inquiries from the commissioner upon submission of the report. The bill would require the commissioner to post to the department’s internet website an aggregated report of the data in the report from insurers. The bill would require all other information submitted to the commissioner under these provisions be confidential, among other things, and exempt from the California Public Records Act.

The bill would require an admitted insurer to pay a civil penalty, to be fixed by the commissioner, but not to exceed $5,000 for each 30-day period the insurer is not in compliance with the reporting provisions. The bill would authorize an insurer to request, and the commissioner to grant, a 30-day extension to submit the report if needed due to unintended or unforeseen circumstances. The bill would authorize the commissioner to find that the failure to submit the report on time was willful and to increase the civil penalty to an amount not to exceed $10,000 for each 30-day period, up to a maximum of $100,000. The bill would allow the penalty to be appealed under specified provisions.

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest. This bill would make legislative findings to that effect.

The bill would make related findings and declarations.

(2) Existing law defines the measure of indemnity for a loss under an open fire insurance policy and specifies time limits under which an insured must collect the full replacement cost of the loss. For a residential property insurance policy, existing law requires the measure of damages available to a policyholder to use to rebuild or replace the insured home at another location to be the amount that would have been recoverable had the insured dwelling been rebuilt at its original location, as specified. In the event of a total loss of an insured structure, existing law prohibits a policy issued or delivered in this state from containing a provision that limits or denies payment of the building code upgrade cost or the replacement cost on the basis that the insured has decided to rebuild at a new location or to purchase a built home at a new location. Existing law requires the insured to give written notice to the insurer of any loss within 60 days after the loss unless the time is extended in writing by the insurer.

The bill would prohibit an insurer from requiring an insured to provide a proof of loss less than 100 days after a loss relating to a state of emergency, as defined. The bill would require the insurer to provide the insured one or more extensions of 3 months for good cause, if the insured, acting in good faith and with reasonable diligence, encounters a delay in providing a proof of loss in specified circumstances beyond the control of the insured.

Existing law requires a residential property insurer to allow an insured that has suffered a loss relating to a declared state of emergency to combine the policy limits for primary dwelling and other structures, and to use the combined amount to rebuild or replace the dwelling, as specified. For a total loss of a furnished residence related to a declared state of emergency, existing law requires an insurer to provide an advance partial payment for contents of no less than 30% of the policy limit, as specified, without requiring an itemized claim.

The bill would instead require the insurer to provide 60% of the policy limit applicable to the personal property covered under the policy, up to a maximum of $350,000, when the loss is relating to a declared state of emergency, without requiring an itemized claim. The bill would also authorize an insurer to require an insured to sign an attestation form as a condition of receiving the advance payment for personal property loss stating that the insured acknowledges the residence was furnished and that they reasonably believe the personal property damaged or destroyed had a value that equates or exceeded the amount of the advance payment.

Digest Key

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO

Bill Text

The people of the State of California do enact as follows:

SECTION 1.

Article 10.85 (commencing with Section 937) is added to Chapter 1 of Part 2 of Division 1 of the Insurance Code, to read:

Article 10.85. Insurance and Climate Risk Market Intelligence Act

937.

The Legislature finds and declares all of the following:

(a) Since 2006, the state of California has funded and undertaken four comprehensive climate change assessments designed to assess the impacts and risks from climate change. The most recent, California’s Fourth Climate Change Assessment, identified that if greenhouse gas emissions continue to increase, the frequency of extreme wildfires will increase.

(b) The Department of Insurance’s review of the multistate Climate Risk Disclosure Survey in 2023 showed that insurance companies commonly identified that the purchase of reinsurance is a primary strategy for addressing increased risks from catastrophic events such as wildfires and the use of catastrophe modeling is a prominent risk assessment tool.

(c) It is in the state’s interest to expand insurance options for consumers in wildfire-distressed areas of California.

(d) It is in the state’s interest to understand the trends in the insurance markets and the reinsurance strategies and models used by insurance companies, not only to expand the writing of insurance policies, but to understand the systemic risk to the solvency of insurance companies that write policies in wildfire-distressed areas.

(e) Regularly updated information will support the ability of the department to further understand the California residential and commercial property insurance market by providing point-in-time information so the department can evaluate reinsurance trends across the market.

(1) The regularly updated information may include, but shall not be limited to, all of the following:

(A) The overview of a reinsurance program.

(B) The catastrophe program in place.

(C) The type of risk covered.

(D) The California-specific information.

(E) Year-over-year changes.

(f) Regularly updated data will allow the department to better analyze market trends and scenarios, which in turn will result in better, more informed communication to California consumers.

937.1.

(a) (1) On or before March 1, 2026, and on or before March 1 of every year thereafter, an admitted insurer in a group with written premiums in the prior year from fire, allied lines, private flood, homeowners, farmowners, and commercial nonliability lines totaling fifty million dollars ($50,000,000) or more shall submit a report to the commissioner that shall only include data and information necessary to understand its reinsurance program placement data and use of probabilistic catastrophic models for the previous year for policies.

