AIA Opposes California Bill to Limit Home Inventories

May 26, 2005

A bill approved by the California Senate May 25 that prevents insurers from requiring claimants to itemize personal property lost in a disaster is well intended, but will invite padding of claims and raise costs for all policyholders, according to the American Insurance Association. SB 2, authored by Senator Jackie Speier (D), will also require insurers to give policyholders a copy of their loss history report, which is duplicative and eventually costly to all policyholders.

“The author is trying to help people recover after a disaster, but in reality this bill goes against the fundamentals of how insurance works and will drive up costs for everyone,” said Janine Gibford, AIA assistant vice president, western region. “Responsible policyholders maintain home inventories to determine what could be lost and potentially need to be replaced under their policy. This bill says insurers should pay up to 85 percent of contents coverage, regardless of whether the homeowner had that much property.”

“Insurance is intended to indemnify for actual losses,” Gibford explained. “The inventory is a tool to account for and replace damaged personal property. If insurers are required to automatically pay a pre-specified limit, regardless of what is lost, the cost of insurance will go up for everyone, and it is simply unfair to responsible consumers.”

“There are several resources available to help insurers prepare for emergencies,” Gibford said. “Homeowners should log onto the website for the California Department of Insurance at or the Insurance Information Network of California at to learn how to do a home inventory before a disaster strikes. Being prepared ahead of time eliminates the difficult process of creating a list of personal property and is also a good reminder to check your policy and make sure it’s up to date if any remodeling or improvements have been made.”

“SB 2 would also require insurers to provide copies of loss history reports to policyholders,” Gibford said. “Insurers already provide the policyholder with a “notice of a claim” when a loss is filed with the insurance company. Policyholders have the right to obtain a copy of their loss history report under the federal Fair Credit Reporting Act. Additional notices will be duplicative and costly.”

“The author has tried to improve the bill, but unfortunately we continue to disagree on a few key provisions in the measure,” Gibford said. “We will continue to try to find middle ground on SB 2 as it moves through the legislative process.”

SB 2 was approved in the Senate by a vote of 23 to 14. The bill now moves to the Assembly for consideration.

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