California Fair Claims Settlement Practices Regulations (10 CCR 2695)

Title 10, California Code of Regulations, Sections 2695.1 through 2695.14 — commonly called the Fair Claims Settlement Practices Regulations — are the detailed rules that govern how every insurance company in California must handle your claim. They were promulgated by the Insurance Commissioner under the authority of Insurance Code Section 790.10 and carry the force and effect of law.

This is an important distinction. These are not guidelines or suggestions. They are binding administrative regulations adopted through California's formal rulemaking process under the Administrative Procedure Act (Government Code § 11340 et seq.). Courts treat them with the same authority as statutes. An insurer that violates these regulations is violating California law — and those violations can form the basis of a CDI complaint, evidence of bad faith, or both.

The regulations work hand-in-hand with Insurance Code Section 790.03(h), which lists prohibited unfair claims settlement practices. Where Section 790 says what insurers cannotdo in broad terms, 10 CCR 2695 fills in the operational details — specific deadlines, documentation requirements, disclosure obligations, and settlement standards. Think of Section 790 as the “thou shalt not” list and 10 CCR 2695 as the operating manual that tells the insurer exactly how to comply. For the full Section 790 analysis alongside these regulations, see our California Insurance Regulations reference page.

Regulatory Violations and Bad Faith: Understanding the Relationship

One of the most important things to understand about these regulations is their relationship to bad faith. A regulatory violation is not automatically bad faith — but it can be powerful evidence of it.

Under Moradi-Shalal v. Fireman's Fund Insurance Companies (1988) 46 Cal.3d 287, the California Supreme Court held that there is no private right of action directly under Insurance Code Section 790.03. You cannot sue your insurer solely for violating the statute or its implementing regulations. Instead, violations of the Fair Claims regulations serve as evidence in a claim for breach of the implied covenant of good faith and fair dealing — the legal theory behind every insurance bad faith case in California.

In Jordan v. Allstate Insurance Co.(2007) 148 Cal.App.4th 1062, the court confirmed that Fair Claims regulation violations are relevant and admissible evidence of bad faith. The regulations define the standard of conduct insurers must meet, and failure to meet that standard — even if it does not automatically equal bad faith — shows the insurer's general disregard for doing things correctly.

However, the Wilson v. 21st Century Ins. Co.(2007) 42 Cal.4th 713 “genuine dispute” doctrine provides insurers with some protection. Wilson held that an insurer is not liable in bad faith when it denies or delays benefits due to a genuine dispute as to coverage or the amount payable. But this protection has limits. In Chateau Chamberay Homeowners Assn. v. Associated International Insurance Co.(2001) 90 Cal.App.4th 335, the court held that the genuine dispute doctrine does not relieve an insurer from its obligation to thoroughly and fairly investigate a claim, and that an insurer is not entitled to the doctrine's protection where the adequacy of its investigation is in dispute. Many plaintiff attorneys argue, based on Chateau Chamberay, that an insurer cannot conduct a sloppy or biased investigation, arrive at a low number, and then invoke the genuine-dispute doctrine to defend it. Whether the doctrine applies in a specific case is a legal question for an attorney.

If You Do not Ask, You Do not Benefit: The Written Demand Principle

Many of the regulations below are only triggered when the insured takes a specific action — typically making a written request or demand. The insurer may be in technical compliance simply because no one asked them to do something they are required to do upon request. But the moment you make that request in writing, the clock starts, and any failure to comply becomes a documented regulatory violation.

This is one of the most important practical lessons in claims handling: the insured who puts things in writing creates leverage; the insured who only makes phone calls does not. Consider these examples:

• If you never request the name of a contractor who can do the repairs for the insurer's estimate, the insurer has no obligation to provide one. But if you make that request in writing citing §2695.9(d)(2), and they fail to respond within 15 days, you now have a documented violation of both §2695.9(d)(2) and§2695.5(b) (the 15-day response requirement).
• If an insured never asks the insurer for claim-related documents, the insurer is not required to send them proactively. The Fair Claims regulations give insureds defined rights to specific claim-related materials — for example, §2695.9(d) requires the insurer to supply a copy of any written scope or estimate the settlement is based on, §2695.7(b)(1) requires written denials to state the factual and legal bases, and §2695.4(a) requires affirmative disclosure of coverages. Once a written request for documents within these provisions is made, §2695.5(b) gives the insurer 15 calendar days to respond. Failure to respond within that window may be documented as a violation of §2695.5(b).
• If an insured never challenges the insurer's estimate, the insurer has no operational reason to change its number. But once a written demand is made under §2695.9(d)(2) for the name of a contractor who will do the work for the insurer's estimated amount, the regulation requires the insurer to respond. If the insurer cannot name a contractor at that amount, many plaintiff attorneys argue the estimate may not meet the trade-standards and local-market requirements in §2695.9(d). In practice, this kind of written demand often prompts the carrier to re-evaluate the estimate or schedule a reinspection — which is usually where additional payment shows up.