(2) Reports filed on or before March 1, 2026, shall include data from the latest available reinsurance treaty year. Subsequent reports shall likewise include data from the latest reinsurance treaty year available when the report is due.

(3) The commissioner may specify the manner of submission, format, and content of the report required pursuant to paragraph (1).

(b) An insurance holding company system, as defined in subdivision (h) of Section 1215, may submit a consolidated report of the information required by this section for all insurers comprising the holding company system.

(c) Upon submission of a report pursuant to this section, the insurer shall promptly respond to inquiries from the commissioner or their representative regarding the information submitted in the report.

937.2.

Notwithstanding Section 937.3, information submitted to the commissioner under this article shall be confidential pursuant to Section 7929.000 of the Government Code and exempt from the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code). Additionally, that information shall not be subject to subpoena or subpoena duces tecum. Testimony by the commissioner, the commissioner’s staff, an employee of the department, or a person to whom the report required by Section 937.1 was disclosed, regarding the contents of a report submitted pursuant to Section 937.1, shall be inadmissible as evidence in a civil proceeding.

937.3.

(a) The commissioner shall post to the department’s internet website an aggregated report based on the data collected under Section 937.1.

(b) The report shall include only data and indices aggregated sufficiently to avoid identification of individual company reinsurance practices.

(c) The aggregated report shall not identify an individual respondent or insurer and may be updated every year to reflect new data submitted by admitted insurers under Section 937.1.

937.4.

(a) Failure to submit a report under Section 937.1 shall subject an admitted insurer to a civil penalty to be fixed by the commissioner, not to exceed five thousand dollars ($5,000) for each 30-day period that the insurer is not in compliance, unless the failure to comply is willful, in which case the civil penalty shall be in an amount not to exceed ten thousand dollars ($10,000) for each 30-day period that the insurer is not in compliance, but not to exceed an aggregate amount of one hundred thousand dollars ($100,000). The commissioner shall collect the amount payable and may bring an action in the name of the people of the State of California to enforce collection. These penalties shall be in addition to other penalties provided by law.

(b) An insurer may request, and the commissioner may grant, a 30-day extension to submit a report pursuant to Section 937.1 if needed due to unintended or unforeseen delays. If the insurer fails to submit a report pursuant to Section 937.1 after the granted 30-day extension has passed, the commissioner may find that the failure to submit the report was willful and increase the civil penalty to an amount not to exceed ten thousand dollars ($10,000) for each 30-day period that the insurer is not in compliance, but not to exceed an aggregate amount of one hundred thousand dollars ($100,000).

(c) The penalty imposed by this section may be appealed by means of a remedy provided by Section 12940, or by Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code.

(d) The commissioner may consider an insurer’s violation of this section or article as the basis for other enforcement action against an insurer, as authorized by law.

937.5.

The commissioner may promulgate regulations that further the purposes of this article.

SEC. 2.

Section 2051.5 of the Insurance Code is amended to read:

2051.5.

(a) (1) Under an open policy that requires payment of the replacement cost for a loss, the measure of indemnity is the amount that it would cost the insured to repair, rebuild, or replace the thing lost or injured, without a deduction for physical depreciation, or the policy limit, whichever is less.

(2) If the policy requires the insured to repair, rebuild, or replace the damaged property in order to collect the full replacement cost, the insurer shall pay the actual cash value of the damaged property, as defined in Section 2051, until the damaged property is repaired, rebuilt, or replaced. Once the property is repaired, rebuilt, or replaced, the insurer shall pay the difference between the actual cash value payment made and the full replacement cost reasonably paid to replace the damaged property, up to the limits stated in the policy.

(b) (1) (A) A time limit of less than 12 months from the date that the first payment toward the actual cash value is made shall not be placed upon an insured in order to collect the full replacement cost of the loss, subject to the policy limit.

(B) In the event of a loss relating to a “state of emergency,” as defined in Section 8558 of the Government Code, a time limit of less than 36 months from the date that the first payment toward the actual cash value is made shall not be placed upon the insured in order to collect the full replacement cost of the loss, subject to the policy limit.

(C) This section does not prohibit an insurer from allowing the insured additional time to collect the full replacement cost.

(2) An insurer shall provide to a policyholder one or more additional extensions of six months for good cause pursuant to subparagraph (A) or (B) of paragraph (1) if the insured, acting in good faith and with reasonable diligence, encounters a delay or delays in approval for, or reconstruction of, the home or residence that are beyond the control of the insured. Circumstances beyond the control of the insured include, but are not limited to, unavoidable construction permit delays, the lack of necessary construction materials, or the unavailability of contractors to perform the necessary work.

(3) (A) In the event of a loss relating to a state of emergency, as defined in Section 8558 of the Government Code, an insurer shall not require the insured to provide proof of loss less than 100 days after the loss.

