California May Limit How Insurers Can Use Aerial Photos of Policyholders’ Homes | Insurify

Insurance policy non-renewals, rejections, and rate increases stemming from drone-taken aerial photos have plagued California's home insurance market for years.

And now state legislators are seeking to regulate the practice.

Assembly Bill 75, which Assemblymember Lisa Calderon proposed in March, requires insurers to notify homeowners if they take aerial photos, supply the photos upon request, and limit how those images can be used in policy decisions.

Ricardo Lara, California's insurance commissioner, supports the bill.

"[The bill] will increase transparency, protect privacy, and give consumers a fair chance to dispute inaccurate or outdated images that could wrongly impact their insurance coverage," he said in a press release.

Roofing assessments affect present and future policies

"The age and condition of the roof will be a driving factor for eligibility and pricing," according to Buddy Parkhurst, an insurance agent with Insurify.

And insurers are increasingly using aerial images instead of in-person inspections to evaluate a roof's condition, set rates, and non-renew or reject policies.

For insurers, the practice stems from a desire to better assess risk.

"Solely relying on practices such as in-person home inspections can limit an insurer's ability to effectively assess risk," Verisk, a risk analytics company, wrote in a recent roof report. "Limited roof visibility from the ground level can cause inspectors to miss signs of damage … [and] inhibit insurers from adopting more up-to-date pricing, coverage and risk management strategies."

But while aerial photos may make sense for insurers, critics of the practice have other concerns.

"The California Department of Insurance has investigated numerous complaints where flawed aerial imagery led to wrongful cancellations or nonrenewals," Lara said in a press release. "In several cases, insurers used imprecise drone or satellite photos to assess roof conditions, resulting in policies being incorrectly dropped due to erroneous data."

And preventing dropped policies can have long-term benefits for homeowners going forward.

"A non-renewal can affect your eligibility with other insurers," said Katie Walters, an Insurify insurance agent. "Especially if your roof was the cause."

Giving homeowners input on policy decisions

Bill 75 specifies "an admitted insurer [must] notify a residential property insurance policyholder that aerial images will be taken or obtained of the insured property."

But a notice isn't required if an insurer takes photos from ground level to assess a claim.

The bill also specifies that insurers can't make policy decisions using an aerial image older than 45 days unless the problem is persistent and verified by an in-person inspection.

Additionally, if an insurer wants to cancel a policy or non-renew based on aerial photos, it has to send the images to the homeowner along with an explanation of why the policy is being canceled.

The homeowner then has until the effective policy change date to remedy the problem.

What's next: Following in other states' footsteps

Assembly Bill 75 currently sits with the California Assembly's Committee on Privacy and Consumer Protection.

California isn't the only state trying to address roof imaging. Last March, the Massachusetts and Connecticut divisions of insurance outlined guidance and regulations for insurers and consumers. Pennsylvania also issued a bulletin last year regulating aerial images.

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