Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) As used in this section and in Section
1749.85, of the
California Insurance Code, the following terms have the following meanings:
(1) "Homeowners' insurance policy" shall have the
same meaning as "policy of residential property insurance" as defined in subdivision
(a) of Section
10104 of the
California Insurance Code. A "homeowners' insurance policy" does not include:
(A) a tenant's policy;
(B) a policy covering an individually owned
mobilehome and its contents;
(C) a
policy covering an individually owned manufactured home and its contents;
(D) a renter's policy; or
(E) a policy insuring an individually owned
condominium unit that does not provide dwelling structure
coverage.
(2) "Replacement
value" shall have the same meaning as "replacement cost" and is defined as the
amount it would cost to repair, construct, rebuild or replace a damaged or destroyed
structure.
(3) " Property broker-agent",
"casualty broker-agent" and "personal lines broker-agent" mean holders of the
licenses defined in Sections
1625 and
1625.5 of the
California Insurance Code, respectively. Property broker-agents, casualty
broker-agents, and personal lines broker-agents are also referred to as
"broker-agents" in this section.
(b) On or after June 27, 2011, every California
resident property broker-agent and casualty broker-agent and personal lines
broker-agent who has not already taken a homeowners' insurance valuation training
course must satisfactorily complete one three-hour training course on homeowners'
insurance valuation meeting the requirements of this section prior to estimating the
replacement value of structures in connection with, or explaining the various levels
of coverage under, a homeowners' insurance policy. This requirement shall be part
of, and not in addition to, the continuing education requirements of Section
1749.3 of the
California Insurance Code. The homeowners' insurance valuation training course needs
to be taken only once in order to satisfy the requirements of this
subdivision.
(c) The training required
by this section must be approved by the Commissioner and shall consist of topics
related to dwelling, fire, and homeowners' insurance. Any course taken to satisfy
the requirements stated in Section
1749.85 of the
California Insurance Code shall use subject matter described in this
section.
(d) The broker-agent shall be
trained on the differences between homeowners' insurance coverage and other Fire,
and Dwelling Property policies, which differences may necessitate differences in
coverage or coverage levels. The broker-agent shall also be trained on the basic
concepts of property insurance and estimating replacement value, which includes:
(1) How loss settlement provisions in an insurance
policy apply to major claims, the potential causes of underinsurance and the
potential effects that underinsurance may have on settlement;
(2) The differences in the measure of indemnity
between actual cash value coverage and replacement cost coverage, as summarized in
Sections
2051,
2051.5, and
10102 of the
California Insurance Code, including:
(A)
California Residential Property Insurance Disclosure, as described in Section
10102 of the
California Insurance Code; and
(B)
Depreciation and how it is applied under a homeowners' insurance
policy;
(3) The several
components and features of a structure necessary to estimate replacement cost, as
well as the other costs incident to reconstruction, including at least the
following:
(A) Type of foundation;
(B) Type of frame;
(C) Roofing materials and type of roof;
(D) Siding materials and type of siding;
(E) Whether the structure is located on a
slope;
(F) Size of the entire structure
and, separately, the square footage of the living space;
(G) Geographic location of property;
(H) Number of stories and any nonstandard interior
wall heights;
(I) Materials used in, and
generic types of, interior features and finishes, such as, where applicable, the
type of heating and air conditioning system, walls, flooring, ceiling, fireplaces,
kitchen and bath(s);
(J) Cost of
demolition and debris removal;
(K) Cost
of permits and architect's plans;
(L)
Age of the structure or the year it was built;
(M) Size and type of attached garage;
and
(N) Additional costs associated with
building a single or custom home.
(4) The effects of catastrophes on replacement
cost. This includes how shortages of construction labor, building supplies, fuel,
transportation issues, and permit restrictions can result in increased costs,
sometimes referred to as demand surge, and delays in rebuilding.
(5) Review of the significant enhancements and
endorsements to the homeowners' insurance policy, and identification of coverages
that help protect against underinsurance. The review is to include:
(A) what is included and excluded in Building Code
Upgrade (Ordinance and Law) Coverage, as defined in Section
10102 of the
California Insurance Code; and
(B) the
various types and levels of replacement cost, as defined in California Insurance
Code section
10102;
(6) Review of the California Standard Form Fire
Policy and FAIR (Fair Access to Insurance Requirements) Plan coverages, as described
in California Insurance Code sections
2071 and
10090,
respectively; review of earthquake insurance coverages as described in Insurance
Code section
10081 et seq.,
including coverage offered by the CEA (California Earthquake Authority).
(7) Review of the types of basic building
construction, including tilt-up, cinderblock, wood frame, brick and masonry, and
metal frame.
(8) Review of the various
methodologies of estimating replacement cost including:
(A) Proprietary replacement cost valuation
tools;
(B) Real estate
appraisals;
(C) Insurance company's
valuation software;
(D) Contractor's and
architect's estimates or opinions;
(E)
Cost per square footage estimates; and
(F) Insured's opinion.
(9) Review of fire mitigation and how it affects
insurance costs, to include:
(A) Define,
recognize, and describe the fire problem in the wildland urban interface;
(B) Discuss the areas that affect the risk and
hazard such as topography, fuel types and locations, weather, and construction;
and
(C) Discuss current statutes and
regulations that address efforts to mitigate and indicate that local codes may also
apply. These statutes, regulations and codes include requirements for defensible
space and fire-resistant building construction.
(e) The training required by this section
2188.65 shall ensure that the
broker-agent is aware of the provisions of sections
2695.182 and
2695.183.
(f) Any course or seminar that is disapproved for
the reason that it fails to comply with this section shall be presumed invalid for
credit towards the continuing education requirement of this section unless the
course or seminar is later approved in writing by the Commissioner.
1. New section
filed 12-29-2010; operative 6-27-2011 pursuant to Government Code section
11343.4(b)
(Register 2010, No. 53).
2. Change without regulatory effect amending
subsection (a)(1) and adding subsections (a)(1)(A)-(E) filed 4-18-2011 pursuant to
section 100, title 1, California Code of
Regulations (Register 2011, No. 16).
3. Amendment filed 10-22-2014;
operative 2-19-2015 pursuant to Government Code section
11343.4(b)(2)
(Register 2014, No. 43).
Note: Authority cited: Sections
790.04,
790.10,
1749.7,
1749.85 and
2051.5,
Insurance Code. Reference: Sections
790.03,
790.04,
1625,
1625.5,
1749.1,
1749.3,
1749.31,
1749.85,
2051.5,
10087 and
10104, Insurance
Code.