(B) The insurer shall provide to the insured one or more additional extensions of three months for submission of proof of loss for good cause if the insured, acting in good faith and with reasonable diligence, encounters a delay in providing proof of loss that is beyond the control of the insured. Circumstances beyond the control of the insured may include, but are not limited to, any of the following, where applicable to the specific claim:

(i) Delays by the insurer in acknowledging the claim or providing the claimant necessary forms, instructions, and reasonable assistance, including, but not limited to, specifying the information the claimant must provide for proof of loss.

(ii) For personal property coverage, the fact that a personal property inventory is premature if the primary structure has not yet commenced construction.

(iii) The unavailability of contractors to either perform the necessary work or create an estimate to rebuild, repair, or replace.

(iv) The disability, injury, or incapacity of the insured.

(v) The inability of the insured to access the insured property as a result of governmental action or because the insured property is located in an area that is exposed to hazardous materials posing a health risk.

(c) (1) In the event of a total loss of the insured structure, a policy issued or delivered in this state shall not contain a provision that limits or denies, on the basis that the insured has decided to rebuild at a new location or to purchase an already built home at a new location, payment of the building code upgrade cost or the replacement cost, including any extended replacement cost coverage, to the extent those costs are otherwise covered by the terms of the policy or any policy endorsement. However, the measure of indemnity shall not exceed the replacement cost, including the building code upgrade cost and any extended replacement cost coverage, if applicable, to repair, rebuild, or replace the insured structure at its original location.

(2) Notwithstanding any other law, for a residential property insurance policy, the measure of damages available to a policyholder to use to rebuild or replace the insured home at another location shall be the amount that would have been recoverable had the insured dwelling been rebuilt at its original location, and a deduction for the value of land at the new location shall not be permitted from that measure of damages. However, the measure of indemnity shall not exceed the cost, including the building code upgrade cost and any extended replacement cost coverage, if applicable, to rebuild the insured structure at its original location.

(d) This section does not prohibit an insurer from restricting payment in cases of suspected fraud.

(e) On and after July 1, 2026, all policy forms issued or renewed by an insurer shall comply with this section in its entirety, including the changes made to this section by the act that added this paragraph.

SEC. 3.

Section 10103.7 of the Insurance Code is amended to read:

10103.7.

(a) In the event of a covered loss relating to a state of emergency, as defined in Section 8558 of the Government Code, an insured under a residential property insurance policy shall be permitted to combine payments for claims for losses up to the policy limits for the primary dwelling and other structures, for any of the covered expenses reasonably necessary to rebuild or replace the damaged or destroyed dwelling, if the policy limits for coverage to rebuild or replace the primary dwelling are insufficient. Any claims payments for losses pursuant to this subdivision for which replacement cost coverage is applicable shall be for the full replacement value of the loss without requiring actual replacement of the other structures. Claims payments for other structures in excess of the amount applied towards the necessary cost to rebuild or replace the damaged or destroyed dwelling shall be paid according to the terms of the policy.

(b) (1) In the event of a covered total loss of a primary dwelling under a residential property insurance policy resulting from a state of emergency, as defined in Section 8558 of the Government Code, if the residence was furnished at the time of the loss, the insurer shall offer a payment under the contents (personal property) coverage in an amount no less than 60 percent of the policy limit applicable to the personal property covered under the policy, up to a maximum of three hundred fifty thousand dollars ($350,000), without requiring the insured to file an itemized claim.

(2) After receiving the payment described in paragraph (1), the insured may recover additional amounts up to the policy limit for contents coverage by filing a claim pursuant to the terms of the policy for the loss of contents that exceeds the value of the payment provided pursuant to paragraph (1).

(3) When an insured files a claim relating to a state of emergency, as defined in Section 8558 of the Government Code, the insurer shall notify the insured of the option to receive payment for loss of contents pursuant to paragraph (1) and of the insured’s option to subsequently file a full itemized claim pursuant to paragraph (2).

(4) This subdivision does not affect payment under the policy for scheduled personal property.

(5) As a condition of receiving the advance payment made pursuant this subdivision, an insurer may require the insured sign an attestation form. The attesting form may request that the insured acknowledge the residence was furnished and that the insured reasonably believes the personal property damaged or destroyed had a value that equates or exceeded the amount of the advance payment. The attestation form shall not contain any misleading or inaccurate information. The commissioner may issue a bulletin or promulgate a regulation that describes the parameters of an attestation form.

(6) This section does not prohibit an insurer from restricting payment in cases of suspected fraud.

(c) On and after July 1, 2026, all policy forms issued or renewed by an insurer shall comply with this section in its entirety, including the changes made to this section by the act that added this paragraph.

SEC. 4.

The Legislature finds and declares that Section 1 of this act, which adds Section 937.2 to the Insurance Code, imposes a limitation on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:

In order to protect consumers, avoid unfair competitive advantages or disadvantages, and protect proprietary information received by the state under this act, it is necessary that the information reported pursuant to this act be treated in a confidential manner.