Help for California Homeowner’s Insurance Consumers

vacant.jpgOur San Francisco insurance lawyer knows that far too many local community members have found themselves in the nightmare scenario of paying for insurance for years only to find out the benefits, for whatever reason, are not available when a disaster strikes. Often a consumer finds out he or she does not have sufficient coverage or that there is an exemption in their insurance policy for something only when the damage is already done. And insurance companies are frequently guilty of confusing business practices, i.e. hiding an exemption in tiny print or legalistic language, or outright intimidation of uninformed consumers.

Fortunately, new rules are in effect now to help California homeowner’s insurance consumers ( avoid these kinds of nightmarish scenarios. The California Department of Insurance has put in place the new rules to help homeowners be more informed about their policies and keep consumers from being underinsured. Insurance agents and brokers do not have to help consumers come up with a coverage figure, but under the new rules, if they do, the number must be based in reality. The brokers and agents cannot make up a number or give you a random estimate. If the broker or agent gives a homeowner a figure of how much coverage protection they need for their home, that figure must be made on a concrete calculation. In addition and in conjunction with this, the agents and brokers are required to have specific and ongoing training to teach them to do these calculations.

Some insurance brokers and agents have already been doing this voluntarily, but the insurance companies are not happy with these new rules mandating this procedure if a coverage amount is given to a consumer. Naturally, insurance companies do not want to be responsible for telling consumers what coverage is needed. The current system works to the companies’ advantage and helps their bottom line-which is to make more and more money for their coffers, not to assist consumers in times of trouble if they can avoid it. The companies are so concerned with these new rules that law suits have been filed to overturn the rules, but so far the rules are still in effect.

Our San Francisco insurance attorneys often remind consumers that California has other protections for homeowners’ insurance consumers, as well. Insurance brokers’ fees must be fully disclosed and agreed to by the consumer up front and brokers are not permitted to be an agent of the company providing the insurance coverage. Homeowner’s insurance companies are only officially allowed to cancel coverage for nonpayment of premiums, fraud, material misrepresentations or physical changes to the property that make hazardous accidents more likely. Insurance companies are also limited in the rates they charge. Each company calculates rates based factors such as location, choice of deductibles, local fire protection, and the age and condition of the home. Once determined, these rates are subject to approval by the Department of Insurance, which seeks to ensure that rates are competitive and fair.

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