While most Californians are concerned with retrofitting their homes and offices for the impending “Big One,” insurers that write property risks in California must be aware of the standards in California governing: (i) the training and accreditation of insurance adjusters in evaluating damage caused by earthquakes; (ii) the maintenance of accreditation records; and (iii) the reporting requirements for unaccredited adjusters.1
Training and Accreditation Requirements
The California Insurance Code and corresponding regulations require insurers to provide training (whether in-house or outsourced) regarding the handling of earthquake claims to insurance adjusters who evaluate earthquake claims for or on behalf of the insurer.2 An “insurer” includes “admitted” and “nonadmitted” insurers that issue or deliver a policy of insurance in California covering the peril of earthquake.3
The term “insurance adjuster” is broadly defined under the California Insurance Code.4 As such, training should be provided to every person that handles or evaluates earthquake claims, i.e., any person who investigates claims, evaluates property, conducts activities related to the determination of coverage, liabilities or the nature and extent of the loss or damage, and/ or negotiates payment of earthquake claims.5 This includes both primary field adjusters as well as an insurer’s employees.
Moreover, supervisors or managers who actively manage claims could be considered to be “handling claims,” and, thus, should be trained as well.
The content of the training required by the regulations includes at least the following topics:
(a) California Fair Claims Settlement Practices Regulations: Compliance with the annual training and certification requirements of Title 10, Section 2695.6 of the California Code of Regulations satisfies this topic;
(b) Determination of Scope of Loss: Covers how to conduct a thorough examination of the property, how to make a complete listing of all recent earthquake damage, how to handle building code upgrade issues, and procedures to follow if hidden damage is discovered after repair has begun;
(c) Loss Estimation Techniques: Covers how to create or obtain an accurate estimate of all covered earthquake damage;
(d) Determination of Necessity for Engineer or Expert: Covers how to evaluate visible damage and hidden damage and when to hire a consulting engineer or expert;
(e) California Department of Insurance Earthquake Mediation Program: Provides details about this mediation program;6
(f) Assessment of Damage to Concrete Surfaces and Foundations: Concerns how to identify preexisting cracks and new cracks, how to evaluate damage to concrete structures, when to replace rather than repair the structure, and the proper methods for concrete repair;
(g) Subsequently Discovered Earthquake Damage: Provides an overview of the basic law governing insurers’ obligations to investigate earthquake damage and when it may be appropriate to obtain legal counsel; and
(h) Programs Designed to Assist Earthquake Victims: Provides information regarding the available programs intended to assist earthquake victims, as well as how these programs and certain deadlines interact with the underlying earthquake insurance claim.7
It is the insurer’s responsibility to ensure that any such training meets the requirements detailed in the California Insurance Code.8 The insurer or entity that provides the training is required to issue a certificate to all persons who successfully completed the training.9 Accreditation must be renewed every three (3) years by completing the training identified above.10
Maintenance of Records
Insurers or other entities providing adjuster training must maintain all records of adjusters completing the program for a period of five (5) years.11 Moreover, an insurer using an adjuster to evaluate earthquake damage must keep record of that adjuster’s accreditation for a period of five (5) years.12
Reporting Requirements for Unaccredited Adjusters
If an insurer uses one or more adjusters to evaluate damage caused by earthquakes who are not trained and accredited in accordance with the standards set forth above, that insurer must comply with the following two requirements: (i) annually submit a list of those adjusters who have not completed the training to the California Department of Insurance; and (ii) the list of adjusters described above must be submitted to the California Department of Insurance within 30 calendar days from the end of the reporting period and shall cover the preceding twelve- month period.13
If you would like additional information on satisfying the earthquake-training requirements provided for in the California Insurance Code, on maintenance of accreditation records, or reporting unaccredited adjusters, please contact the author, Kelly S. Biggins, at firstname.lastname@example.org or (213) 687-6763.
Cal. Code Regs. tit. 10, § 2695.40; Cal. Ins. Code § 10089.3.
Cal. Ins. Code § 10089.3; Cal. Code Regs. tit. 10, §§ 2695.41(d) and 2695.42.
Cal. Code Regs. tit. 10, § 2695.41(c).
Cal. Ins. Code §§ 10089.3(b), 14000 et seq. and 14021; Cal. Code Regs. tit. 10, §§ 2695.2 and 2695.41(b).
This can further include any person who makes any investigation for the purpose of obtaining information in the course of adjusting or otherwise participates in the disposal of any claim on behalf of an insurer, as well as those who aid an insurer in any manner with reference to the cause or responsibility for losses or damage or injury to property. See Cal. Ins. Code § 14021.
See Cal. Ins. Code § 10089.70; Cal. Code Regs. tit. 10, §§ 2696.1 through 2696.10.
Cal. Code Regs. tit. 10, §§ 2695.41(d) and 2695.42.
Id. at § 2695.42. An adjuster trained and accredited by one insurer is deemed accredited in order to adjust claims for a different insurer, unless that insurer includes additional requirements as part of its internal procedures. Id.; Cal. Ins. Code § 10089.3(a).
Id. at § 2695.43 (certificate must include the following: name and contact information of entity providing training; name of adjuster and license number, if applicable; statement of certification; signatures of both the adjuster and trainer; and completion date of training).
Id. at § 2695.43(b).
Id. at § 2695.44.
Id. The records must contain the name of the adjuster and license number, if applicable, date training was completed and the name and contact information of the training entity. Id.
Id. at § 2695.45. Each list of adjusters must include the name of the adjuster, license number (if any) and claim number of the earthquake claim evaluated by that adjuster. Id. Further, the initial reporting period began January 1, 2005 and ended December 31, 2005. Id.