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 Bill Text - SB-878 Insurance business practices.

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 |Add To My Favorites |Track Bill | Version: 06/10/26 - Amended Assembly
 04/27/26 - Amended Senate
 04/06/26 - Amended Senate
 01/06/26 - Introduced

 SB-878 Insurance business practices.(2025-2026)

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 Date Published: 06/10/2026 09:00 PM

SB878:v96#DOCUMENTBill Start

 Amended
 IN 
 Assembly
 June 10, 2026

 Amended
 IN 
 Senate
 April 27, 2026

 Amended
 IN 
 Senate
 April 06, 2026

 CALIFORNIA LEGISLATURE—
 2025–2026 REGULAR SESSION

 Senate Bill

No. 878

Introduced by Senator Pérez
(Principal coauthor: Assembly Member Harabedian)
(Coauthor: Senator Allen)

January 06, 2026

 An act to amend Sections 2051 and 2051.5 of, and to add Article 15.6 (commencing with Section 1078) to Chapter 1 of Part 2 of Division 1 of, the Insurance Code, relating to insurance. 

LEGISLATIVE COUNSEL'S DIGEST

SB 878, as amended, Pérez.
 Insurance business practices.

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 fire insurance
 claims, 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 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 of 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.

Digest Key

 Vote:
 MAJORITY 
 Appropriation:
 NO 
 Fiscal Committee:
 YES 
 Local Program:
 NO 

Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 Article 15.6 (commencing with Section 1078) is added to Chapter 1 of Part 2 of Division 1 of the Insurance Code, to read:

 Article
 15.6. Prompt-Payment Compliance

1078.

 (a) Upon receiving notice of a fire insurance claim, claim under a policy of residential property insurance, as defined in Section 10087, every insurer shall immediately, but in no event more than 15 calendar days later, do the following unless the notice of claim received is a notice of legal action:

(1) Acknowledge receipt of the notice to the claimant unless payment is made within that period of time.

(2) Provide the claimant with the necessary
 forms, instructions, and reasonable assistance, including, but not limited to, specifying the information the claimant is required to provide for proof of claim. loss.

(3) Begin any necessary investigation of the claim.

(b)