The principle works like this: a written demand either produces a meaningful response from the carrier — sometimes a concession, sometimes a reinspection, sometimes an adjustment to the estimate — or, if the insurer fails to comply, it creates a documented record that may support a CDI complaint or any future bad-faith analysis an attorney conducts. Either way, the demand serves the insured's interest. A request that is never made in writing produces neither result.

Section 2695.1 — Preamble and Scope

Explanation

The Preamble establishes several critical principles. First, a single knowing violationis enough — the insurer does not have to engage in a “pattern or practice” for a single act to constitute an unfair claims practice. Second, the regulations set minimum standards — any policy language that is less favorable to the insured than the regulations is unenforceable to that extent. Third, the insurer cannot hide behind third-party tools — if the tool produces an unfair result, the insurer is still responsible.

Real-World Examples

• The Xactimate defense.An insurer pays a claim based on an Xactimate estimate that uses incorrect local pricing, omits line items, or applies depreciation to labor. When challenged, the adjuster says “that is what Xactimate says.” Section 2695.1(g) provides:

  The fact that information, data or statistical methods used or relied upon by a licensee to process or establish the value of insurance claims is obtained through a third party source shall not absolve the licensee of its legal responsibility to comply with these regulations or to effectuate prompt, fair and equitable settlements of claims.

  In plain language: the insurer cannot deflect responsibility for an inaccurate claim valuation by pointing at Xactimate, a third-party vendor, or any software tool. The duty stays with the insurer regardless of which tool produced the number.

• Policy language less favorable than the regulations. Your policy says the insurer has 60 days to acknowledge your claim. The regulation says 15 days. The regulation controls — the insurer must meet the 15-day standard regardless of what the policy says.

How to Use This

When the insurer cites Xactimate, a third-party valuation service, or any external tool to justify a low estimate, respond in writing: “Per 10 CCR §2695.1(g), the use of a third-party source does not absolve you of your obligation to effectuate a prompt, fair and equitable settlement. Your estimate does not reflect actual local repair costs for the following reasons…” Then list the specific deficiencies. This shifts the burden back to the insurer to justify their number on the merits, not by pointing at a software program.

Section 2695.2 — Definitions

Explanation

The definitions section contains several terms with major practical significance. The definition of “proof of claim”is critical: it includes evidence the insurer already has from its own investigation. This means the 40-day clock to accept or deny your claim (in §2695.7) can start ticking based on the insurer's own adjuster's report — the insurer cannot stall by claiming it is “waiting for proof of claim” when its own files contain the evidence.

The definition of “knowingly committed” includes constructive knowledge — meaning the insurer cannot claim ignorance of facts it should have known through reasonable investigation. This ties directly to Chateau Chamberay — an insurer that conducts a sloppy investigation and then claims it did not know the extent of the damage is charged with the knowledge a proper investigation would have revealed.

Real-World Examples

• The “we are waiting for your proof of loss” stall. The insurer's own adjuster has inspected the property, taken photos, and written an estimate. Yet the insurer tells you they cannot make a decision because they have not received your sworn proof of loss. Under the definition of “proof of claim,” the insurer's own investigation data is proof of claim. The 40-day clock may already be running.
• Refusing to communicate with your PA.You designate a Public Adjuster in writing. The insurer's adjuster continues contacting you directly, ignoring your PA's calls and emails. Under the definition of “claimant,” your properly designated PA has the same communication rights as you do. The insurer's refusal to communicate with your representative is a violation.
• The adjuster who does not look.The adjuster inspects only the first floor but never enters the attic, crawlspace, or detached garage — all of which have damage. The adjuster denies those portions of the claim. Under the definition of “knowingly committed” (which includes constructive knowledge), the insurer is charged with the knowledge a thorough investigation would have produced.

How to Use This

If the insurer is stalling by demanding additional documentation when it already has enough information to make a decision, write: “Per the definition of ‘proof of claim’ in 10 CCR §2695.2(s), proof of claim includes evidence obtained by the insurer during its own investigation. Your adjuster inspected my property on [date] and prepared an estimate. The 40-day deadline under §2695.7(b) commenced no later than that date.”

Section 2695.3 — File and Record Documentation

Explanation

The insurer must maintain a complete, detailed paper trail — every phone call note, every email, every internal memo, every estimate version, every supervisor instruction. The five-year retention requirement means these records are available for CDI investigations and litigation long after the claim is closed.

