Insurers Must Provide Complete Replacement Cost Estimates
The California Supreme Court issued a unanimous ruling yesterday requiring insurers to communicate “complete” replacement cost estimates to insureds.1 The ruling not only found the regulation requiring this action to be well within the Insurance commissioner's authority, but found the basis for the regulation to be well founded. It is a wonderful victory for policyholders in California.
The issue pending before the California Supreme Court was whether the California Insurance Commissioner had authority to issue a proposed insurance regulation that sought to:
- require insurers to communicate “complete” replacement cost estimates to insureds when selling homeowners policies;
- classify incomplete or misleading estimates by insurers or their representatives as a violation of California Insurance Code §790.03 (part of California's the Unfair Insurance Practices Act).
The court found that Insurance Commissioner Dave Jones was within his authority to enact the new regulation aimed at stamping out the practice of providing incomplete home replacement cost estimates, leaving homeowners underinsured and unable to rebuild their homes after paying premium for insurance products they were led to believe provided sufficient insurance to rebuild their homes.
The ruling revives a regulation that was set to take effect in 2011, before it was struck down by the trial court in 2013.