Committee advances bill to speed contents payouts after total loss in declared disasters

Senator Ben Allen told the Insurance Committee SB 495 would simplify claims for disaster survivors by requiring insurers to pay personal-property coverage up to policy limits after a total loss in a declared emergency, and by extending the proof-of-loss period.

‘‘Under current law, the homeowner who experiences a total loss in disaster may receive a payment of 30% or up to $250,000 of the coverage limits of their policy without an itemized claim. But to receive the remainder, homeowners are required to undergo a really tedious and, in many cases, traumatizing task of creating an itemized list,’’ Allen said. He said SB 495 would require insurers to cover 100% of personal property coverage limits without an itemized inventory in declared emergencies, extend the proof-of-loss period to 180 days (with additional six-month extensions for reasons outside the policyholder’s control), and give the Department of Insurance (DOI) authority to collect reinsurer and catastrophe-modeling data.

Insurance Commissioner Ricardo Lara, who is sponsoring the bill, described the change as consumer protection for wildfire survivors who were unable to access properties and documents for weeks after fires. ‘‘Cutting through the red tape during such a traumatic experience and expediting these claims is what policyholders need at that moment,’’ he said, urging an aye vote.

Opponents including the Personal Insurance Federation of California and the American Property Casualty Insurance Association urged caution. ‘‘SB 495 seems to be a well-intentioned effort to put more money into the pockets of policyholders that experience a wildfire loss, [but] it will result in the unintended consequence of mandating major overpayments that increase the cost of insurance for all Californians,’’ said Sarah Taylor for the Personal Insurance Federation. Taylor argued insurers price policies based on dwelling risk and that coverage-C (personal property) limits are upper boundaries that are often set higher than a given household’s contents value; mandating a percentage payout without validation could force companies to raise premiums.

Mark Sekhnan (APCIA) said the bill could convert content coverage into a ‘‘grant’’ that pays a set amount regardless of what the policyholder actually lost. He noted the current statute includes a $250,000 cap for expedited payments and that disparate default personal-property percentages across policies could produce uneven outcomes.

Supporters, including Consumer Watchdog and local elected officials, described the inventory requirement as re-traumatizing for survivors who cannot access homes or who have lost irreplaceable items. The DOI said it has encouraged insurers in prior catastrophes to make large advance payments and supports requiring better access to modeling and reinsurance data to inform market regulation.

Senators asked for technical fixes. Senator Nilo recounted his own fire experience, saying he had sufficient time to inventory losses and warning the bill could change how contents coverage is priced and underwritten. Industry witnesses recommended a delayed implementation or other safeguards to prevent overpayments and fraud; DOI and author said fraud-prevention statutes remain in force and would apply. Allen and the DOI said they would continue negotiations with industry; the committee voted to pass the bill to the Judiciary Committee.

Votes at a glance: SB 495 — Passed to Judiciary Committee (committee tally reported during roll calls; recorded objections and later committee votes displayed in the transcript).