Insurance business practices.

The bill's coverage was narrowed from 'fire insurance claims' and residential property insurance to only residential property insurance claims (as defined in Section 10087). Fire insurance claims are no longer explicitly covered by the prompt-payment deadlines in new Article 15.6.

Senator Ochoa Bogh was added as a coauthor alongside Senator Allen.

A sunset provision was added to Section 3 (amending Insurance Code Section 2051.5): the section remains in effect only until January 1, 2028, and is repealed as of that date.

New Section 3.1 was added, which amends Section 2051.5 with substantially the same content as Section 3 but without the sunset provision. This version would apply if both SB 878 and SB 876 are enacted in the required sequence.

New Section 4 was added as a coordination mechanism: Sections 3.1 and 3.2 only become operative if (1) both SB 878 and SB 876 are enacted and effective on or before January 1, 2027, (2) this bill amends Section 2051.5 while SB 876 amends, repeals, and adds Section 2051.5, and (3) this bill is enacted after SB 876.

In Section 1078(a)(2), the phrase 'proof of claim' was changed to 'proof of loss.' In Section 1078(b)(2), a grammatical error ('the situation specific future event') was corrected to 'the specific future event.'

New Section 3.2 was added, which adds a replacement Section 2051.5 operative on January 1, 2028. This version includes new language stating that for policies issued, amended, or renewed on or after January 1, 2028, the building code upgrade cost payable shall include all costs that would have been incurred if the insured structure had been completely rebuilt at its original location.

The entire prompt-payment compliance reporting framework was deleted. Insurers no longer must file quarterly data reports with the Department of Insurance, have a corporate officer sign and certify those reports, face a $1,500 administrative penalty for knowingly providing false information, or be subject to public publication of their compliance data on the department's website.

The provision making insurers liable for 20 percent per annum interest plus reasonable attorney's fees for non-compliance with payment deadlines was removed. Late payments now only accrue interest under the standard Section 2057 rate.

The restriction that the prompt-payment section applies only to claims arising on or after January 1, 2027 was removed, meaning the remaining provisions apply without that date limitation.

The bill now applies to claims under policies of residential property insurance (as defined in Section 10087) in addition to fire insurance claims. References throughout were updated from 'fire insurance claim' to include 'residential property insurance claim.'

In Section 2051(b)(2), the 30-day deadline for paying actual cash value after a total loss now runs from the date the property is determined to be a total loss, rather than from the date of loss. This gives insurers more time when a total loss determination takes longer.

New exceptions toll the 30-day total loss payment deadline: (A) if the property is in an area subject to evacuation orders, restricted access, or other governmental safety restrictions preventing inspection, the clock does not start until the property is reasonably accessible; (B) if the insurer is awaiting material and relevant information from the policyholder, the clock is tolled until that information is received.

In Section 2051.5(a)(3), the 30-day deadline for paying replacement cost after a total loss now also requires that the insurer has first received adequate proof of loss and documentation reasonably sufficient to determine the amount payable, giving insurers an additional precondition before the clock starts.

The bill now amends Sections 2051 and 2051.5 of the Insurance Code in addition to adding new Article 15.6, expanding its scope from prompt-payment deadlines to also cover how fire insurance indemnity is calculated and paid out for total losses.

New Section 3 prohibits policies from limiting or denying building code upgrade costs or replacement cost (including extended replacement cost coverage) solely because the insured decides to rebuild at a new location or purchase an already-built home after a total loss, capped at the cost to rebuild at the original location. No deduction for land value at the new location is permitted.

New Section 2 (amending Section 2051) requires insurers to pay actual cash value for a total loss to the insured structure within 30 calendar days from the date of loss, with interest accruing under Section 2057 if payment is late. It also clarifies that depreciation deductions apply only to components normally subject to repair and replacement during the useful life of the structure.

New Section 3 (amending Section 2051.5) requires insurers to pay the undisputed replacement cost amount within 30 calendar days after the insured either signs a contract with a licensed contractor to rebuild or enters into a contract or escrow to purchase a replacement home.

New Section 3 establishes minimum time limits for collecting full replacement cost: at least 12 months from the first actual cash value payment under normal circumstances, and at least 36 months during a declared state of emergency. Additional six-month extensions are required for good cause such as permit delays, material shortages, or contractor unavailability.

During a state of emergency, insurers cannot require proof of loss less than 100 days after the loss, and must provide additional three-month extensions for good cause if the insured encounters delays beyond their control.

Removed 'under penalty of perjury' from the requirement that a corporate officer sign the quarterly compliance report. This eliminates the expansion of the crime of perjury and changes the state-mandated local program designation from 'yes' to 'no.'

New Section 3 specifies that on and after July 1, 2026, all policy forms issued or renewed by an insurer must comply with the amended replacement cost provisions in their entirety.

Added cross-reference to Section 2057 for interest accrual on late payments in both the new prompt-payment section and the new indemnity sections, replacing the standalone 20 percent interest provision language with a reference to an existing statutory interest mechanism.

The bill now applies only to insurers that offer or sell fire insurance in this state, rather than all insurers. All references to 'claims' in the reporting requirements are narrowed to 'fire insurance claims.'

Assembly Member Harabedian is added as principal coauthor, suggesting cross-chamber collaboration on the amendment.

A new administrative penalty of up to $1,500 is imposed on any corporate officer who knowingly provides false information in the quarterly compliance report, assessed by the commissioner in addition to other available remedies.

The quarterly report now tracks the number of days late across all three stages of the claims process (subdivisions (a), (b), and (c) of Section 1078.1) rather than only the initial acknowledgment stage under subdivision (a).

The 'total dollar amount of late payments' data point is now specifically tied to payments pursuant to Section 1078.1, clarifying what counts as a late payment for reporting purposes.