AB2114 (Irwin) - Building Standards: Exterior Elevated Elements: Inspection 

This one is easy. It adds civil engineers to Civil Code § 5551(b) as an additional class of professionals authorized to conduct balcony inspections contemplated by the statute.

CAI-CLAC sponsored this bill because it adds to the pool of professionals who can perform the inspections. This is emergency legislation and if passed will take effect immediately (potentially in July) rather than January 1, 2025. 

AB2159 (Maienschein) – Electronic Voting

Yes – electronic voting may be a reality next year! This bill would authorize a community association to adopt new election rules that allow the association to conduct an election by “electronic secret ballot” either through email or through a website. As currently written, if enacted the bill would permit electronic voting regardless of what is in the association’s governing documents.

The bill would require a community association that conducts an election by electronic secret ballot to ensure, among other things: 

• The electronic secret ballots provide a method to authenticate the member’s identity to the online voting system; and
• A method for the member to confirm that their electronic device can successfully communicate with the online voting system at least 14 days before the voting deadline. 
• The online voting system must have the ability to authenticate the member’s identity, authenticate the validity of each electronic vote, and to transmit a receipt to a member that casts an electronic vote. 
• The right of a member to cast a physical ballot. 

This bill will be a great benefit to California community associations.  However, please note that there are quite a few detailed conditions and restrictions that associations will be required to follow should the bill pass substantially in its current form. So far, the bill has received all “Yeas” and no “Nays”, so it looks like it is headed towards passage. Get ready!

AB2460 (Ta) – Reduced Quorum (clean up legislation)

This CAI-CLAC sponsored bill is a “clean-up” bill intended to clarify that either the Board of Directors or the members may call for a reconvened meeting if a quorum is not achieved, as this was not clear under current Civil Code § 5115. This is to make sure that the association can avail itself of the benefits of Civil Code § 5115, which allows for an automatic step down in quorum requirements to 20% (so long as the requisite notice is given). The bill achieves this (and other relatively minor clarifications) through some minor amendments to the language of the law.

INSURANCE UPDATES

So far in this legislative session we have only had a few insurance bills that specifically impact community associations in California due to legislators and the Governor asking the Department of Insurance to take steps to improve the situation before the end of the legislative session. Although we believe more changes will likely be necessary, the legislators didn’t want to interfere with the work being done by the CA Department of Insurance (DOI) but will feel more able to move forward with possible insurance legislation at the end of this year once Commissioner Lara has had a chance to act.

A few bills that we are looking at:

AB 2996 (Alvarez) – FAIR Plan

This bill was originally going to codify the promise the DOI made that the $20 million dollar CA FAIR Plan limit would apply PER BUILDING instead of PER LOCATION (which would be the entire community association) dramatically increasing larger associations’ ability to get adequate insurance. That has since been amended out of the bill. [NOTE: while the DOI has said that this per building coverage is available, it is not yet available in practice.]

This bill DOES continue to codify exactly how the CA FAIR Plan will assess member carriers in the event a large loss exceeds the amount of money the CA FAIR Plan has to pay out on claims, and it provides a provision for them to sell bonds to pay for those assessments which is a bit of a protection for over-exposed carriers in the CA insurance market.

This also removes “Diligent Search” requirements, which means there’s no need to exhaust every admitted option before moving to the CA FAIR Plan. You will WANT to exhaust every other option (even non-admitted) before going to the CA FAIR Plan because the coverage is inadequate for community associations in CA without additional coverage purchased elsewhere and the cost is quite high. There is no need for a rule to make us do what makes sense to do anyway.

SB 1060 (Becker) – Risk Modeling

This requires a property insurer to employ risk models for underwriting purposes that account for wildfire risk reduction associated with hazardous fuel reduction, home hardening and defensible space creation. This would force carriers to include discounts for actions that may keep people safe but may in no way reduce the cost that the carriers will ultimately bear in a loss. Also, these factors are ALREADY being considered to some extent as these factors are used in fire modeling (which we see as “fire scores”) used by the carriers to underwrite risks.

Ultimately, just like community associations can often have difficulty with sweeping laws that treat every association the same, no matter the size, makeup, etc., this would paint carriers with a large regulatory brush that would encourage carriers to stay OUT of the market instead of coming back in.

AB 2260 (Calderon) – FAIR Plan Reporting

This requires the CA FAIR Plan, until December 31, 2027, to provide reporting about policies and clearinghouse programs to the DOI, the Assembly and Senate Committees on Insurance and to have a public posting on their website on a quarterly basis. Since we have a goal of moving policies out of the CA FAIR Plan and back into the admitted market (those communities that have done mitigation work get to be the top of that list), we want a way of tracking how successful we are at it. This is a way of keeping track.

We continue to attend hearings and workshops and to meet with legislators to discuss what moving forward might look like. We will also be involved in helping to create and launch insurance education for legislative staffers to be sure they have the resources they need to provide the best advice to their legislators.