California Fair Claims Settlement Regulations: Deadlines and Rights

California has some of the most detailed claim-handling rules in the country. They are in the Fair Claims Settlement Practices Regulations, California Code of Regulations, title 10, section 2695.1 and following. These regulations turn the general duties in Insurance Code section 790.03(h) into specific deadlines and requirements. If you have a property claim in California, these are the rules your insurer is expected to follow.

This guide covers the provisions that matter most on a typical home or business property claim. Section numbers are given so you can cite them in letters.

Telling you about your coverage

Under § 2695.4(a), the insurer must disclose to a first-party claimant all benefits, coverages, time limits, and other policy provisions that may apply to the claim. If more benefits could become payable once you submit more proof, the insurer must tell you promptly and help you figure out the extent of its added liability.

In practice, this means you can ask in writing: “Please identify all coverages under my policy that may apply to this loss, including additional living expenses, debris removal, code upgrade, and any other coverage.” Ask for the answer in writing.

The 15-day rules

Responding to your communications

Under § 2695.5(b), when you send the insurer a communication that reasonably suggests a response is expected, it must give a complete response, based on the facts then known, within 15 calendar days.

Acknowledging a new claim

Under § 2695.5(e), within 15 calendar days after receiving notice of a claim, the insurer must:

• Acknowledge receipt of the claim, unless it pays within that time.
• Provide the necessary forms, instructions, and reasonable assistance.
• Begin any necessary investigation.

The 40-day decision rule

Under § 2695.7(b), once the insurer receives proof of claim, it must accept or deny the claim, in whole or in part, within 40 calendar days.

If the insurer needs more time

Under § 2695.7(c)(1), if more time is needed, the insurer must notify you in writing within the 40-day period. The notice must say what additional information it needs and why more time is required. It must then send you a written update every 30 calendar days until it decides the claim or legal action is served.

If you have gone more than 30 days without a written status letter on an open claim, that is worth noting in your claim log and raising in writing.

What a denial must include

Under § 2695.7(b)(1), a denial or rejection of all or part of a claim must be in writing and must state the reasons. If the insurer relies on a specific policy provision, condition, or exclusion, the denial must refer to it and explain how it applies to your claim.

Under § 2695.7(b)(3), the written denial must also tell you that if you believe all or part of the claim was wrongfully denied, you may have the matter reviewed by the California Department of Insurance. It must include the address and telephone number of the department’s unit that reviews claims practices.

A denial that just says “not covered” without citing the policy language, or one delivered only by phone, does not meet these requirements.

Paying after acceptance

Under § 2695.7(h), once the insurer accepts all or part of a claim, it must pay the accepted amount within 30 calendar days, subject to receiving any properly executed release where one is required.

Investigation and offers

§ 2695.7(d) requires the insurer to conduct and diligently pursue a thorough, fair, and objective investigation. The same subsection bars the insurer from persisting in seeking information that is not reasonably required for or material to resolving the claim.

§ 2695.7(g) prohibits attempting to settle a claim by making a settlement offer that is unreasonably low. The regulation lists factors that bear on whether an offer is unreasonably low, such as how much the insurer considered the evidence you submitted and what procedures it used to determine the dollar amount of property damage.

§ 2695.7(l) bars denying a claim based on information obtained in a phone call or interview unless that information is documented in the claim file.

Warning before time limits run out

Under § 2695.7(f), the insurer must give you written notice of any statute of limitations or other time limit that may apply to your claim at least 60 days before it expires. If the insurer first learns of the claim inside that 60-day window, it must give notice immediately.

This matters because many California property policies contain a suit limitation period. See Denied or Lowballed: What to Do Next.

Property claim rules in § 2695.9

Matching

Under § 2695.9(a)(2), when a policy pays on a replacement cost basis and a loss requires replacing items that do not match in quality, color, or size, the insurer must replace all items in the damaged area to achieve a reasonably uniform appearance. For more on how this shows up in estimates, see Understanding Your Estimate: Xactimate, O&P, and Matching.

Your choice of repairer

Under § 2695.9(b), the insurer may not require you to use a particular repairer. Under § 2695.9(c), it may not even suggest one unless you expressly ask or it has told you in writing that you have the right to choose. See You Choose Your Contractor.

Estimates and disputes

Under § 2695.9(d), the insurer must give you a copy of each document on which the settlement is based. If you submit a higher written estimate from your own contractor, the insurer has three options: pay the difference, provide (if you ask) the name of at least one repairer who will do the work for the insurer’s estimate amount, or adjust your estimate. If the insurer names a repairer, it must make sure the work is done in a good and workmanlike manner.

Depreciation

Under § 2695.9(f), any adjustment for depreciation or betterment must be discernable, measurable, itemized, and specified as to dollar amount, and the basis must be fully explained to you in writing. Under § 2695.9(f)(1), the cost of labor needed to repair, rebuild, or replace covered property is not a component of physical depreciation and may not be depreciated. For background, see ACV vs. Replacement Cost and Depreciation.

Getting your claim documents

Separate from the regulations, Insurance Code section 2071 requires insurers to notify claimants that they may request copies of claim-related documents. Within 15 calendar days after an insured’s request, the insurer must provide them. Some materials are excluded, such as privileged documents and documents that indicate fraud by the insured.

Know this: These regulations set minimum standards for how the claim is handled. A violation is reported to and enforced by the Department of Insurance. Whether it also supports a lawsuit is a separate question for an attorney.

How to use these rules

• Keep a dated claim log and save every letter and email.
• When a deadline passes, send a short written note citing the section. Ask for a written response.
• If a denial lacks reasons or policy citations, ask in writing for a compliant denial under § 2695.7(b)(1).
• Request your claim-related documents under Insurance Code section 2071.
• If problems continue, file a Request for Assistance with the California Department of Insurance. See How to File a Department of Insurance Complaint.

For a large loss or a denial you believe is wrong, consider talking with a licensed public adjuster or a California attorney who represents policyholders before deadlines pass.