Real-World Example

You request your claim file and discover internal notes showing the adjuster recommended paying $180,000, but a supervisor instructed the adjuster to reduce the estimate to $120,000 with no documented justification. These internal records — which the insurer is required to maintain — become powerful evidence in a bad faith case. In Gruenberg v. Aetna Insurance Co.(1973) 9 Cal.3d 566, the California Supreme Court established that the insurer owes a duty of good faith and fair dealing. Internal records showing a supervisor overriding a field adjuster's recommendation without justification is exactly the kind of evidence that demonstrates breach of that duty.

How to Use This

Request your complete claim file in writing.Cite §2695.3 and request all documents, notes, work papers, correspondence, internal emails, adjuster reports, supervisor notes, estimates (all versions), and photographs. The insurer must respond within 15 days under §2695.5(b). If they produce an incomplete file — missing internal notes or supervisor communications — that itself may be a violation. The claim file is the single most valuable discovery tool available to a policyholder short of litigation.

Section 2695.4 — Representation of Policy Provisions and Benefits

Explanation

Subsection (a) is one of the most important and most frequently violated regulations in the entire code. The insurer must affirmatively identify every coverage that may apply to the claim. The duty rests with the insurer; an insured does not have to ask for the carrier to be in compliance. As a practical matter, though, a written request from the insured creates a clear record of what was asked and what the insurer disclosed — which is often what makes any later non-disclosure provable.

Subsection (f) prohibits “full and final settlement” language on partial payment checks. If the insurer sends a partial payment with release language, that language is unenforceable unless you have expressly agreed to a compromise or the policy limit has been exhausted.

Real-World Examples

• Failure to disclose coverages. After a total loss fire, the insurer processes your dwelling claim but never mentions ordinance or law coverage, debris removal coverage beyond the basic dwelling limit, extended replacement cost, or the separate Coverage B (other structures) limit. Months later you discover these coverages existed. The insurer violated §2695.4(a) from day one. In a bad faith context, failing to tell you about coverages you are paying for is precisely the kind of conduct Gruenberg addresses — the insurer placed its financial interest above its duty to the policyholder.
• Broad release on a partial payment.You settle the dwelling portion of your claim for $200,000, but the insurer's release form says you are releasing “any and all claims arising from the loss.” You still have an open contents claim and an ALE claim. Under §2695.4(e), the insurer must explain the legal effect of this broad release in writing before you sign. And under §2695.4(f), release language on a partial settlement check is unenforceable if you did not agree to compromise the remaining coverages.
• The “full and final” check.You receive a check for $75,000 with “full and final payment” printed on it, but you believe your claim is worth $150,000 and you never agreed to settle. This violates §2695.4(f). See our guide on insurance checks for what to do.

How to Use This

Early in your claim, send a written request: “Per 10 CCR §2695.4(a), please identify all benefits, coverages, time limits, and policy provisions that may apply to my claim, including but not limited to: Coverage A (dwelling), Coverage B (other structures), Coverage C (personal property), Coverage D (loss of use), ordinance or law coverage, debris removal, extended replacement cost, and any other applicable endorsements.” If the insurer fails to respond or omits coverages, the written request creates a documented record. The affirmative disclosure duty under §2695.4(a) exists regardless of whether the insured asks; what the written request adds is provability — a clear paper record of what was requested and what the carrier disclosed (or did not).

Section 2695.5 — Duties Upon Receipt of Communications

Explanation

The 15-day response rule(§2695.5(b)) is one of the most frequently violated and most useful regulations. It applies to everycommunication from a claimant that reasonably suggests a response is expected. Each email, letter, or voicemail that asks a question, requests information, or submits documentation may trigger the 15-calendar-day response obligation. Continued non-response past the 15-day mark may be treated as an ongoing violation that supports a CDI complaint or future bad-faith analysis.

The 15-day acknowledgment deadline(§2695.5(e)) starts the moment you file your claim. The insurer has 15 days to acknowledge it, tell you what they need, and begin investigating. An insurer that takes three weeks to assign an adjuster has already violated this regulation.

Real-World Examples

• The silent adjuster.You send your contractor's estimate to the adjuster by email on March 1. By March 20, you have received no response. That is a violation of §2695.5(b). You send a follow-up on March 21 noting the missed deadline. By April 5, still no response — that is now a second violation (of the follow-up communication). Each unanswered communication is a separate, documentable violation.
• Slow claim acknowledgment. You file your claim on January 15 after a pipe burst. On February 10 — 26 days later — you finally receive a letter acknowledging the claim. The insurer violated the 15-day deadline by 11 days.
• Agent delay imputed to insurer.You report a fire loss to your insurance agent on Monday. The agent does not transmit the claim to the carrier until the following Friday. Under §2695.5(e)(1), the agent's delay is imputed to the insurer — the 15-day clock started Monday, not Friday.

