Changes in Home Insurance to Benefit Owners in California

California residents will benefit from a new state law that took effect July 1 that clarifies various types of homeowner property insurance coverage.

Largely as the result of confusion in the wake of the disastrous Oakland Hills fire in October, 1991, State Sen. Nicholas Petris authored legislation requiring precise definitions of the types of homeowner coverage marketed in the state.

Beginning July 1, new or renewed homeowner policies must be accompanied by a “California Residential Property Insurance Disclosure” statement spelling out categories of coverage, including those that pay full replacement costs without regard to policy limits. The statements also clarify whether coverage includes costs incurred from required building code changes. In the aftermath of some disasters, local governments have imposed new building code conditions that previously weren’t contemplated.

“This legislation is aimed directly at allowing the homeowner to understand options in advance and make a reasoned judgment as to the level of coverage desired,” said Patricia Lombard, executive director of the Western Insurance Information Service (WIIS). WIIS is a non-profit consumer education and communications organization serving 10 western states for more than 40 years.

Several additional homeowner insurance categories with limited or no building code upgrades are also being detailed to give consumers a clear choice in deciding what level of coverage they want.

“A great deal of confusion resulted from the process of negotiating settlements with some of those who lost their homes in the Oakland fire,” Petris said. “The new law expressly eliminates the words ‘guaranteed replacement cost coverage’ if the policy contains any maximum coverage limitations including set dollar limits, percentage amounts or construction cost limits.”

WIIS is offering the public four brochures on the subject of insurance and fire protection: “Taking Inventory,” “Fire Retardant Plants,” “Your Home Insurance and Inflation” and “Can I Protect My Property From Fire.” Please send a self-addressed stamped envelope to WIIS, 3530 Wilshire Blvd., Suite 1610, Los Angeles, Calif. 90010.