AB 1804, as introduced, Perea. Insurance: notice of lapse.
Existing law requires an insurance policy to specify certain information, including, but not limited to, the parties to the contract, the property or life insured, the risks insured against, the premium, and the coverage period.
This bill would prohibit an individual insurance policy covering real property, personal property, as described, liability, or health, issued or renewed on or after January 1, 2015, from being issued until the applicant has been given the right to designate at least one individual, in addition to the applicant, to receive the notice of lapse, termination, expiration, nonrenewal, or cancellation of the policy for nonpayment of the premium, as provided. The bill would prohibit an insurance policy from lapsing or being terminated for nonpayment of the premium unless the insurer, at least 10 days prior to the effective date of the lapse, termination, expiration, nonrenewal, or cancellation gives notice, as provided, to the insured and to the individual or individuals designated, if any, at the address provided by the insured for these purposes.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 396 is added to the Insurance Code, to
2read:
(a) An individual policy shall not be issued until the
4applicant has been given the right to designate at least one
5individual, in addition to the applicant, to receive the notice of
6lapse, termination, expiration, nonrenewal, or cancellation of a
7policy for nonpayment of the premium. Upon application for
8issuance of a policy, the insurer shall provide the applicant with
930 days to do one of the following:
10(1) Designate in writing the name, address, and telephone
11number of at least one individual, in addition to the applicant, who
12is to receive the notice of lapse, termination, expiration,
13nonrenewal, or cancellation for nonpayment of the premium.
14(2) (A) Provide a written waiver
signed and dated by the
15applicant electing not to designate additional persons to receive
16the notice of lapse, termination, expiration, nonrenewal, or
17cancellation for nonpayment of the premium.
18(B) The required waiver shall read as follows:
19
20“Protection Against Unintended Lapse, Termination, Expiration,
21Nonrenewal, or Cancellation.
22I understand that I have the right to designate at least one person
23other than myself to receive the notice of lapse, termination,
24expiration, nonrenewal, or cancellation of this insurance policy
25for nonpayment of the premium. I understand that notice will be
26given within 10 days after a premium is due and unpaid. I elect
27not to designate any person to receive the notice.
28Dated:____ Signature of Applicant:_____”
29
30(3) If after receiving notice from the insurer of the right to
31designate additional persons to receive the notice of lapse,
32termination, expiration, nonrenewal, or cancellation for
33nonpayment of the premium, the applicant fails to take action
34pursuant to either paragraph (1) or paragraph (2) within 30 days,
35the insured is deemed to have waived the right to designate those
36additional persons.
37(b) Notwithstanding subparagraph (C) of paragraph (2) of
38subdivision (a) of Section 791.13 or any other law, the insurer
P3 1shall retain and utilize as necessary the contact information
2provided in the written designation for the lifetime of the policy,
3and allow the insured to update the written designation if the
4insured so requests.
5(c) Not less than every two years, the insurer shall notify the
6insured in writing of whichever of
the following applies:
7(1)If an insured has previously provided a written designation
8pursuant to paragraph (1) of subdivision (a), the right to change
9the prior written designation by adding or deleting additional
10persons to receive the notice of lapse, termination, expiration,
11nonrenewal, or cancellation for nonpayment of the premium.
12(2) If the insured has previously waived the right to designate
13any persons pursuant to paragraph (2) of subdivision (a), to exercise
14the right to designate additional persons to receive the notice of
15lapse, termination, expiration, nonrenewal, or cancellation for
16nonpayment of the premium.
17(d) When the insured pays the premium for an insurance policy
18through a payroll or pension deduction plan, the requirements
19contained in subdivision (a) need not be met until 60 days after
20the insured is no longer on
that deduction payment plan. The
21application form for an insurance policy shall clearly indicate the
22deduction payment plan selected by the applicant.
23(e) An insurance policy shall not lapse or be terminated for
24nonpayment of the premium unless the insurer, at least 10 days
25prior to the effective date of the lapse, termination, expiration,
26nonrenewal, or cancellation, gives notice to the insured and to the
27individual or individuals designated pursuant to subdivision (a) at
28the address provided by the insured for purposes of receiving the
29notice of lapse, termination, expiration, nonrenewal, or cancellation
30for nonpayment of the premium. Notice shall be given by first-class
31United States mail, postage prepaid, within 10 days after the
32premium is due and unpaid.
33(f) This section applies to policies of insurance, other than
34workers’ compensation insurance, on risks located or
resident in
35this state that are issued and take effect or which are renewed after
36the effective date of this section and insuring any of the following
37contingencies:
38(1) Loss of or damage to real property that is used predominantly
39for residential purposes and that consists of not more than four
40dwelling units.
P4 1(2) Loss of or damage to personal property in which natural
2persons resident in specifically described real property of the kind
3described in paragraph (1) have an insurable interest, except
4personal property used in the conduct of a commercial or industrial
5enterprise.
6(3) Legal liability of a natural person or persons for loss of,
7damage to, or injury to, persons or property, but not including
8policies primarily insuring risks arising from the conduct of a
9commercial or industrial enterprise.
10(4) Disability and health insurance as defined in Section 106.
11(g) This section applies to policies that are issued and take effect
12or that are renewed on or after January 1, 2015.
O
99