The new regulations were adopted, Jones said in a release, to improve the standards and training for estimating the replacement value on homeowners’ insurance in the event of a disaster. They also were designed to reduce the common problem of homeowners buying too little coverage.
Two Sacramento-based insurance trade associations, however, contend that the regulations restrict communications between insurers and policyholders, are anti-consumer and inconsistent with California law.
The Association of California Insurance Companies and the Personal Insurance Federation of California filed a lawsuit a few weeks ago in Los Angeles County to stop a piece of the regulations. The associations object to insurance companies having to use a formula and particular words when talking to customers about home insurance, and being subjected to discipline if they deviate from those words.
“There are many more helpful ways than one to talk with a customer about the purchase of homeowners’ insurance,” the associations said. The Department of Insurance’s “approach just sets a technical trap to punish perfectly legitimate conduct. “
“These regulations will go a long way toward ensuring that consumers who are victims of a disaster, such as a wildfire, are able to get the financial relief to rebuild their homes and their lives, while also dong much to ensure that homeowners are not underinsured” Jones said in the release. “It’s devastating enough to lose your house to a disaster, but not to receive adequate funds to replace it just adds insult to injury.”