The California Insurance Commissioner has now issued emergency notices to all admitted and non-admitted property and casualty insurance companies doing business in California to assist survivors, displaced residents, and businesses impacted by the current and recent wildfires throughout the state. The emergency order was issued in connection with Governor Gavin Newsom’s August 18, 2020 emergency declaration that was issued due to the wildfires.
Lara stated that “[w]ildfire survivors need immediate help as they start on the long road to recovery” and “urge[d] insurance companies to do the right thing for these survivors and help them through this difficult process.” Specifically, Lara implored all property and casualty carriers to implement expedited claims handling procedures and billing grace periods to aid the quick recovery of residents and businesses during the emergency. Lara’s requests to carriers include the following:
Billing Grace Period: billing leniency for at least 60 days for policyholders in designated wildfire disaster areas;
Loss of Use, Fair Rental Value or Additional Living Expenses (ALE): a standard ALE advance payment of at least 4 months for a total loss;
Personal Property (Contents): an initial contents advance payment of at least 25% of policy limits for a total loss of the primary residence in a wildfire disaster without the completion of an inventory;
Inventory Forms: company-specific inventory form not required if the policyholder provides an inventory using a form containing substantially the same information;
Inventory Itemization: accept an inventory including groupings of categories of personal property rather than listing individually;
Vehicle Claims: expedite payment of automobile property damage claims covered under comprehensive loss coverage; and
Debris Removal: cooperate with a consolidated debris removal process unless the carrier can provide more rapid debris removal outside of the coordinated effort.
The California Department of Insurance issued similar notices after the Kincade, Camp, Woolsey, and Hill fires. Lara remarked that these “emergency expedited claims handling procedures will help policyholders as they begin to rebuild their lives and their homes.”
In addition, Lara’s notice asks all residential property carriers to cover ALE for policyholders who remain under mandatory evacuation or whose homes are otherwise inaccessible or uninhabitable due to the wildfires. Lara again reiterated that Homeowners’ policies provide Loss of Use or ALE benefits to cover costs associated with temporary lodging, transportation, clothing, and other necessities caused by a covered peril (in this case, a wildfire) that renders a home uninhabitable or inaccessible. Lara also reminded carriers that ALE is available to Insureds when access to the home is restricted because a civil authority has issued mandatory evacuation orders due to the wildfires.
However, as Policyholders have advised the DOI that carriers are terminating these ALE benefits after two weeks, despite mandatory evacuation orders remaining in effect, Lara urged residential property carriers to stop the termination of ALE benefits while the policyholder’s property remains uninhabitable due to wildfire damage. In addition, Lara requested that carriers not terminate ALE due to their own failure to timely inspect properties to verify covered damage in areas where access to homes is not restricted.
Lara remarked that “[w]hen people are told to get out of harm’s way by first responders, they should be able to access insurance benefits, not be forced to pay out of pocket for necessary emergency costs when they are still under evacuation orders or without water or power” and that “people need help now to recover from these devastating fires.”