Residential property insurance.
The impact of AB 2756 fundamentally alters how residential property insurance policies are communicated to consumers in California. By requiring explicit acknowledgment and clear disclosures regarding the absence of fire coverage, the bill seeks to prevent misunderstandings about policy limits. Additionally, it establishes that policies providing replacement cost coverage must include building code upgrade coverage of at least 10% of the dwelling limits, reflecting changes that align with current construction regulations and rebuilding costs in the event of a loss.
Assembly Bill No. 2756, approved on September 29, 2020, amends the Insurance Code concerning residential property insurance. The bill mandates that insurers issuing new policies or renewing existing ones provide clear disclosures regarding the coverage for fire peril. Specifically, if an insurer issues a policy without fire coverage, they must obtain a signed acknowledgment from the insured and include a prominent statement on the declarations page that the policy does not cover fire. This aims to enhance consumer awareness and ensure policyholders are informed about the limitations of their coverage.
The general sentiment around AB 2756 appears to be supportive, especially among consumer advocacy groups. Supporters emphasize that the bill promotes transparency and accountability within the insurance industry, giving homeowners the information they need to make informed decisions about their insurance policies. However, there may be some concerns from insurers regarding the additional administrative burdens placed on them to comply with these new requirements, which could lead to increased costs.
Notable points of contention arise primarily from the implications of the fire coverage disclosure requirement. Some stakeholders argue that while consumer protection is essential, the mandatory acknowledgment could lead to confusion or discourage individuals from selecting policies that may be appropriate for them. Moreover, the additional requirements for the declarations page might complicate the insurance purchasing process and lead to potential delays in policy issuance.