The California Supreme Court dealt property insurers a blow on Monday, reversing lower court rulings that had limited the state insurance commissioner's authority and blocked a rule the industry had slammed as overly prescriptive and burdensome.
The lawsuit by two state industry trade associations challenged a 2011 regulation making it illegal for insurers to issue estimates of a home's replacement cost to consumers unless the estimate included specific factors like the cost of labor, building materials and debris removal.
California Insurance Commissioner Dave Jones issued the rule in response to an outcry from hundreds of victims of the Southern California wildfires in 2007 and 2008, who found that they were underinsured by tens or hundreds of thousands of dollars when faced with actually having to rebuild their homes.
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