California Department of Insurance

The Homeowner’s insurance policy calls for a “dwelling” limit which is the amount that would be the equivalent cost to replace your home. This often has little to do with appraised market value or even the original purchase price of your home. And take note that homeowner insurance does not cover the land value of your property.

Your insurance policy is not governed by real estate market forces but by the re-building cost for your home. Insurance companies have formulas used to evaluate the replacement cost of your home.  Since the formulas are unique for each insurer, there are different limits of coverage for your dwelling limit. 
The following information can be useful to check if the limit set by your insurer accurately reflects the cost to rebuild your home in the event of a total loss:

• Document all offers and deals with your insurer.
• Review the replacement cost of your home and be familiar with the building materials and associated costs that make up your home.  Know also any changes to your home that may cause your dwelling limit to increase or decrease in value.
• Be updated to the current building costs in your area. 
• Save receipts and maintain records of updates, renovations, and improvements to your home. 
• Contact your broker or insurance company if you think your policy limits are inaccurate and have them reviewed.

The “contents” limit stipulated in the insurance is generally around 50% of the dwelling amount.  This is, however, just a guideline only.  The most competent source on the replacement value of your personal possessions is you.  Be sure to account all of your personal property when calculating the contents limits and understand the coverage amounts for specific types of personal property such as:

• Fine art collection
• Jewelry
• Silverware
• Antique collection
• Other collectibles
• Computer and accessories,
• Firearms
• Business personal property
• Money

The limited coverage amounts for these types of personal property are not from the contents limit.  These are included in the overall contents limit representing the maximum paid out for that specific type of personal property.  It is very important to add an endorsement coverage (sometimes referred to as a “rider” or a “floater”) which takes into account the personal property value above the special limits.  Remember that personal property also includes clothing, shoes, accessories, and personal items. That’s why you should also take into account the small sundry items things you use to run your household chores and enjoy your home. Oftentimes people just concern themselves with big ticket items and neglect to account for the small things like kitchen utensils, linens, curtains, etc. when calculating for these limits  

Under insurance can be a real nightmare as discovered by homeowners who lost their properties in the Northern and Southern California fires.  The insurance must be able to cover a major part of any rebuilding effort as well as the contents to start a new life in a new home.  An integral part to owning any property is protecting the property as best as you could. Homeowners insurance is a vital form of protection.  Knowing and understanding the coverage limits of your policy will greatly add to your peace of mind in any loss situation.  GP

In 1996 a federal law called the Health Insurance Portability and Accountability Act (HIPAA) was promulgated providing individuals who just lost their employer-sponsored health plan a way to secure and purchase health insurance even if they suffer a preexisting health condition. This is a sure way of providing health coverage when needed to anybody with a pre known disease which can be denied due to the health status of that person. Under this federal law, the person that meets the eligibility qualifications can ask any health insurance companies that sell individual plans to offer him health insurance regardless of any pre-existing medical condition. This requirement is called the “guaranteed issue” where the insured may not be declined coverage based on medical reasons.

An eligible individual must meet the following conditions:

 • His health care insurance coverage must have originated from an employer’s sponsored group health plan that qualifies under COBRA or Cal-COBRA coverage for at least 18 months.
 • All available continuation coverage provisions under COBRA or Cal-COBRA has been exhausted. (When an employer terminates a currently active group health plan, COBRA or Cal-COBRA continuation coverage ends and is deemed exhausted.).
 • The person is not eligible under any group health plan, Medi-Cal, Medicare, and/or do not enjoy other health plan coverage.
 • The person did not lose his health insurance due to fraud or premium non-payment.

The person did not lose his health insurance due to fraud or premium non-payment.Once Cal-COBRA or COBRA is exhausted, an eligible individual has 63 days to apply for a guaranteed HIPAA policy from a health or insurance company. All insurers that sell individual health care policies are mandated to offer their two most popular individual health plans to individuals eligible under HIPAA regardless of their pre-existing health condition. It is important to note that a conversion policy is not a HIPAA policy. That means that if the qualified person accepts a conversion policy after exhausting Cal-COBRA or COBRA, he forfeits his HIPAA eligibility.Applying for a policy under HIPAA requires a Certificate of Creditable Coverage from his health insurance company. The Certificate of Creditable Coverage is a written document indicating the length of the policy coverage. The Certificate is proof of the 18-month creditable coverage when HIPAA policies are applied for.Although HIPAA is federal law, as of January 1, 2001, California state law followed suit and now complies with HIPAA to answer the clamor for more comprehensive health coverage of its citizen.

