All bets are off today as two North Bay lawmakers, whose districts were ravaged by wildfires, face off against the insurance industry at the Capitol.
The Senate Insurance Committee, chaired by arguably the upper house's most moderate Democrat Sen. Steve Glazer, will vote on two bills with major implications for homeowners and insurers. The measures come in the aftermath of the devastating 2017 wildfire season and with future blazes expected to be increasingly damaging and frequent in California.
Insurers are flexing their political muscle to kill the bills, arguing the legislation could make it more difficult for companies to operate in California and force them to raise premiums.
"The only complaints that I hear are from the insurance corporations," said Sen. Mike McGuire, a Healdsburg Democrat and author of one of the bills. "The ones that I care about are those who lost their homes to the most destructive and deadly wildfires in modern American history."
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McGuire's Senate Bill 897 would require insurance companies to cut a check for at least 80 percent of the policy limit for items lost in a fire instead of everything the homeowner can itemize. The bill means payouts could be equal for homeowners under the same policy regardless of whether their home was filled with Walmart furniture constructed with particle board or mirrored a Restoration Hardware showroom.
Sen. Bill Dodd, D-Napa, is pushing legislation that would require insurance companies to renew a homeowner's policy for at least 24 months after their home is destroyed in a wildfire. The controversial crux of the Senate Bill 894 is a provision that would allow homeowners to add up their separate policy limits for dwellings, other structures, contents and living expenses and use the money to cover any expenses to rebuild. It could effectively provide more handsome payouts to homeowners who are typically restrained to only collecting their actual losses up to the policy limit and sometimes cannot, for example, recoup money for a shed they don't reconstruct.
The bills, which are sponsored by the California Department of Insurance to take effect in disaster areas declared by the governor, are retroactive to July and would apply to claims from the largest and most destructive blazes in state history last year.
"At some point, people are going to look at their numbers and say, 'if I can’t make this work, I can’t stay in this market,'" said Armand Feliciano of the Property Casualty Insurers Association of America. "That’s reality for all businesses."
Feliciano, whose group opposes both bills unless amended, said the 80 percent mandate in the McGuire bill could reduce the ability of homeowners who don't live in fire prone areas to seek more affordable plans. Others suggest insurance companies would lower policy limits in response.
Insurers argue that Dodd is working to address a problem that doesn't exist, although state data show that complaints about renewing homeowners’ insurance or spiking premiums have more than tripled in ZIP codes at the greatest risk of wildfire over the last six years.
"We believe this is a fair and efficient approach to help homeowners in our community rebuild," McGuire said.
The show begins at 1:30 p.m. in room 112 at the Capitol.
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