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Insurance Code - INS

DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.5]

  ( Division 2 enacted by Stats. 1935, Ch. 145. )

PART 1. FIRE AND MARINE INSURANCE [1880 - 10108.1]

  ( Part 1 enacted by Stats. 1935, Ch. 145. )

CHAPTER 2. The Fire Insurance Contract [2030 - 2084]

  ( Chapter 2 enacted by Stats. 1935, Ch. 145. )

ARTICLE 2. Measure of Indemnity [2050 - 2060]
  ( Article 2 enacted by Stats. 1935, Ch. 145. )

2050.
  

The effect of a valuation in a fire policy is the same as in a marine policy.

(Enacted by Stats. 1935, Ch. 145.)

2051.
  

(a) Under an open policy, the measure of indemnity in fire insurance is the expense to the insured of replacing the thing lost or injured in its condition at the time of the injury, the expense being computed as of the time of the commencement of the fire.

(b) Under an open policy that requires payment of actual cash value, the measure of the actual cash value recovery, in whole or partial settlement of the claim, shall be determined as follows:

(1) In case of total loss to the structure, the policy limit or the fair market value of the structure, whichever is less.

(2) In case of a partial loss to the structure, or loss to its contents, the amount it would cost the insured to repair, rebuild, or replace the thing lost or injured less a fair and reasonable deduction for physical depreciation based upon its condition at the time of the injury or the policy limit, whichever is less. In case of a partial loss to the structure, a deduction for physical depreciation shall apply only to components of a structure that are normally subject to repair and replacement during the useful life of that structure.

(Amended by Stats. 2004, Ch. 605, Sec. 2. Effective January 1, 2005.)

2051.5.
  

(a) (1) Under an open policy that requires payment of the replacement cost for a loss, the measure of indemnity is the amount that it would cost the insured to repair, rebuild, or replace the thing lost or injured, without a deduction for physical depreciation, or the policy limit, whichever is less.

(2) If the policy requires the insured to repair, rebuild, or replace the damaged property in order to collect the full replacement cost, the insurer shall pay the actual cash value of the damaged property, as defined in Section 2051, until the damaged property is repaired, rebuilt, or replaced. Once the property is repaired, rebuilt, or replaced, the insurer shall pay the difference between the actual cash value payment made and the full replacement cost reasonably paid to replace the damaged property, up to the limits stated in the policy.

(b) (1) (A) (i) A time limit of less than 12 months from the date that the first payment toward the actual cash value is made shall not be placed upon an insured in order to collect the full replacement cost of the loss, subject to the policy limit.

(ii) In the event of a loss relating to a “state of emergency,” as defined in Section 8558 of the Government Code, a time limit of less than 36 months from the date that the first payment toward the actual cash value is made shall not be placed upon the insured in order to collect the full replacement cost of the loss, subject to the policy limit.

(iii) This section does not prohibit an insurer from allowing the insured additional time to collect the full replacement cost.

(B) An insurer shall provide to a policyholder one or more additional extensions of six months for good cause pursuant to clause (i) or (ii) of subparagraph (A) if the insured, acting in good faith and with reasonable diligence, encounters a delay or delays in approval for, or reconstruction of, the home or residence that are beyond the control of the insured. Circumstances beyond the control of the insured include, but are not limited to, unavoidable construction permit delays, the lack of necessary construction materials, or the unavailability of contractors to perform the necessary work.

(2) In the event of a covered loss relating to a state of emergency, as defined in Section 8558 of the Government Code, coverage for additional living expenses shall be for a period of no less than 24 months from the inception of the loss, but shall be subject to other policy provisions. An insurer shall grant an extension of up to 12 additional months, for a total of 36 months, if an insured acting in good faith and with reasonable diligence encounters a delay or delays in the reconstruction process that are the result of circumstances beyond the control of the insured. Circumstances beyond the control of the insured include, but are not limited to, unavoidable construction permit delays, lack of necessary construction materials, and lack of available contractors to perform the necessary work. Additional extensions of six months shall be provided to policyholders for good cause.