How Some Policyholders Use This

Many policyholders keep a communication log.Every communication sent to the insurer is logged with the date and what was sent. If 15 calendar days pass without a response, a follow-up letter is one option some policyholders use, along these lines: “On [date], I sent [description]. Per 10 CCR §2695.5(b), a response was due within 15 calendar days. No response has been received. This may constitute a regulatory violation. Please respond immediately.” In our experience, this approach accomplishes two things: it tends to get the insurer's attention, and it creates a paper trail that may support a future CDI complaint or any bad-faith analysis an attorney later conducts.

Section 2695.6 — Training and Certification

Explanation and How to Use This

Every adjuster who handles your claim — including independent adjusters brought in after a catastrophe from other states — is required to have been trained on these regulations and to have certified under penalty of perjury that they understand them. When an adjuster tells you “we do not have to do that” or “that is not how it works in California,” they are either violating this regulation (by being insufficiently trained) or they are knowingly misrepresenting the regulations to you (which is itself a violation of §790.03(h)(1) — misrepresenting policy provisions). After a major wildfire, when carriers bring in hundreds of out-of-state adjusters, this regulation is particularly relevant. “My adjuster did not know the rule” is not a defense — it is a separate violation.

Section 2695.7 — Standards for Prompt, Fair and Equitable Settlements

This is the longest and most important section of the regulations. It contains 17 subsections (a through q). Each property-relevant subsection is addressed below with the regulation text, explanation, examples, and practical guidance.

§2695.7(a) — Anti-Discrimination

Explanation: Every claim must receive the same investigation and settlement standards regardless of who the claimant is or where the property is located. A claim in a lower-income neighborhood must receive the same level of attention as one in a wealthy area. A non-English-speaking claimant must receive the same treatment as an English speaker.

How to use this: If you observe that the insurer is providing lesser service — longer delays, less thorough investigations, lower estimates — in certain communities, this regulation provides a basis for a CDI complaint and may support a broader pattern-and-practice investigation.

§2695.7(b) — 40-Day Accept/Deny Deadline

Explanation:Once the insurer has proof of your loss — from your submissions or its own investigation — they have 40 calendar days to decide. A vague denial that says “claim denied — insufficient documentation” without citing the specific policy exclusion, the factual basis, and the CDI's contact information fails the regulatory standard on multiple grounds. Every denial must tell you exactly why, cite the exact policy language, explain how it applies, and tell you how to contact the CDI.

Real-world example:Your insurer denies your water damage claim with a one-paragraph letter stating: “After review, we have determined this loss is not covered under your policy.” This denial violates §2695.7(b)(1) in multiple ways: it does not list all bases for denial, does not cite the specific exclusion, does not provide the factual basis, and does not include CDI contact information. In Brizuela v. CalFarm Ins. Co.(2004) 116 Cal.App.4th 578, the court found that an insurer's failure to adequately explain a denial was relevant evidence of bad faith.

How to use this:If you receive a deficient denial, respond in writing: “Your denial letter of [date] does not comply with 10 CCR §2695.7(b)(1). It fails to identify the specific policy provision, condition, or exclusion relied upon; fails to provide the factual basis for each reason; and fails to include CDI contact information. Please provide a compliant denial letter within 15 days per §2695.5(b).” This either forces a proper explanation (which may reveal the denial is weak) or creates another documented violation.

§2695.7(c) — 30-Day Written Status Updates

Explanation: The insurer cannot leave the claim in limbo. Each 30-day period that passes without a written status update may be treated as a separate violation under §2695.7(c).

Real-world example: Your wildfire claim has been open for six months. You received one status letter in month two and nothing since. That is potentially four separate 30-day violations — each one individually documentable in a CDI complaint.

How to use this:After 30 days without an update, write: “Per 10 CCR §2695.7(c)(1), you are required to provide written status updates every 30 calendar days. The last written status was dated [date], more than 30 days ago. Please provide a written status update immediately, including any additional information you require and the reasons for the continued delay.”

§2695.7(d) — Thorough, Fair and Objective Investigation

Explanation: This is a two-sided regulation. The insurer must investigate thoroughly — but it also cannot demand unnecessary information as a delay tactic. The investigation must be objective, not designed to support a predetermined outcome.