Salient Points about HIPAA: 
 • HIPAA empowers eligible employees who just lost group insurance coverage to obtain individual health plans.
 • Individuals eligible under HIPAA need not undergo medical underwriting.
 • HIPAA policies are issued to individuals on a guaranteed issue basis regardless of his medical history.
 • Eligible individuals who have exhausted COBRA or Cal-COBRA extension have only 63 days to apply for a HIPAA policy.
 • HIPAA policies are not considered as conversion policies. Taking a conversion or short-term policy terminates HIPAA eligibility.
 • Interested individuals may get in touch with the CDI or the DMHC for inquiries on the type of health insurance coverage or any problem with HIPAA.   GP

COBRA or the Consolidated Omnibus Budget Reconciliation Act is a federal law extending current group health insurance of an employee when he experiences a qualifying situation like employment termination or reduction of part-time work. The coverage can be as long as 18 months extension period. 

To be eligible for COBRA, an employee’s group policy must have 20 or more employees covered during more than 50% of his company’s business days in the previous calendar year. HMOs, PPO’s, indemnity policies and self-insured plans qualify for COBRA extension too. The following however is not covered like Federal government Health plans or Church health insurance plan members and federal government employees. Individual health insurance which has been purchased is also exempt from COBRA extension. Seeing the restrictions make it one reason to participate in group health plans.

Cal-COBRA on the other hand is a California state law with provisions similar with that of federal COBRA. With Cal-COBRA the group policy must be active for 2-19 employees insured over at least 50% of its working days during the last complete calendar year, or the preceding calendar quarter if the employer was not in business during the earlier months of that year.

Unlike COBRA, self-insured plans are not qualified but church health insurance plans are covered under Cal-COBRA.  It is important to remember that both COBRA and Cal-COBRA do not apply to individual health insurance.

Starting January 1, 2003, Cal-COBRA extension period has been lengthened from 18 to 36 months. This would mean that you can still enjoy the full benefits of your health insurance for the next 36 months although you have not made any updates on your account. After January 1, 2003, employees will enjoy the benefit of complete 36-month coverage under Cal-COBRA instead of the prior 18-month coverage extension.

California Insurance Code (CIC) Section 10128.59 stipulates a similar extension under Cal-COBRA for employees finishing 18 months coverage under federal COBRA provided the total extension does not exceed 36 months. For the extension under Cal-COBRA to apply, the employee must be eligible for COBRA after January 1, 2003, and the employer’s group master policy is issued in the state of California. If the group master policy did not originate in California, the employer must be employing 51% or more of its workforce in California and have its actual business address in California.

Salient Points to note about COBRA and Cal-COBRA:
• COBRA is a federal law extending employees’ active group health coverage after a qualifying situation or condition. Individual health plans do not qualify under COBRA.
• COBRA law applies to group policies in force with 20 or more employees insured for more than 50% of their company’s business days in the preceding calendar year.
• PPO’s, HMOs, indemnity policies and self-insured plans are eligible under COBRA. Federal government employee plans and church plans are exempted from COBRA.
• Cal-COBRA is a California state law that resembles federal COBRA.
• Cal-COBRA law covers active group policies insuring 2-19 employees. Like COBRA, individual policy holders do not qualify.
• Only indemnity policies, PPO’s, HMOs, and church plans are Cal-COBRA eligible.  GP

   California is home to some of the most exhilarating natural wonders in continental USA. All this beauty comes with a price. Living in beautiful California faces the risks of forest fires, mudslides, floods, and earthquakes. Earthquakes in particular make one chilling prospect for most Californians. Impossible to predict, earthquakes have been known to cause catastrophic calamities on lives and properties. One way to cover this risk of property damage is to have Earthquake insurance.