(c) In the event of a total loss of the insured structure, a policy issued or delivered in this state shall not contain a provision that limits or denies, on the basis that the insured has decided to rebuild at a new location or to purchase an already built home at a new location, payment of the building code upgrade cost or the replacement cost, including any extended replacement cost coverage, to the extent those costs are otherwise covered by the terms of the policy or any policy endorsement. However, the measure of indemnity shall not exceed the replacement cost, including the building code upgrade cost and any extended replacement cost coverage, if applicable, to repair, rebuild, or replace the insured structure at its original location.

(d) This section does not prohibit an insurer from restricting payment in cases of suspected fraud.

(e) (1) On and after July 1, 2005, and only until July 1, 2019, all policy forms used by an insurer shall be in compliance with this section, except for the changes made to this section by the act that added paragraph (2).

(2) On and after July 1, 2019, all policy forms issued or renewed by an insurer shall comply with this section in its entirety, including the changes made to this section by the act that added this paragraph.

(Amended by Stats. 2018, Ch. 628, Sec. 1.7. (AB 1800) Effective September 21, 2018.)

2052.
  

Whenever the insured desires to have a valuation named in his policy insuring any building or structure against fire, he may require such building or structure to be examined by the insurer and the value of the insured’s interest therein shall be fixed at that time by the parties. The cost of the examination shall be paid by the insured.

(Enacted by Stats. 1935, Ch. 145.)

2053.
  

A clause shall be inserted in such a valued policy, stating substantially that the value of the insured’s interest in the insured building or structure has been thus fixed.

(Enacted by Stats. 1935, Ch. 145.)

2054.
  

In the absence of any change increasing the risk without the consent of the insurer or of fraud on the part of the insured, and except as provided in Sections 2056 and 2058, the insurer under such a valued policy shall pay losses as follows:

(a) In case of a total loss, the whole amount insured upon the insured’s interest in such building or structure, as stated in the policy and upon which the insurers have received a premium.

(b) In case of a partial loss the full amount of the partial loss.

(c) In case there are two or more policies covering the insured’s interest, each policy shall contribute pro rata to the payment of such whole or partial loss.

(Amended by Stats. 1991, Ch. 602, Sec. 5.)

2055.
  

Except as provided by section 2056, the insurer shall not be required to pay more than the amount stated in such a valued policy.

(Enacted by Stats. 1935, Ch. 145.)

2056.
  

Stipulations in a valued policy concerning the repairing, rebuilding or replacing of buildings or structures wholly or partially damaged or destroyed shall prevail over the provisions of sections 2054 and 2055.

(Enacted by Stats. 1935, Ch. 145.)

2057.
  

Under a contract of fire insurance, payment to the insured shall be made within 30 days after the amount of the loss and the liability of the company have been agreed upon or settled by the insured and the company in writing.

If the company fails to pay within the 30 days, the payment shall bear interest, beginning the 31st day, at the prevailing legal rate. The company also shall be liable for all costs of collection, including reasonable attorneys’ fees, if legal action is necessary to obtain payment after the company has willfully failed to pay within the 30 days.

(Added by Stats. 1979, Ch. 1165.)

2058.
  

Notwithstanding any other provision of law, if a loss arising out of fire is rebuilt or replaced, an insured covered by a valued policy shall receive full payment for the loss up to the face amount of the policy. If the loss is not rebuilt or replaced, an insured covered by a valued policy shall receive either the replacement value of the loss or the face amount of the policy, whichever is less. As used in this section, “valued policy” has the meaning set forth in Section 412.

This section applies only to valued policies issued or renewed on and after July 1, 1992.

(Added by Stats. 1991, Ch. 602, Sec. 6.)

2060.
  

In the event of a loss under a homeowners’ insurance policy for which the insured has made a claim for additional living expenses, the insurer shall provide the insured with a list of items that the insurer believes may be covered under the policy as additional living expenses. The list may include a statement that the list is not intended to include all items covered under the policy, but only those that are commonly claimed, if this is the case. If the department develops a list for use by insurers, the insurer may use that list.

(Added by Stats. 2005, Ch. 447, Sec. 4. Effective January 1, 2006.)

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