Under Commissioner Steve Poizner the regulation was developed and then Commissioner Dave Jones issued the regulation to address analleged problem met by some homeowners whose homes were underinsured when the Oakland Hills and other fires damaged or wreckedtheir homes.

According to Commissioner Jones, the reason behind all this trouble is because the replacement cost estimates from the homeowner's insurers forgot to includeimportant elements of the cost to reconstruct their homes.

"In an attempt to offer artificially low premiums and compete unfairly for business, insurers removed certain elements of the actual estimated-replacement, which left homeowners without sufficient coverage to rebuild their homes," Jones alleges.

 "Regulation requires home insurers when providing a replacement-cost estimate to provide a complete estimate of the cost of replacing a home so homeowners know how much insurance they should buy,"Jones added.

Insurers charged the commissioner to block the regulation, alleging that the Department lacked authority to promulgate the regulation.

The Association of California Insurance Companies (ACIC) and the Personal Insurance Federation of California (PIFC) see the case as an instance of a risingstyle where watchdogs get the better of their decrees.

According to the groups, this supervisory overreach trend is driving up expenses for insurers and their customers in addition to harming insurers' capacity to efficiently serve their customers.

Adopted in 2010,the regulation, went into effect in 2011. It creates specific requirements governing replacement-cost estimates. It also decreed that any estimate not compliant to those requirements will be consideredanambiguousstatement in violation of the Unfair Insurance Practices Act.

"The Attorney General's office noted that the Department of Insurance is expressly authorized to issue regulations to protect consumers, and this regulation falls within that express authority as well as within the authority of a long line of cases supporting rulemaking by governmental agencies like the California Department of Insurance," Jones said in a statement.