CLA report and Resolution (Rodriguez – Lee) relative to establishing the City’s position on Senate Bill 876 (Padilla), which would reform the insurance claim process.

This item concerns a resolution to support Senate Bill 876 (SB 876), introduced by Senator Padilla. The bill aims to reform California's insurance claim process, particularly in the wake of devastating wildfires like those experienced in Southern California in 2025.

Key Issues Addressed by SB 876:

• Timeliness of Payments: Aims to improve the speed at which insurance claims are paid.
• Consumer Protections: Strengthens safeguards for policyholders.
• Disaster Recovery Plans: Requires insurers to develop and update disaster recovery plans for DOI review.
• Penalties: Doubles fines for insurance companies violating fair claims practices during declared emergencies, mandating restitution to policyholders.
• Adjuster Delays: Mandates status reports to homeowners within five days of assigning a new adjuster.
• Additional Living Expenses (ALE): Doubles policy limits for ALE during disasters.
• Upfront Payments: Mandates upfront payments for structure replacement costs after a total loss.
• Building Code Upgrades: Ensures coverage for mandatory building code upgrades applies at the time of rebuild, not loss, to facilitate safer construction.
• Extended Replacement Cost: Requires insurers to offer at least 50% extended replacement cost coverage to combat underinsurance.

The City Council is being asked to adopt a resolution to include support for SB 876 in its 2025-2026 State Legislative Program, thereby safeguarding homeowners from insurer roadblocks and improving recovery outcomes after large-scale emergencies.