Earthquake Insurance Offer and Coverage
Property owners are better served with an earthquake insurance to help defray the expense of costly earthquake repairs. Residential property insurers or insurance companies that sell homeowner policies for qualifying condominiums and apartments are obligated under the California Insurance Code (CIC) Section 10081 to offer earthquake coverage. Earthquake insurance offers must provide coverage for residential dwelling, for personal property not less than $5,000 or 10% of the covered dwelling loss, and for any additional living expense (ALE) of at least $1,500. The homeowner can opt to waive ALE coverage if the structure is not occupied.

California Earthquake Authority (CEA)
The CEA was established to provide earthquake insurance to residential property owners that include houses, condominium unit, mobile homes, and rented apartments. Under the CEA policy guidelines, the CEA member insurance company’s offer of earthquake coverage must meet the requirements as outlined in CIC Section 10089. Dwelling structures must be covered except other structures such as outbuildings, swimming pools, and masonry fences as in the case of many earthquake insurance policies.
Homeowners cannot purchase earthquake coverage directly from the CEA which does not offer stand-alone earthquake policies. Only licensed California insurers who are CEA accredited can sell CEA policies. Homeowners must have a valid residential property policy or be purchasing a new residential property policy from a CEA member insurer in order to be offered a CEA policy.

Special Earthquake Provisions
Insurance companies are required to offer earthquake coverage even if the property fails to meet Building Code and Health and Safety Code requirements. However additional premium and/or an increased earthquake deductible may be charged.  Also, the insurance company must disclose any discounts due to strengthening or retrofitting for earthquake hazard reduction in writing.
Retrofitting can strengthen the house to minimize earthquake damage.  Taking simple steps like bolting a wood frame home to the foundation can avert severe earthquake damage and reduce earthquake insurance premium. Residential retrofitting includes, but is not limited to the following:

• Anchoring a dwelling to its foundation through seismic bolting
• Reinforcing and/or bracing the fireplace chimney
• Securing and bracing the water heater to the dwelling frame
• Installing automatic gas shut-off valves
• Installing bracing for sheer walls

If the dwelling structure has been completely retrofitted as verified by the insurance company, a $10,000 coverage should be offered to cover reconstruction costs of bringing the dwelling up to current building codes.
The CDI publishes a Residential Property Claims Guide that anyone can request over the phone or access online. This brochure offers a valuable educational resource to have when facing any residential property claim. Contact the CDI through its website at www.insurance.ca.gov.  GP

The California Department of Insurance is responsible for enforcing many of the insurance-related laws of the state. They are foremost a consumer protection agency. The California Department of Insurance’s number one priority is to protect insurance consumers by regulating the industry’s practices and encouraging a healthy marketplace, which is one of the largest in the world.

The California Department of Insurance ensures that consumers are protected, the insurance marketplace is fostered to be vibrant and stable, the regulatory process is maintained as open and equitable, and the law is enforced fairly and impartially.

As a state mandated regulatory agency, the California Department of Insurance has authority over how the insurance industry conducts business within California. The department aids consumers by regulating how insurance companies market and administer their policies. Insurance business must be conducted in an honest, open, and fair manner.

The California Department of Insurance holds licensing examinations for insurance brokers and insurance agents and investigates suspected violations of the CIC by licensees as mandated by the California Insurance Code (CIC).

Criminal investigations protects the public from economic loss and general distress by actively investigating and arresting those who commit insurance fraud.  Claimant, agent, and insurance company fraud is investigated and prosecuted to the fullest extent of the law.

Insurance companies that want to do business in California must apply and be reviewed by the California Department of Insurance to determine whether or not they should be given the authority to sell insurance in this state. The California Department of Insurance takes an active, leading role to conserve, rehabilitate, or liquidate troubled insurance companies under appointment of the Superior Court.

The Rate Regulation Branch, under the provisions of Proposition 103, reviews proposed personal auto  and homeowners insurance rates to ensure that they are fair, reasonable, and adequate.  The California Department of Insurance oversees the financial condition of the insurance industry and helps to ensure stability and to protect policy holders by examining and reviewing key financial statements and conducting audits of insurance companies in California.