Real-world example and case law:The insurer sends a forensic engineer to inspect your fire-damaged roof. The engineer spends 20 minutes on-site, looks at two small areas, and writes a report attributing all damage to “pre-existing wear and tear.” Your contractor, who spent two full days on the property, documents extensive fire damage in areas the engineer never inspected. Under Chateau Chamberay(2001) 90 Cal.App.4th 335, the genuine dispute doctrine does not protect an insurer whose investigation was unreasonable. An insurer cannot conduct a 20-minute inspection, ignore contradicting evidence, and then claim the resulting low estimate is a “genuine dispute.” See our guide on defeating carrier engineer reports and the insurer's duty to investigate.

How to use this:When the insurer's investigation is superficial, document the deficiencies in writing: “Your adjuster spent approximately [X] minutes on the property and did not inspect [list areas]. Per 10 CCR §2695.7(d), you are required to conduct a thorough, fair and objective investigation. The following areas of damage were not inspected: [list]. I request a reinspection that includes all damaged areas.”

§2695.7(e) — No Delay Based on Other Parties

Explanation:Your insurer cannot tell you to “go after the other guy first.” If your neighbor's tree fell on your house and you have coverage, your insurer must pay — their right to subrogate does not delay their obligation to pay you.

How to use this:If your insurer says “you should file a claim against your neighbor's insurance,” respond: “Per 10 CCR §2695.7(e), you may not delay or deny settlement of my first party claim on the basis that responsibility should be assumed by others. I am filing this claim under my own policy. Please process it accordingly.”

§2695.7(f) — Statute of Limitations Notice

Explanation and case law: An insurer that silently waits for a deadline to pass and then denies your claim as time-barred has committed one of the most clear-cut bad faith violations possible. This regulation reflects the principle established in cases like Egan v. Mutual of Omaha(1979) 24 Cal.3d 809 — the insurer has a duty of good faith that includes affirmatively protecting the insured's interests, not laying traps. See our guide on equitable tolling for how the statute of limitations works in insurance disputes.

How some policyholders use this:Many policies contain a one-year suit limitation provision, and certain statutes of limitation may also apply depending on the legal theory involved — CCP §339(1) is sometimes cited in this area. Identifying which statute(s) of limitation apply to a specific claim is a legal question for an attorney, not a public adjuster.That said, §2695.7(f) places the disclosure burden on the insurer. Some policyholders write to the carrier with language like: “Per 10 CCR §2695.7(f), please identify in writing any statute of limitation or time period requirement that may apply to my claim and the applicable expiration dates.” The point is to obtain the carrier's own written identification of any deadlines it intends to rely on, so the insured and the insured's attorney can evaluate them.

§2695.7(g) — Prohibition on Unreasonably Low Offers

Explanation and case law: This is the regulation behind lowball offers. The standard is objective: would “a reasonable person with knowledge of the facts and circumstances” have offered this amount? Under Insurance Code §790.03(h)(5), failing to attempt in good faith to effectuate a prompt, fair settlement when liability is reasonably clear is a statutory violation. Under §790.03(h)(6), compelling the insured to institute litigation by offering substantially less than the amount ultimately recovered is also prohibited. Together with §2695.7(g), these provisions create a powerful framework against lowball tactics.

Real-world example:You submit a contractor estimate for $175,000. The insurer offers $65,000 with no explanation of why your contractor's estimate is wrong — no competing line items, no analysis, just a lower number from their software. Under §2695.7(g), the Commissioner would look at whether the insurer considered your evidence (it ignored your contractor's estimate) and whether the procedures used were reasonable (running Xactimate with below-market pricing is not a reasonable procedure when local contractors are bidding 2.5x higher).

How to use this:When you receive a lowball offer, respond in writing with your competing evidence: “Your settlement offer of $[X] is unreasonably low under 10 CCR §2695.7(g). I have submitted written estimates from [number] licensed contractors totaling $[Y]. Your offer does not address or rebut the specific line items in my contractors' estimates. A reasonable person with knowledge of local repair costs would not have offered $[X] for this scope of damage.”

§2695.7(h) — 30-Day Payment Deadline After Acceptance

Explanation: Once the insurer agrees to pay — even a partial amount — they have 30 days to write the check. They cannot hold undisputed amounts hostage while other portions of the claim are still being evaluated. If they accepted your dwelling claim for $200,000 but are still working on contents, the $200,000 must be paid now.

How to use this:If the insurer has accepted all or part of your claim and 30 days pass without payment, write: “On [date], you accepted my [coverage] claim in the amount of $[X]. Per 10 CCR §2695.7(h), payment was due within 30 calendar days. [X] days have elapsed without payment. Please tender payment immediately.”

§2695.7(i) — No False Urgency on Forms

Explanation:The insurer cannot create artificial urgency — telling you “you must sign this release within 10 days or you'll lose your rights” — unless there is an actual legal deadline. This prevents pressure tactics designed to rush claimants into signing unfavorable settlements.

