Catch Me If You Can: Fake Doctor’s Application Voids Coverage For Himself But Not For Innocent Co-Insureds

This post was written by Kevin B. Dreher and Natalie C. Metropulos.

In life, sometimes even the law imitates art. As if copied straight out of the script of “Catch Me If You Can,” the U.S. District Court in South Carolina issued a ruling on October 21, 2014 in which it held that despite a false application for professional liability insurance submitted by an applicant pretending to be a doctor, the insurance afforded to the company and other doctors and nurses identified as named insureds under the policy remained in force and was not void ab initio as to the innocent co-insureds. Evanston Insurance Company v. Agape Senior Primary Care, et al., 2014 WL 5365679.

As Frank Abagnale Jr. said to Carl Hanratty, “people only know what you tell them.” Earnest Addo took that to heart and posed as Dr. Arthur Kennedy to obtain employment with Agape Senior Primary Care. Once employed, he filled out an application for professional liability insurance with Agape’s professional liability insurer, Evanston, warranting that he was a licensed medical doctor. Turns out Addo’s representations in his application to Evanston were false – he was in fact not a doctor. After discovering the fraud, Evanston sought to void the coverage it issued to Dr. Kennedy (a/k/a Addo) along with the coverage it issued to Agape and to every other doctor, nurse and health care professional employed by Agape.


In holding that Addo’s coverage should be voided but coverage for the innocent co-insureds should be upheld, the court relied on South Carolina law which stands for the proposition that where an insurance policy creates several, individual obligations among co-insureds, criminal acts or misrepresentations by one co-insured does not bar the innocent co-insureds from recovering under the policy. McCracken v. Government Employees, Ins. Co., 325 S.E.2d 62 (S.C. 1985).

The court’s ruling in Agape serves as a reminder to policyholders to review professional liability policies as well as directors & officers liability policies to ensure that the insurance coverage provided is properly protected from the wrongful conduct of a single individual insured.

Property Exposed to the Ebola Virus – Are Associated Business Income Losses Covered Under First Party Policies?

Can policyholders expect coverage for loss of Business Income if (1) they must close their business and decontaminate it after the property is exposed to persons with the Ebola virus or (2) civil authorities prohibit access to their property because of such exposure?

In the first circumstance, policyholders would seek Business Income coverage, which covers policyholders for lost income and unavoidable continuing expenses when damage to property causes a suspension of business operations. In the second circumstance, policyholders would seek coverage under Civil or Military Authority clauses, covering loss of income where an action or order of an authority, taken or issued on account of property damage, prevents access to the policyholder’s premises. The key question under either coverage is whether the property exposed to an Ebola patient has suffered “property damage.”

Case law supports coverage in either circumstance. First, the Ebola virus, while not particularly hardy, can survive on dry surfaces for hours after exposure, and for days in expelled fluids kept at room temperature. Accordingly, cleanup must be undertaken in a thorough manner by professionals wearing protective equipment. 

Courts and insurance companies have found that property infused with radioactive dust, bacteria or other contaminants has suffered property damage sufficient to trigger Business Income coverage. American Alliance Insurance Co. v. Keleket X-Ray Corp., 248 F.2d 920 (6th Cir. 1957) (radioactive dust and radon gas); Brand Mgt., Inc. v. Maryland Cas. Co., No. 05-cv-02293, 2007 WL 1772063 (D. Colo. June 18, 2007) (listeria); Cooper v. Travelers Indem. Co., No. C-01-2400, 2002 WL 32775680 (N.D. Cal. Nov. 4, 2002) (e-coli); Schlamm Stone & Dolan, LLP v. Seneca Ins. Co., No. 603009/2002, 2005 WL 600021 (N.Y. Supr. Mar. 16, 2005) (dust from the WTC). Under these authorities, property exposed to the Ebola virus has suffered “property damage.”

