Legal update – New Law – Insurance: 75-day notice of nonrenewal

Insurance: 75-day notice of nonrenewal

This new law requires insurers to provide at least a 75-day notice of a nonrenewal of a homeowner’s policy (currently 45 days) and raises the limit on a homeowner insurance claim covered by the California Insurance Guarantee Association (CIGA) to $1 million. This law also allows insurer who voluntarily writes policies for property in high fire hazard severity zone in the state responsibility area and very high fire hazard severity zone in local responsibility areas to be proportionately relieved of their responsibility to participate in the Fair Access to Insurance Requirements (FAIR) plan.

For policies that expire on or after July 1, 2020, would require an insurer to deliver or mail the notice of nonrenewal to the named insured on or before 75 days prior to the policy expiration and, if the insurer fails to do so, would require the existing policy, with no change in its terms and conditions, to remain in effect for 75 days from the date that the notice of nonrenewal is delivered or mailed.

With respect to a policy of residential property insurance, each claim for a loss under a different coverage category to be considered a separate covered claim. The limit for a covered claim for damage to, or loss of, a dwelling structure under a policy of residential property insurance is increased to $1,000,000 or the amount recoverable under the policy, whichever is less.

Assembly Bill 1816 is codified as Insurance Code §§ 678, 1063.1 and 10094.2

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