California Senate Finance Committee Passes Surcharge Bill


A bill has been passed by the The California Senate Banking, Finance and Insurance Committee that includes within it a surcharge to be imposed on commercial and residential fire and multi-peril insurance policies. The surcharge of 4.8% would be used to help the state create an Emergency Response Fund as part of the California State Treasury.

The state of California already has an established California Emergency Management Agency to handle emergency and disaster response service, including those activities which may be necessary to “…prevent, respond to, recover from and mitigate the effects of…” emergencies and disasters to both people and property. The bill , SB 1258, requires that monies be deposited into the Emergency Response Fund, which would then be allocated to the program. The bill also requires the Secretary of California Emergency Management to control the allocation of funds to specific organizations or entities in order to sustain or enhance fire and rescue disaster “mutual aid capacity” to fight the effect of all hazard disasters.

The surcharge, designated as a “special purpose surcharge” imposed on insurers will apply to all policies with combined property and liability coverage that are issued or renewed from July 1, 2010 forward.
The Governor’s office has estimated that monies generated by the surcharge will total $238 million this year, and roughly $480 million/year from 2011 on.

The bill is scheduled to be heard in the Senate Appropriations Committee.

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