Business Income coverage should exist until the property can be decontaminated, and is found to be safe to inhabit by the authorities. Urology Clinic of New Orleans, Inc. v. United Fire & Cas. Co., 993 So. 2d 803 (La. App. 2008) (finding Business Income coverage existed until the fire marshal approved re-occupancy). Thereafter, policyholders should have coverage for continuing losses due to reputational injury under Extended Business Income coverages.

Civil Authority coverage should exist through the duration of the order of the Civil Authority. To the extent that the policyholder’s loss is covered by both Business Income and Civil Authority coverage, it can choose to claim under either, both, or one then the other, so as to maximize recovery. Audubon Internal Medicine Group v. Zurich Am. Ins. Co., No. 07-4874, 2008 WL 2718928 (E.D. La. July 10, 2008).

Department of Defense Proposes Expanded Consumer Protections for Servicemembers

At the end of September the Department of Defense (DOD) announced proposed changes to the Military Lending Act (MLA) that, if implemented, will expand financial protections for servicemembers and their families. Since its enactment in 2006, the MLA has protected servicemembers and their dependents from ultra high interest rates of over 36 percent on short-term, small dollar loans.

When it originally drafted the MLA, DOD narrowly defined the types of loans covered by the act and excluded credit cards, overdraft loans, military installment loans, and all forms of open-end credit from coverage. In practice this meant that the MLA covered traditional payday loans, car title loans, and refund anticipation loans but allowed companies to tailor loan characteristics to fall just outside the parameters and evade the restrictions. The DOD has now moved to close these loopholes by expanding the types of loans covered by the 36 percent interest rate cap to these commonly used products and, in doing so, preventing or at least slowing down predatory financial institutions from literally taking money right out of the pockets of our servicemen and women and their families.

The movement to protect servicemembers from cycles of debt caused by high-interest loans gained recognition as the military barred a growing number of servicemembers from duties overseas for financial reasons. Pressure from different military communities across the country motivated the DOD to research predatory lending practices on a national scale. The resulting report, released by the DOD in 2006, documented increased numbers of lender locations around military bases, an online presence catering to military families, and company names implying official military affiliation. It also found that young servicemembers with job security, a steady paycheck, and little financial literacy offered loan companies a low-risk, high-reward target for loans with interest rates as high as triple digits. Lenders even reportedly offered referral rewards for military members as well as threw "loan parties." The DOD report concluded “predatory lending undermines military readiness, harms the morale of troops and their families, and adds to the cost of fielding an all-volunteer fighting force.”  The report led to the inclusion of the MLA (H.R. 5122, Section 670) in the John Warner National Defense Authorization Act of 2007.

Although Congress aimed to strike a balance between protecting servicemembers from burdensome debt and maintaining adequate sources of healthy credit, when it came into effect in 2007 the MLA fell short in scope. The 36 percent interest cap applied specifically to tax refund loans, other loans of less than $2,000 and a term of less than 90 days, and auto loans with a term of less than 180 days. Consequently, lenders began offering payday loans of $2,001 for over 91 days and auto title loans longer than 181 days, a particularly easy transition for online lenders and lenders in states where high cost loans are not prohibited. By only slightly changing loan terms, creditors continued to successfully target servicemembers, trap them in repeat borrowing, exploit the use of allotments, and fail to provide buyers with adequate information for an informed decision.

Under continued pressure in the face of stories of damaging debt accumulated as a result of legal technicalities in the MLA, the DOD has now proposed to expand regulations to ensure military families more complete consumer protections. The proposed 36 percent interest rate cap would apply to all forms of payday loans, vehicle title loans, refund anticipation loans, deposit advance loans, installment loans, unsecured open-end lines of credit, and credit cards. Additionally, the regulations would hold creditors responsible for providing military borrowers with additional disclosures, prohibit creditors from requiring servicemembers to submit to arbitration, and put the burden of determining military status on the creditor instead of the borrower.

