California Mandates 60-Day Premium Grace Period, State Agencies Follow with Additional Policyholder Protections
California Insurance Commissioner Ricardo Lara issued a Notice requesting that all insurance companies provide their policyholders with at least a 60-day grace period to pay insurance premiums
Commissioner Lara also urged uninsured Californians and those who have lost coverage due to COVID-19 to purchase health coverage through Covered California during a new special enrollment period
These steps are part of a nationwide trend of state regulatory agencies taking steps to mitigate the financial burden placed upon insureds during the COVID-19 pandemic
On March 18, 2020, in response to the evolving coronavirus pandemic, California Insurance Commissioner Ricardo Lara issued a Notice requesting that all insurance companies provide their policyholders with at least a 60-day grace period to pay insurance premiums. The Commissioner’s Notice is directed to all admitted and non-admitted insurance companies that provide any insurance coverage in California including, life, health, auto, property, casualty, and other types of insurance.
In addition, in a separate Notice, the Commissioner requested the assistance of all automobile insurers, producers, and other licensees transacting automobile insurance in California to refrain from using the expiration of policyholders’ drivers’ licenses or vehicle registrations for 60 days, from March 16, 2020, for any of the following reasons:
- To affect a driver’s ability to secure and maintain auto insurance coverage
- To affect a driver’s eligibility for a Good Driver discount
- To determine eligibility for a California Low Cost Automobile policy
- To impact the rates charged to any driver
Further, on March 20, 2020, Commissioner Lara urged uninsured Californians and those who have lost coverage due to COVID-19 to purchase health coverage through Covered California, or through health plans and health insurers offering coverage outside the health insurance benefits exchange, during a new special enrollment period. Effective March 20, 2020, Covered California opened the state’s health insurance benefits exchange to eligible uninsured individuals who need health care coverage amid the COVID-19 pandemic emergency. Anyone who meets eligibility requirements, which are similar to those in place during the annual open enrollment period, can sign up for coverage through June 30, 2020. This includes network telehealth or, when necessary, doctor’s office visits as well as network emergency room or urgent care when necessary for the purpose of screening and testing for COVID-19. In addition, Covered California health plans and health insurers will help cover costs that arise from any required treatment or hospitalization.
Trending: States’ Regulatory Agencies Placing Moratorium on Cancellation/Nonrenewal of Policies
The California Commissioner’s steps are part of a nationwide trend of state regulatory agencies taking steps to mitigate the financial burden placed upon insureds during the COVID-19 pandemic. One of the steps states are taking is placing a moratorium on insurers’ ability to cancel policies based on the insured’s nonpayment of premiums. States like Alaska, Georgia, Arkansas, and Delaware have precluded insurers from cancelling policies based on an insured’s failure to make premium payments for various periods of time, from 60 days to the duration of the declared state of emergency.
Other states have sought other ways lighten an insured’s burden during these trying times. For example, in Maryland, the Maryland Insurance Administration issued a bulletin asking insurers to make reasonable accommodations to their insureds “so that individuals and businesses do not lose coverage due to non-payment of premium during this emergency.” Some accommodations include suspension of premiums due, extension of billing due dates, and waiver of late payment fees.
As time goes on, we expect state regulatory agencies to continue to seek means to mitigate financial burdens on insureds. We will continue to monitor these developments on a national level.
For information on the latest state regulatory updates or further guidance related to insurance coverage and the coronavirus pandemic, contact:
- Adam R. Durst
- Albert K. Alikin
- Jeffrey L. Kingsley
- Or another member of the Global Insurance Services practice