California lawmakers propose groundbreaking insurance reform for fire victims, sparking debate over its potential impact on the industry and policyholders.
It’s good for victims, but couldn’t this destroy the insurance industry?
At a Glance
- The “Eliminate ‘The List’ Act” aims to simplify insurance claims for fire victims
- Bill requires insurers to pay 100% coverage without itemized lists
- Proposed legislation is part of a broader package to address wildfire insurance challenges
- Insurance companies show varied responses to voluntary compliance requests
- California could become the first state to implement such a requirement
California’s Bold Move to Reform Fire Insurance Claims
California State Senator Ben Allen has introduced the “Eliminate ‘The List’ Act,” a groundbreaking bill aimed at reforming insurance claim procedures for fire victims. The proposed legislation would require insurers to pay 100% of coverage for belongings in homes destroyed by natural disasters without requiring policyholders to provide itemized lists. This move comes as part of a larger legislative strategy to tackle insurance challenges faced by fire victims in California.
It sounds great, but this could backfire…
The bill, sponsored by California Insurance Commissioner Ricardo Lara and authored by State Senator Ben Allen, seeks to alleviate the burden on Californians who have lost their homes to wildfires. If enacted, California would become the only state with such a requirement, surpassing similar proposals in Oregon and Colorado, which suggested 70% and 65% payouts without inventory, respectively.
The “Eliminate ‘The List’ Act” aims to reduce the stress and logistical challenges faced by fire victims when dealing with insurance claims. Currently, many policyholders are required to provide detailed inventories of their lost possessions, a process that can be emotionally draining and time-consuming during an already difficult period.
“Californians who have lost all they call home should not be subject to the pain compounded by insufficient coverage or missed deadlines. Additionally, the Eliminate ‘The List’ Act modernizes our data collection protocols to provide us with better climate insight that will guide us to a more insurable future,” State Senator Ben Allen said.
The proposed legislation builds upon a 2020 California law that mandates insurers to pay 30% of a policy’s dwelling limit without itemization in total loss situations during a state of emergency. The new bill seeks to expand this protection significantly, ensuring full coverage for personal property losses.
Insurance Industry Response
California Insurance Commissioner Ricardo Lara has been actively pushing for change, requesting insurance companies to voluntarily offer 100% coverage without itemization by February 28. However, a survey conducted by Breitbart News revealed varied responses from insurance companies regarding their itemization policies.
Some insurers, like Pacific Specialty, have already adopted policies offering 100% payout without itemization. Others, such as AAA, allow bulk itemization for insurance claims. However, companies like Farmers, Mercury, SageSure, and State Farm still require full itemization after partial payouts. USAA takes a middle ground, providing 75% payout before requiring full itemization.
The “Eliminate ‘The List’ Act” is part of a broader legislative package with 10 proposals focused on wildfire mitigation, recovery, consumer protection, and maximizing insurance payouts. These initiatives aim to improve the overall landscape of fire insurance in California, addressing the growing challenges posed by climate change and increasing wildfire risks.
Here’s a thought: all this wouldn’t have even been necessary if California just looked after its forests like Europe does…