While it is hoped that these changes will bring needed protections to servicemembers and their families, they leave veterans and civilians unprotected from the same exploitative lending practices. The Consumer Financial Protection Bureau (CFPB), which enforces the MLA, has suggested that the protections of the MLA be extended to veterans and citizens and continues to emphasize financial education as an important component of reform. This past month, the Illinois Asset Building Group (IABG), on behalf of its members, joined organizations across the country in sending a letter to the CFPB to encourage a strong rule that will stop the debt trap and end abusive payday, car title and installment loans for all families.  You can make your own voice heard by signing our petition to the CFPB today.

MacKenzie Speer contributed to this blog post. This blog is also posted at the Illinois Asset Building Group’s website. 


Beware Of Gaps In Your Cyber Risk Policy – AreYou Covered In the Event of an Insider Attack or Data Breach?

This post was written by Brian T. Himmel, J. Andrew Moss and Robert H. Owen.

The evolving market for cyberliability insurance coverage reveals significant differences in the scope of coverage afforded under available policies. A coverage gap that may exist under some policies is for insider cyber attacks. While external attacks receive substantial news coverage, a recent study finds that businesses may be far less equipped to stave off attacks involving insiders: employees, vendors, suppliers and others who may have authorized access to critical or sensitive data. Liability insurance protection – even under specialized cyberliability policy forms – may potentially lag behind on this important issue. Differences in policy language – including policy definitions and exclusions – may have a significant impact on the scope of coverage available for a cyberliability claim. It is therefore critical to understand the coverage provided under your company’s cyberliability policy in response to insider attacks or data breaches.

Brian Himmel and Andrew Moss are partners in the Reed Smith Insurance Recovery Group and co-leaders of the Group’s Cyberliability practice area. Rob Owen is an associate in the Insurance Recovery Group. Companies considering cyberliability coverage or interested in determining whether certain types of claims may be included as an insured risk under a particular policy form should contact Brian, Andrew or Rob to address questions regarding their specific cyberliability coverage needs.

Perception versus Reality: ACE Adds an Ebola Exclusion Just in Case

This post was written by Kevin B. Dreher and Michael H. Sampson.

The insurance industry reacts not only to real losses, but it reacts with equal concern to perceived risks, particularly where those perceived risks could, at least in theory, amount to significant financial loss for policyholders and/or insurers.  The Ebola “crisis” is the latest example of the insurance market reacting to a perceived risk that may never amount to an actual insurable loss.  Nonetheless, ACE has taken the first step in what is expected to be an industry-wide initiative to prospectively preclude coverage for Ebola-related losses by adopting an Ebola-specific exclusion that it intends to “selectively” add to property and casualty insurance policies.  Although ACE’s policyholders may never suffer an actual Ebola-related loss, ACE is leading the charge to ensure that the perceived risk of Ebola does not become a real financial loss, at least not for ACE.

Excess Insurance Implications of a Below Limits Settlement

This post was written by Courtney C.T. Horrigan and Caitlin R. Garber.

While policyholders frequently negotiate the terms and conditions of primary insurance, it is somewhat less common for policyholders to give the same attention to the language in their excess coverage. Excess policies which state that coverage attaches only after the underlying insurer pays out its full-limits of liability can frustrate policyholders attempting to resolve a coverage dispute with an underlying insurer. Policy wording is critical – as demonstrated in a recent Texas appellate court. Excess insurance can be drafted or endorsed to recognize exhaustion of underlying limits when either the insurer or the policyholder makes the required payments. Policyholders should carefully negotiate the terms of excess – as well as primary – coverage during the renewal process.

All Businesses Should Review Insurance Coverage in Face of Ebola Crisis

This post was written by Michael H. Sampson, Courtney C.T. Horrigan and Caitlin R. Garber.

Every day, there is a new story about Ebola in the media. While some commentators suggest that the threat of Ebola in the United States is overblown - and we hope they are right - now is still the time for all businesses to review their insurance policies to understand what insurance coverage, if any, they may have available should an Ebola-related liability and/or loss occur.

