It's wise for both insurance agents in California and their customers to have some background on the laws governing insurance activities in the state. The insurance commissioner enforces insurance laws in California and provides consumers with information about relevant regulations. Failing to adhere to insurance regulations can come with penalties and licensing challenges, problems that can be avoided by keeping an eye on these rules.
Finding California Insurance Laws
The provisions of California state law that governs most insurance standards and practices is called the California Insurance Code. It is one of California's 29 legal codes, and covers the majority of the legal restrictions on insurance activities. Other provisions governing insurance are found in the Vehicle Code, such as requirements for reporting private vehicle information to the Department of Motor Vehicles. Some of the provisions regarding state-run insurance programs like unemployment insurance and workers' compensation can be found in the Unemployment Insurance and Labor Codes, respectively.
Basic Provisions
The California Insurance Code divides insurance by class and lays out rules for each type of insurance. The classes of insurance established by the Insurance Code include life, fire, auto, marine, title, surety, and disability insurance, among several others. The code explicitly defines each class and what policies of that class may insure. The Insurance Code is designed to protect both insurers and their consumers against fraudulent activity and misrepresentation.
Insurance Frauds Protection Act
The Insurance Frauds Protection Act, a California state insurance law, is found at section 1871 through section 1879 of the Insurance Code. This law entitles insurers access to public records in investigating fraud claims and prohibits both claimants and insurers from making false claims in the interest of either obtaining or denying insurance compensation. The code also creates a Bureau of Fraudulent Claims within the state's Fraud Division to investigate and pursue violations of the law arising from insurance fraud.
Privacy Protections
The California Insurance Code provides extensive protections for consumers against the disclosure of their private information without their knowledge. Rules similar to those found in this section of the Insurance Code was later adopted by the federal government to protect patients across the nation. The privacy protections of the Insurance Code require insurers to ask permission to release private consumer information to third parties and carefully account for the release of information. The law requires the Insurance Commissioner's office to investigate insurers they believe to be in violation of consumer privacy protections. If found in violation, insurers are subject to a fine of up to $10,000 per violation, according to the code.
