Senate advances bill to simplify contents claims after declared disasters; insurers warn of overpayments

The Senate Insurance Committee advanced SB 495 after extensive testimony pitting post-disaster relief for homeowners against insurers’ concerns about payment accuracy and potential market and premium effects.

Sen. Ben Allen presented SB 495 and said the bill responds to difficulties wildfire survivors face when they must inventory every item lost to receive full contents coverage. Under current law, insurers may pay up to 30% (capped at $250,000) of the contents coverage limit without an itemized inventory; the bill would require insurers to pay 100% of the personal-property coverage limits for total-loss claims following a declared emergency, and would extend the deadline to submit proof of loss to 180 days with possible additional six-month extensions for reasons beyond the policyholder’s control.

Allen and coauthors argued that many survivors cannot access their property for long periods after a fire, and that producing itemized inventories is traumatic and often impossible. Insurance Commissioner Ricardo Lara supported the bill’s intention and asked the committee for an “I” vote, saying insurers voluntarily offered increased payouts to some survivors after recent wildfires but that the bill would standardize a streamlined approach for catastrophic total losses.

Insurance industry witnesses opposed or sought amendments. Representatives from the Department of Insurance (supporting sponsor role), the Personal Insurance Federation of California, APCIA and other insurer groups argued the bill would mandate large “up-front” payments that do not reflect actual losses because personal-property limits are a policy ceiling set by formula rather than a precise inventory valuation at issuance. Industry witnesses said the change would effectively convert personal-property payouts into unconditional grants in many cases, could legalize “soft fraud” (overstated or exaggerated claims), and would force insurers to revise underwriting and pricing. They asked for additional fraud-prevention safeguards, delayed implementation to allow carriers to adjust systems, and coordination with the Department of Insurance.

Committee members described the emotional testimony of wildfire survivors but expressed concern about unintended market consequences. Deputy Commissioner Tony Signorelli clarified that current law includes a $250,000 cap on the prior 30%-payment exception and that insurers already take steps to prevent fraud and use tools to help consumers inventory losses. The committee recorded a favorable motion to move SB 495 to the judiciary committee; the hearing record shows recorded support and at least one “No” vote during roll calls. Authors and opponents agreed to continue technical discussions on fraud prevention, caps, and implementation timing.