Potential for Ebola-related liability and loss is not just limited to hospitals or other medical institutions. Recent news stories have demonstrated the breadth of the potential impact of the Ebola crisis: It has affected not just health-care workers but also the airline industry, the chocolate industry, an Ohio university, a cruise ship sailing in the Caribbean, and others.

In considering potential coverage for such liabilities and losses – and when seeking coverage should such a liability or loss occur – businesses will want to carefully consider all of their insurance policies, including, but not limited, to commercial general liability policies, professional liability policies, commercial property policies, and directors’ and officers’ policies. The availability of coverage will depend not just on the specific facts of a business’ situation, but on the specific language contained in their insurance policies.

Michael H. Sampson and Courtney C.T. Horrigan are partners in the Reed Smith Insurance Recovery Group and are members of the firm’s Global Ebola Task Force. Caitlin R. Garber is an associate in the firm’s Insurance Recovery Group.  If you have specific questions regarding your insurance coverage for Ebola-related risks, please contact Michael H. Sampson, Courtney C.T. Horrigan, Caitlin Garber, any member of the firm’s Insurance Recovery Group with whom you usually work, or Douglas E. Cameron, the Reed Smith Insurance Recovery Group’s Global Practice Group Leader.

Concurrent Causation from “A Medley of Interesting Disability Cases”

Kruk v. Metropolitan Life Ins. Co.,2013 U.S. Dist. LEXIS 35637 (D. Conn. 2013)

Facts and holding: Rita Kruk (“Kruk”), a Human Resources Specialist, was a participant in an ERISA plan provided through her employment that provided disability benefits. Kruk’s Plan stated that if a disability was due to a mental or emotional disease, participants were entitled to monthly long term disability benefits for a maximum of 24 months. If the disability was due to physical injury or illness, then participants were entitled to benefits up to, at most, age 65. The Plan used an “any occupation” definition of total disability.

Kruk suffered from the combined effect of two co-morbid illnesses: one mental or emotional in nature (depression) and one physical in nature (lupus). In December 2000, she submitted a claim to Metropolitan Life Insurance Company (“MetLife”) for long term disability benefits. MetLife paid Kruk’s claim for the maximum 24-month duration pertaining to benefits for disability due to a mental or emotional illness. Kruk challenged this determination, claiming that she was disabled by lupus, a physical cause, entitling her to benefits until age 65. MetLife argued that Kruk’s disabling conditions were actually mental and emotional depression, and not the physical illness of lupus.



On summary judgment, and under an abuse of discretion standard, the Court found that Kruk was impaired “by a combination of symptoms and ailments: some readily ascribable to mental or emotional disease (severe depression, anxiety, cognitive impairment); others more readily ascribable to physical disease (arthralgias, anemia), still others of less determinable origin (fatigue, sleep disturbances).” Id. at *34-35. The Court held that in order to be entitled to disability benefits after the 24-month limitation period, Kruk had to show that “her physical disease, in and of itself and entirely disregarding her mental and emotional disease, was totally disabling.” Id. at *47. The Court found that Kruk could not make that showing. Despite a report from Kruk’s physician which concluded that Kruk was totally disabled by her lupus and depression, one independent physician determined that Kruk was totally disabled by her psychiatric condition and a second independent physician found that, from a physical standpoint, Kruk was capable of unrestricted work activities. Therefore, the Court ruled that Kruk was not entitled to more than 24 months of disability payments, and MetLife’s decision to terminate Kruk’s benefits after that time did not constitute an abuse of discretion.

The Court found its decision consistent with Sheehan v. Metropolitan Life Insurance Co., 368 F. Supp. 2d 228 (S.D.N.Y. 2005). There, the plaintiff suffered from two co-morbid illnesses – coronary heart disease, a physical illness, and cardiac neurosis, a mental disorder generated by fear of recurrence of a heart attack. The Sheehan court ruled that during the time in which the plaintiff’s co-morbidity existed, he had exhausted his entitlement to benefits resulting from psychiatric disease, and thus he could only receive additional disability benefits if the physical cardiac condition by itself constituted a total disability.

