SECTIONS 570-572 - California Statutes

INSURANCE CODE

SECTION 570-572

570. Except in the event that the insurer has previously obtained a
release on a loss, each insurer which issues, amends, or renews, on
or after January 1, 1975, a policy of insurance covering repair or
reconstruction work on commercial, industrial, or residential real
property and appurtenances thereon, shall, in the event of covered
work being performed by a licensee under the Contractors License Law
(Chapter 9 (commencing with Section 7000) of Division 3 of the
Business and Professions Code), make payment by check or draft
directly to the contractor performing the work, or, with the consent
of the contractor, by an electronic funds transfer to the contractor
performing the work, and not to the owner of the property, in every
case in which all of the following conditions are present and the
insurer has actual knowledge thereof:
(a) The property owner of record has, in a writing signed by him
and transmitted to the insurer, stated all of the following:
(1) The work completed meets with his satisfaction.
(2) The insurer, upon direct payment to the contractor, is
released from liability.
(3) The writing was not completed or signed by him until after all
work was completed.
(b) The property owners of record, the named insured, and any loss
payee have consented in writing to such direct payment and release
from liability.
(c) The completed work has been certified by the appropriate
public agency or authority as conforming to existing building,
electrical, and construction codes.
(d) Each subcontractor of the contractor, and each materialman, to
whom direct payment is to be made by the insurer has executed, and
filed of record, releases of any and all claims, including, but not
limited to, mechanic's liens, which the subcontractor and materialman
might have against the property or any appurtenance thereof, the
property owners of record, the named insured, and any loss payee
named in the policy, for any work the subcontractor performed, or
material the materialman furnished, upon the property under the
contract for which such payment is being made. The property owner or
the contractor, as the case may be, shall submit to the insurer
proof, satisfactory to it, of such execution and filing prior to the
insurer's making any direct payment provided for by this article.

571. Where the insurer has authorized the work and its liability is
not in dispute, the direct payment provided for by Section 570 shall
be made to the contractor performing the work not later than 30 days
after the insurer has actual knowledge that the conditions of
subdivisions (a) through (d) of Section 570 have been completed.

572. As used in this article, the term "loss payee" shall include,
but not be limited to, any mortgagee of the insured real property.