How to use this:If the insurer imposes an artificial deadline on a release or form, respond: “Per 10 CCR §2695.7(i), you may not inform me that my rights will be impaired if this form is not completed by [date] unless that deadline is based on an applicable statute of limitations or policy provision. Please identify the specific statute or policy provision that establishes this deadline.”

§2695.7(k) — Extended Timeline for Suspected Fraud

Explanation: The insurer gets extra time only with genuine, documented fraud suspicion — not a vague hunch. If the insurer is using fraud referral as a pretext to delay a legitimate claim, that is itself a violation. The abuse of SIU referrals to delay claims is a recognized bad faith tactic. See our guide on SIU investigations.

How to use this:If your claim is sent to SIU without apparent justification, write: “I understand my claim has been referred to your Special Investigations Unit. Per 10 CCR §2695.7(k), extension of the 40-day deadline requires a reasonable basis supported by specific information. Please identify the specific information that supports a fraud investigation, or confirm that the 40-day deadline in §2695.7(b) remains in effect.”

§2695.7(l) — Denials Must Be Based on Documented Evidence

Explanation:If the adjuster denies part of your claim based on “a contractor I spoke to said the damage is pre-existing,” that conversation must be documented in the file — the contractor's name, the date, and what was said. Undocumented verbal evidence cannot be the basis for a denial.

How to use this:When the insurer cites verbal information in a denial, request documentation: “Your denial references information obtained from [source]. Per 10 CCR §2695.7(l), this information must be documented in the claim file. Please provide a copy of the documentation, including the date of the communication and the identity of the source.”

§2695.7(o) — No Retaliation for CDI Complaints

Explanation and how to use this:The insurer cannot condition your settlement on dropping a CDI complaint. If an adjuster says “we'll settle if you withdraw your complaint,” that statement itself is a violation you should immediately document and report to the CDI. You have an absolute right to file and maintain a CDI complaint regardless of settlement status.

§2695.7(p)–(q) — Subrogation and Deductible Recovery

Explanation: If someone else caused your damage, the insurer must tell you whether it will pursue that party. If it does, your deductible must be included, and any recovery is shared proportionately — the insurer cannot recover its full payout first and leave you with nothing.

How to use this:If a third party caused your loss, write: “Per 10 CCR §2695.7(p), please advise in writing whether you intend to pursue subrogation against [responsible party]. If you do not intend to pursue subrogation, please confirm that any recovery is my responsibility so that I may take appropriate action to recover my deductible and uninsured losses.”

Section 2695.9 — Additional Standards for Residential and Commercial Property

This section contains property-specific standards that supplement the general requirements in §2695.7. These are the rules that apply specifically to your homeowner, renter, condo, or commercial property insurance claim — and they contain some of the most powerful tools available to policyholders.

§2695.9(a) — Replacement Cost and Matching

Explanation:Subsection (a)(1) requires the insurer to pay for “tear-out” — the damage caused by making repairs. If the plumber cuts through drywall and tile, repairing the drywall and tile is part of the covered loss. Subsection (a)(2) is the matching regulation — if new materials do not match existing undamaged materials in the same area, the insurer must replace enough to achieve a uniform appearance.

Real-world example:Your kitchen has hardwood flooring throughout. A water loss damages 30% of the floor. The insurer replaces the damaged section, but the new wood does not match the existing floor in color or grain pattern — even after staining. Under §2695.9(a)(2), the insurer must replace the entire kitchen floor to achieve a reasonably uniform appearance. See our guide on matching disputes.

How to use this:When the insurer proposes a partial repair that will not match, write: “Per 10 CCR §2695.9(a)(2), when replaced items do not match the existing items in quality, color, or size, you are required to replace all items in the damaged area to conform to a reasonably uniform appearance. The proposed partial replacement of [describe] will not match the existing [describe] in [color/size/quality]. I am requesting replacement of the entire [area] to achieve a uniform appearance as required by the regulation.”

§2695.9(b)–(c) — Right to Choose Your Own Contractor

Explanation:You have the absolute right to choose your own contractor. The insurer cannot require their preferred vendor or “managed repair” program. If the insurer recommends a contractor, they must first tell you in writing that you can choose someone else. If you use the insurer's contractor and the work is substandard, the insurer guarantees it.

Real-world example:Your insurer says: “We have a preferred vendor network. We can only guarantee payment if you use one of our contractors.” This is a violation of §2695.9(b). The insurer cannot require you to use a specific contractor, and implying that payment depends on using their vendor is coercive. See our guides on choosing your contractor and right to repair clauses.