Lessons learned: The issue of concurrent causation can be very complicated, primarily because the same issue can be analyzed in a variety of contexts, or by focusing on different aspects of the dispute. Here, of course, the issue is a disability caused by both a mental and a physical condition. But the issue can also arise in the context of “accident versus sickness.” And more generally (and more commonly), the issue is presented in the property/casualty context when a loss is the result of both a covered and excluded cause. See, e.g., Garvey v. State Farm Fire & Casualty Co., 48 Cal.3d 395 (1989). In the disability context, that same issue can arise when a cause of disability is excluded specifically by rider, or the cause is excluded as a pre-existing condition. See, e.g., Fought v. Unum Life Ins. Co., 379 F.3d 997 (10th Cir. 2004). And many courts divert the focus of the dispute to whether one of the two causes is the primary or proximate cause of the loss or disability, sidestepping the issue of what happens with true independent, concurrent causation. See, e.g., Brooks v. Metropolitan Life Ins. Co., 27 Cal.2d 305, 309-310 (1945). Thus, different states may characterize the dispute differently, leading to different types of analyses, which in turn makes generalizing or predicting an outcome to this kind of dispute difficult. (And the author reminds the reader that this decision was based on a review under the “arbitrary and capricious” standard, and it is often difficult to generalize a legal conclusion based on a ruling from a court using that standard.)

For a review of another concurrent causation (or dual causation) case discussed by the author, see White v. Prudential Ins. Co., 2012 U.S. Dist. LEXIS 161675 (E.D. Penn. 2012), reviewed in the Ensemble of Interesting Disability Cases.

Finally, an entirely separate (and more common) issue may arise in determining whether a psychiatric condition is properly characterized as “mental” in the first place. See, e.g., Patterson v. Hughes Aircraft Co., 11 F.3d 948 (9th Cir. 1993). This issue, too, has been discussed in the author’s earlier annual case summaries.

From A Medley of Interesting Disability Cases

Plaintiff Awarded Benefits when Sedgwick Abuses its Discretion

Sedgwick Claims Management is notorious for abusing its discretion when determining whether a claimant qualifies for disability benefits. The most common ways in which Sedgwick abuses its discretion includes, the failure to consider treating doctors’ opinions, failure to consider a favorable determination by the Social Security Administration, failure to speak to treating doctors regarding the claimants’ disabling conditions, failure to have the claimant examined and relying solely on paper reviews of paid doctors. A court in the Northern District of California addressed some of these very issues resulting in a very favorable outcome for the Plaintiff.

The Plaintiff in James v. AT&T West Disability Benefits Program et. al, was seeking disability benefits under an ERISA plan administered by Sedgwick. The Court found that Sedgwick carved out the Plaintiff’s disability into discrete parts stating “because the evidence for any single ailment did not support a finding of disability, she was not disabled under the terms of the Plan”. Sedgwick failure to consider the Plaintiff’s overall disability as a whole and how the combination of mental and physical symptoms prevented her from working was an abuse of discretion.

The Court also held that Sedgwick abused its discretion when it failed to have its hired peer review physicians speak to the Plaintiffs treating doctors to discuss her disabling conditions. It was brought to the court’s attention that Sedgwick’s doctors placed calls to James’ treating physicians with instructions to return the call within 24 hours or a report would be submitted without their input. The court stated that most physicians have very busy schedules and allowing only 24 hours for a return call is unreasonable. James’ doctors were very familiar with her condition and would have been able to shed light on her multiple disabling issues. Sedgwick’s failure to provide a fair opportunity for these consultations to take place was arbitrary and capricious.

