California Assembly Bill AB487

California 2021-2022 Regular Session

• Introduced: 2/8/21
• Refer: 2/18/21
• Failed: 2/1/22

Caption

Automobile insurance.

Impact

The passage of AB 487 would alter the existing insurance framework, particularly how deductibles impact policy cancellations. Supporters of the bill argue that this provides greater flexibility for both insurers and insured persons, making it easier for consumers to manage their policies without fear of cancellation due to minor changes in deductible amounts. This change is expected to align with broader trends toward more consumer-friendly insurance practices, promoting stability in the insurance market.

Summary

Assembly Bill No. 487, introduced by Assembly Member Chen, aims to amend Section 661 of the California Insurance Code related to automobile insurance. The bill proposes to increase the maximum deductible for automobile physical damage coverage from $100 to $200. This change is significant as it clarifies that modifying coverage with a deductible not exceeding $200 does not constitute a cancellation of the coverage or the policy itself. This amendment seeks to standardize the treatment of deductibles in the context of insurance modifications, especially in relation to when and how insurance providers can cancel policies.

Contention

However, there may be contention surrounding this bill, particularly regarding how increased deductibles could affect the policyholders' responsibilities and financial liabilities. Some stakeholders might express concerns about the potential burden on consumers who may find themselves facing higher out-of-pocket expenses during claims. Additionally, there could be industry pushback, with some insurers arguing that the change may affect their risk assessment and overall financial models.