SB 878: Insurance business practices.

Official summary

Legislative Counsel’s Digest (official, as of the latest version). Written by nonpartisan legislative staff; reproduced verbatim.

Existing law creates the Department of Insurance, headed by the Insurance Commissioner, and generally regulates classes of insurance, including fire and residential property insurance. Existing regulations prescribe specified deadlines by which an insurer is required to, among other things, respond to a notice of claim, accept or deny a claim, in whole or in part, and, upon acceptance of a claim in whole or in part, tender payment or otherwise take action to perform its obligation, as specified.

This bill, with respect to a claim under a policy of residential property insurance, would codify specified provisions of the regulations prescribing the deadlines above.

Existing law specifies the measure of indemnity under an open fire insurance policy that requires payment of actual cash value or replacement cost. Under existing law, the measure of the actual cash value recovery is 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. If an open policy requires the insured to repair, rebuild, or replace the damaged property to collect the full replacement cost, under existing law the insurer is required to pay the actual cash value of the damaged property until the damaged property is repaired, rebuilt, or replaced, at which time the insurer is required to pay the difference between the actual cash value payment made and the full replacement cost reasonably paid to replace the damaged property.

If there is a total loss to the insured structure, this bill would require, except under specified circumstances, an insurer to pay the actual cash value associated with the primary structure and other insured structures within 30 calendar days from the date the property is determined to be a total loss. After this payment is made, and after the insurer has received adequate proof of loss and documentation reasonably sufficient to determine the amount payable, the bill would require an insurer to pay the undisputed amount of replacement cost associated with the primary structure and other insured structures, up to the limits in the policy, within 30 calendar days from the occurrence of a specified event.

This bill would require interest to accrue if payments are not made within 30 calendar days, as specified.

This bill would incorporate additional changes to Section 2051.5 of the Insurance Code proposed by SB 876 to be operative only if this bill and SB 876 are enacted and this bill is enacted last.

Sponsors

Sponsors by party (alphabetical): Democratic 3 · Republican 1

“Support” is shown only as formal sponsorship recorded by the legislature. Roll-call votes are available on the official bill page.

Recent official actions

1. September 27, 2026In Senate. Consideration of Governor's veto pending.
2. September 27, 2026Vetoed by the Governor.
3. September 9, 2026Enrolled and presented to the Governor at 2 p.m.
4. August 31, 2026Assembly amendments concurred in. (Ayes 37. Noes 0.) Ordered to engrossing and enrolling.
5. August 31, 2026In Senate. Concurrence in Assembly amendments pending.
6. August 31, 2026Read third time. Passed. (Ayes 70. Noes 0. Page 6996.) Ordered to the Senate.
7. August 21, 2026Ordered to third reading.
8. August 21, 2026Read third time and amended.
9. August 21, 2026Assembly Rule 69(b)(1) suspended. (Ayes 55. Noes 17. Page 6296.)
10. August 13, 2026Read second time. Ordered to third reading.
11. August 13, 2026From committee: Do pass. (Ayes 12. Noes 0.) (August 13).
12. August 13, 2026Assembly Rule 63 suspended.