How to use this:If the insurer pressures you to use their contractor, write: “Per 10 CCR §2695.9(b), you may not require me to have my property repaired by a specific individual or entity. I will be selecting my own licensed contractor. Please process my claim accordingly.”

§2695.9(d) — The Contractor Name Requirement: The Most Powerful Tool for Property Policyholders

Why This Regulation Changes Everything

In our experience, this is one of the most effective regulations available to property policyholders in California. It works because it tests whether the insurer's estimate can survive contact with the actual repair market — by asking the insurer to name a contractor who will perform the work for the estimated amount.

Here is how it works in practice: The insurer's adjuster — or a contractor hired by the insurer — writes an estimate for $80,000 to repair your fire-damaged home. You look at that estimate and you know the work cannot be done for that amount. You send a written demand: “Per 10 CCR §2695.9(d)(2), provide me with the name of a licensed contractor who will perform the repairs described in your estimate, to accepted trade standards for good and workmanlike construction, for $80,000.”

The §2695.9(d) leverage rests on two independent requirements in the regulation.The first is in §2695.9(d)'s opening paragraph: the insurer's estimate itself must be “of an amount which will restore the damaged property to no less than its condition prior to the loss” using “accepted trade standards for good and workmanlike construction,” and the insurer must take reasonable steps to verify that repair costs are “accurate and representative of costs in the local market area.” If no licensed contractor will do the scope for the insurer's number, many plaintiff attorneys argue the estimate may not meet that standard on its face — and an insured may have grounds to challenge it even without producing a separate written estimate.

The second is the §2695.9(d)(1)–(3) framework, which is triggered when the claimant does submit a written estimate showing higher costs. At that point the carrier has three options: pay the difference, name a contractor who will do the work for the insurer's number, or reasonably adjust the claimant's estimate.

In our experience, the insurer rarely produces a contractor. The estimate was usually generated by an adjuster using software, or by a contractor who wrote it for the carrier but has no intention of actually performing the work. Reputable licensed contractors do not agree to do repairs for a number that does not reflect actual construction cost in the local area.

When the insurer cannot produce a contractor at its number, many plaintiff attorneys argue the estimate may not satisfy the trade-standards and local-market requirements in §2695.9(d). In practice, this is often the point at which the carrier agrees to a reinspection or to adjust the estimate — which is usually where additional payment shows up.

Real-World Results

In our experience, this regulation is used routinely by experienced Public Adjusters to support settlement increases — often by tens of thousands of dollars, and on large residential claims sometimes much more. The pattern we see is consistent: the insurer writes a low estimate, the contractor-name demand is sent, the insurer cannot produce a contractor who will do the work at that number, and the carrier often agrees to a reinspection or to adjust the estimate. Having a competing contractor estimate strengthens the demand. In our experience, the written demand itself — backed by the regulation's trade-standards and local-market requirements — is often what creates the leverage.

The regulation also addresses the insurer's estimate quality independently. The first sentence requires the estimate to be “accurate and representative of costs in the local market area.” Many plaintiff attorneys argue that an insurer using Xactimate with default pricing that does not reflect Bay Area, Los Angeles, or other California local market costs may not satisfy this requirement — even before anyone challenges the estimate.

Key point: This regulation requires you to take action. You need to make the written demand. If you never request a contractor name, you cannot benefit from this regulation. The insured who makes the written demand gets the settlement increase. The insured who accepts the insurer's number without challenging it gets the insurer's number. This is the clearest example of the principle: if you do not ask, you do not benefit.

§2695.9(e) — Appraisal Process Limitations

Explanation: The appraisal process follows Insurance Code §2071 — nothing more, nothing less. The insurer cannot inject additional procedures like demanding an EUO as a prerequisite. You retain the right to pursue separate legal action on coverage issues.

How to use this:If the insurer attempts to delay or condition appraisal on additional proceedings, write: “Per 10 CCR §2695.9(e), the appraisal process shall not include any legal proceeding or procedure not specified under Insurance Code Section 2071. Your requirement of [describe additional procedure] is not authorized under the appraisal provision. Please proceed with appraisal as provided in the policy.”

§2695.9(f) — Depreciation Standards and the Labor Depreciation Prohibition

Explanation

This section contains two crucial requirements. First, every depreciation deduction must be individually justified— not applied as a blanket percentage. The insurer cannot say “we depreciated everything 30%.” Each item must be depreciated separately, specified as a dollar amount, and explained in writing.

Second — and this is one of the most commonly violated regulations — labor cannot be depreciated on California property claims. The only exception is labor “intrinsic” to manufactured materials (factory labor in a pre-made cabinet, for example). Field labor — the roofer, carpenter, painter, electrician, demolition crew — cannot be depreciated. Period.