Sedgwick further failed to consider James’s subjection complaints of pain, requiring objective medical evidence that was impossible to provide, an abuse of discretion that occurs frequently with claimants suffering from conditions such as fibromyalgia. Finally, the Court slapped Sedgwick on the wrist yet again for failing to conduct an IME of a James, relying solely on a paper review, when its own policy allows for such an examination to take place.

This decision is a definite win for Plaintiff’s who have been denied disability benefits by Sedgwick as well as insurance companies that have denied their claims for similar reasons.

California Insurance-Related Bills Signed into Law

September 30, 2014, was the deadline for Governor Jerry Brown to take action on bills passed by the California Legislature during the 2014 regular legislative session. Here are summaries of noteworthy insurance-related bills that were signed into law. Unless noted otherwise, these new laws will go into effect on January 1, 2015.  

Assembly Bills

AB 1234 - provides in statute that information reported in the registration statement required by the Insurance Holding Company System Regulatory Act and information and documents disclosed in the course of an examination or investigation made pursuant to the Act is not subject to discovery from the commissioner and is not admissible into evidence in any private civil action if obtained from the commissioner in any manner.

AB 1395 - increases from $0.25 to $0.26 the annual per vehicle fee assessment on automobile insurance policies which funds consumer service functions at the Department of Insurance related to automobile insurance; the assessment will remain at $0.26 until January 1, 2016, thereafter the amount of the assessment will be determined by the insurance commissioner but may not exceed $0.26. AB 1395 also clarifies that an insurer, after it remits the $0.15 Seismic Safety Commission assessment on property insurance policies to the Department of Insurance, does not owe a duty to the policyholder to return a portion of the assessment in the event the policy is terminated early.   

AB 1804 - requires private passenger auto insurers, residential property insurers, and insurers providing individual disability income insurance to maintain a verifiable process or to adopt a procedure that allows an applicant or policyholder to designate one additional person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of a policy for nonpayment of premium. AB 1804 does not apply to policies of private passenger auto insurance that provide coverage for less than six months. AB 1804 will become operative on January 1, 2016.

AB 1897 - adds a section to the Labor Code which provides that when a client employer obtains or is provided workers from a labor contractor to perform labor within the employer’s usual course of business, the client employer and the labor contractor share all civil legal responsibility and civil liability for all workers supplied by the labor contractor for both the payment of wages and the failure to obtain workers’ compensation insurance.

AB 2056 - requires pet insurance policies to include specified disclosures, including policy exclusions, any waiting period or deductible, and whether the insurer reduces coverage or increases premium based on claim history. AB 2056 also sets forth definitions of certain terms, including “chronic condition,” “hereditary disorder,” and “veterinary expenses,” which a pet insurer must include in its policies if the insurer uses any of the terms in its policies. AB 2056 applies to any policy of pet insurance which is marketed, issued, amended, renewed, or delivered to a California resident on or after July 1, 2015.  

AB 2064 - revises the disclosure language which must be included in a residential property insurer’s mandatory offer of earthquake insurance. The disclosure revisions enacted in AB 2064 will become operative on January 1, 2016. AB 2064 also increases the statutory cap on the California Earthquake Authority’s operating expenses from 3% of its premium income to not more than 6% of its premium income.

AB 2128 - extends the sunset date on the statutory provisions relating to the Department of Insurance’s California Organized Investment Network (COIN) from January 1, 2015 to January 1, 2020. Existing law requires all admitted insurers to file data on their community development investments in California. AB 2128 limits the requirement to report on community development investments to each admitted insurer with annual premiums written in California equal to or in excess of $100 million for any reporting year. AB 2128 further provides that an insurer meeting the $100 million threshold also must report on its community development infrastructure investments and its green investments in California. The information required by AB 2128 must be submitted by July, 1, 2016, on investments made or held during calendar years 2013, 2014, and 2015. AB 2128 also revises the information regarding insurer community development investments which the Department of Insurance is required to post on its website.       

AB 2220 - requires private patrol operators to carry a minimum of $1 million in liability insurance coverage.

