OR DFR Bulletin 2021-05: Expediting claims handling and other expectations related to wildfires

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F ,~ancial

Aogut;rtion

Department of Consumer

and Sus ness Services

350 Winter St. NE, Rm 410, PO Box 14480, Salem, OR 97309

503 947 7694

dfr.oregon.gov

Oregon Department of Consumer and Business Services

Division of Financial Regulation, Bulletin No. DFR 2021-5

To:

All property and casualty insurers

Date: October 26, 2021

RE:

Expediting claims handling and other expectations related to wildfires

Purpose

The purpose of this bulletin is to clarify the division’s expectations for property and casualty

insurers and provide guidance on expediting claims handling for Oregon policyholders affected

by wildfires.

Authority

•

ORS 731.870

•

2021 OR Laws CH 262 (Enrolled House Bill 3272)

Background

Wildfires in Oregon result in the loss of life and property, create imminent health and safety

risks, and cause widespread disruption to the normal course of business in many areas across

the state. In recent years, the governor of Oregon has issued executive orders declaring states

of emergency due to critical fire danger throughout Oregon pursuant to governor authority under

ORS 401.165.1

Under ORS 731.870, the director of the Department of Consumer and Business Services

(DCBS) may order all admitted insurers in Oregon to provide relief to insureds during a declared

state of emergency

In recent years, the governor of Oregon has issued executive orders declaring states

of emergency due to critical fire danger throughout Oregon pursuant to governor authority under

ORS 401.165.1

Under ORS 731.870, the director of the Department of Consumer and Business Services

(DCBS) may order all admitted insurers in Oregon to provide relief to insureds during a declared

state of emergency. DCBS issued emergency orders in the past, directing insurers to extend

reporting requirements for claims, provide grace periods for payment of insurance premiums

and other duties by insureds, and temporarily postpone any cancellations or nonrenewals for

policyholders in areas affected by wildfire.2

1 For example, see Oregon Gov. Kate Brown’s executive order declaring a state of emergency (EO No. 20-35),

issued Aug. 20, 2020. EO 20-35: https://www.oregon.gov/gov/Documents/executive_orders/eo_20-35.pdf. Also see

EO No. 21-17, issued June 29, 2021: https://www.oregon.gov/gov/Documents/executive_orders/eo_21-17.pdf.

2 Department of Consumer and Business Services, Wildfire Emergency Order, issued Sept. 18, 2020, can be found

at https://dfr.oregon.gov/insure/home/storm/Documents/wildfire-emergency-order-20200918.pdf. The

accompanying bulletin on affected areas subject to the Wildfire Emergency Order can be found at

https://dfr.oregon.gov/laws-rules/Documents/Bulletins/bulletin2020-16.pdf.

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The Oregon Legislature passed House Bill 3272 in the 2021 legislative session (HB 3272). HB

3272, assigned to 2021 OR Laws CH 262, provides minimum protections for homeowners who

suffer a loss as a result of a declared emergency.

The Division of Financial Regulation is providing the following guidance which supersedes

bulletin No. DFR 2020-18. It is directed to all property and casualty insurers and describes

reasonable measures to provide relief to Oregonians affected by wildfires.

Guidance

All property and casualty insurers should ensure compliance with the requirements set forth in

HB 3272, which became effective for policies issued or renewed on or after June 11, 2021.

Requirements include, but are not limited to:

o If the property is located in an area subject to a declared state of emergency and the

damage or loss is directly related to the declared emergency, allow a homeowner

insurance policyholder:

o Up to 24 months of additional living expenses (ALE), subject to policy limits.

o At least 24 months to repair, rebuild, or replace damaged property if the

insurance policy requires an insured to repair, rebuild, or replace damaged

property in order to collect full replacement cost.

o Additional six-month increments of ALE and time to repair, rebuild, or replace if

the homeowner encounters construction delays under certain circumstances (for

a total period of not more than either 24 or 36 months, whichever applies)

eplace damaged property if the

insurance policy requires an insured to repair, rebuild, or replace damaged

property in order to collect full replacement cost.

o Additional six-month increments of ALE and time to repair, rebuild, or replace if

the homeowner encounters construction delays under certain circumstances (for

a total period of not more than either 24 or 36 months, whichever applies).

o Not limiting or denying payment on the basis that the policyholder chose to

rebuild in a new location or to purchase an existing structure in a new location

when the insured structure was a total loss, subject to certain limitations.

o To combine payments for claims for damage to primary dwelling and other

structures under certain circumstances if policy limits on the residence are

insufficient.

o Offer policyholders at least every other year at time of renewal an estimated cost

to rebuild or replace the covered property, beginning July 1, 2022.

Since some sections of HB 3272 are effective only upon issuance or renewal of a policy, the

division encourages insurance carriers to provide these benefits to all insurance customers

over the next year, regardless of their renewal status.

In addition to the requirements of HB 3272, the division encourages all property and casualty

insurers to take these active measures to help people and businesses affected by wildfires:

•

Advance payments of loss of use, fair rental value, or ALE benefits

An advance payment of ALE recognizes the immediate need for financial support after

a wildfire disaster. Policyholders need access to ALE benefits to cover emergency

lodging, food, and other necessities as a result of wildfire damage making a home

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hese active measures to help people and businesses affected by wildfires:

•

Advance payments of loss of use, fair rental value, or ALE benefits

An advance payment of ALE recognizes the immediate need for financial support after

a wildfire disaster. Policyholders need access to ALE benefits to cover emergency

lodging, food, and other necessities as a result of wildfire damage making a home

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uninhabitable or inaccessible.

Insurers should adopt a standard ALE advance payment of at least four months for

insureds who experience a total loss or whose property is uninhabitable. Insurers

should consider any adverse circumstances that may require maintaining ALE benefits

for policyholders whose property remains inaccessible due to damage caused by the

wildfires once evacuation orders have been lifted.

Additionally, in areas where access to property is restricted, insurance companies

should not terminate ALE benefits until the property is accessible and deemed

habitable.

•

Expedite automobile property damage claims

Insurers should expedite payment of automobile property damage claims under

comprehensive coverage, upon satisfaction of proof. Insurers should provide relief to

policyholders through rental vehicle benefits or other benefits within the policy for

policyholders who are unable to access their property or provide proper documentation

for verification due to wildfires

bile property damage claims

Insurers should expedite payment of automobile property damage claims under

comprehensive coverage, upon satisfaction of proof. Insurers should provide relief to

policyholders through rental vehicle benefits or other benefits within the policy for

policyholders who are unable to access their property or provide proper documentation

for verification due to wildfires.

•

Inventory forms and itemization of certain types of property

Insurers should allow and accept any inventory form that contains similar information to

what would be reported using a company-specific form. Insurers are allowed to request

more information from the policyholder upon receipt of the inventory form.

Insurers should agree to accept an inventory form that includes groupings of categories

of personal and commercial property, including, but not limited to, clothing, shoes,

books, food items, business supplies, livestock supplies, or other categories of items that

would be impractical to list each individual item separately.

•

Expedite payments for business interruption claims

Insurers should expedite payment of business interruption claims related to wildfires

upon satisfaction of proof that the business suffered a total loss or is inaccessible.

This bulletin takes effect immediately and supersedes Bulletin No. DFR 2020-18.

________________________________

10/26/2021

Andrew R. Stolfi

Date

Insurance Commissioner and Director

Department of Consumer and Business Services

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