Real-World Example

Your insurer writes a replacement cost estimate of $200,000 for your fire damage. The ACV (actual cash value) payment depreciates the total by 25%, paying you $150,000 as the initial check. But buried in the depreciation calculation, the insurer applied 25% depreciation to everything— including $80,000 in labor costs (demolition, framing, roofing installation, painting, cleanup). Under §2695.9(f)(1), the $80,000 in labor should not have been depreciated at all. The correct ACV depreciation should have been applied only to the $120,000 in materials, producing an ACV payment of $170,000 — a $20,000 difference.

On large claims, the labor depreciation violation can mean $30,000, $50,000, or more in wrongfully withheld funds. See our detailed guide on labor depreciation.

How to Use This

Review the insurer's ACV estimate line by line. Identify every line item where depreciation is applied to labor. Then write: “Per 10 CCR §2695.9(f)(1), the expense of labor necessary to repair, rebuild or replace covered property is not a component of physical depreciation and shall not be subject to depreciation or betterment. Your ACV calculation applies depreciation to the following labor costs: [list items and amounts]. Please recalculate the ACV payment excluding labor from depreciation and issue a supplemental payment for the difference.”

Section 2695.12 — Penalties

How This Affects You

These factors govern CDI enforcement decisions. Understanding them helps you build a stronger CDI complaint. The most impactful factors are: whether management was aware (showing the violations were not just one rogue adjuster), previous violations (the insurer's track record), and the degree of harm (the financial impact on you). When documenting violations, frame them in terms of these factors.

In litigation, many of the same factors that drive CDI penalty decisions can also influence a jury's damages analysis. Under Egan v. Mutual of Omaha, the California Supreme Court held that bad-faith conduct that is oppressive, fraudulent, or malicious may support punitive damages. Many plaintiff attorneys treat a documented record of regulatory violations — especially where management was aware — as supportive evidence in any punitive-damages analysis. Whether punitive damages are available in a specific case is a determination for the courts and attorneys involved.

Sections 2695.13–2695.14 — Severability and Compliance

§2695.13 (Severability): If one section is struck down, the rest remain in force.

§2695.14 (Compliance Date): Insurers have 90 days to comply with amendments. The regulations apply to all claims handling after the compliance date — not just claims filed after that date. If you have an existing claim and the regulations are amended, your insurer must comply with the new requirements on your existing claim.

Putting It All Together

These regulations are not abstract legal theory. They are practical tools that policyholders and public adjusters use to advance claims. A common framework looks like this:

1. Written demands, citing the regulation. Carriers rarely volunteer compliance. Many policyholders make every meaningful request in writing, citing the specific section number. In our experience, a written demand either prompts a substantive response — sometimes a concession, sometimes a reinspection — or it creates a documented record that may support a CDI complaint or any future bad-faith analysis.
2. Track every deadline. From the moment a claim is filed, a simple log tracking dates against the 15-day, 40-day, and 30-day deadlines builds a record. Each missed deadline may be a separately documentable violation.
3. The contractor-name requirement.Once the insurer produces an estimate, an insured may request — under §2695.9(d)(2) — the name of a contractor who will do the work for that amount. Having a competing contractor estimate strengthens the request, but the trade-standards and local-market requirements in §2695.9(d)'s opening paragraph give an insured independent grounds to challenge the estimate even without one.
4. Labor depreciation. Many insureds review the ACV calculation line by line. Where labor is depreciated, citing §2695.9(f)(1) and requesting correction is a common approach — and the math here is straightforward: labor on field repairs is not subject to depreciation in California.
5. Documents the insurer is required to provide. The Fair Claims regulations give insureds specific document rights — for example, §2695.9(d) requires the insurer to supply a copy of any written scope or estimate the settlement is based on; §2695.7(b)(1) requires written denials to state the factual and legal bases. A written request under §2695.5(b) starts the 15-day response clock for these materials.
6. Document violations for the future. Even where a single violation does not amount to bad faith, a pattern of violations — especially with documented written demands that went unanswered — is the kind of record many plaintiff attorneys point to under Jordan v. Allstate when evaluating bad faith, and under Egan v. Mutual of Omaha when evaluating potential punitive damages. The real value of this documentation usually shows up later, if the dispute escalates to litigation.
7. File CDI complaints when warranted.Cite specific regulation numbers, dates, and facts. A complaint that references “violation of 10 CCR §2695.7(b) — failure to accept or deny within 40 days of proof of claim submitted on [date]” carries far more weight than “my insurer is being unfair.” See our guide on filing a CDI complaint.