AB 2293 - establishes insurance requirements for a transportation network company which the bill defines as an entity “operating in California that provides prearranged transportation services for compensation using an online-enabled application or platform to connect passengers with drivers using a personal vehicle.” AB 2293 requires a transportation network company to maintain $1 million in primary liability coverage from the moment a participating driver accepts a ride request until the driver completes the transaction on the online-enabled application or platform or until the ride is complete, whichever is later. In the timeframe from when a participating driver logs on to the transportation network company’s online-enabled application or platform until the driver accepts a request to transport a passenger, the transportation network company insurance must maintain primary liability insurance coverage in the amount of at least $50,000/$100,000/$30,000; the company also must  maintain excess coverage of at least $200,000. The statutory section on insurance coverage enacted by AB 2293 states that nothing in the section “shall be construed to require a private passenger automobile insurance policy to provide primary or excess coverage during the period of time from the moment a participating driver in a transportation network company logs on to the transportation network company’s online-enabled application or platform until the driver logs off the online-enabled application or platform or the passenger exists the vehicle, whichever is later.”   These provisions of AB 2293 become operative on July 1, 2015.      

AB 2494 - authorizes a trial court to order a party, the party’s attorney, or both to pay reasonable expenses, including attorney’s fees, incurred by another party as a result of bad-faith actions or tactics that are frivolous or solely intended to cause unnecessary delay.

AB 2734 - makes changes to the Insurance Code which the Assembly Insurance Committee characterizes as “noncontroversial.” Among other changes, AB 2734 1) increases from $5,000 to $20,000 the annual tax threshold which triggers the obligation on a surplus lines broker to make tax payments in monthly installments, 2) increases from $5,000 to $20,000 the annual tax threshold which triggers an obligation on an insurer to prepay taxes, 3) clarifies what constitutes “California business” for the purposes of insurers’ duty to file information with the insurance commissioner concerning procurement contracts with minority, women and disabled veteran-owned businesses, 4) changes the annual data call on private passenger auto insurance information to an every-other-year data call, 5) clarifies that the $5 million financial responsibility requirement for testing of autonomous vehicles may be satisfied with an insurance policy, and 6) authorizes the insurance commissioner to act on an application seeking status as a certified reinsurer 30 days after the application is published, rather than the 90 days required by existing law.

AB 2735 - sets forth in statute that a homeowner who has purchased an earthquake insurance policy that does not satisfy the standard coverage requirements must be reminded by the insurer at renewal that the homeowner has the right to purchase a policy that meets the standard coverage requirements. The reminder notice must be filed with the insurance commissioner 30 days before its first use and is subject to the commissioner’s disapproval.   

Senate Bills

SB 1011 - authorizes certain 501(c)(3) nonprofit organizations to insure themselves against damage to property and the losses related to the loss of use of property though a risk pool arrangement.

SB 1205 - requires the Department of Insurance’s curriculum board to develop or recommend courses of study for agents and brokers on commercial earthquake risk management.  

SB 1273 - extends the sunset date on the California Low-Cost Automobile Insurance Program from January 1, 2016 to January 1, 2020. SB 1273 also amends several statutory provisions relating to the program. Among other changes to the program, SB 1273 1) increases the cap on the value of an automobile that may be insured under the program from $20,000 to $25,000 and authorizes the California Automobile Assigned Risk Plan Advisory Committee to adopt a method to determine the value of an automobile, subject to the insurance commissioner’s approval, 2) allows a person who has fewer than three years of driving history to qualify for coverage under the program, and 3) entitles certified producers to a commission of 12% or $50, whichever is greater.

SB 1446 - allows a small employer health plan or a small employer health insurance policy that was in effect on December 31, 2013, that is still in effect on the effective date of SB 1446, and that does not qualify as a grandfathered health plan under the federal Affordable Care Act, to be renewed until January 1, 2015, and to continue to be in force until December 31, 2015. SB 1446 went into effect on July 7, 2014.