AB 1512: Insurance: notice of lapse.
- Session Year: 2015-2016
- House: Assembly
- Latest Version Date: 2015-07-14
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, premium, and the coverage period. Existing law, commencing January 1, 2016, and with regard to private passenger automobile insurance that provides coverage for 6 months or longer, specified residential property insurance, and policies of individual disability income insurance that are issued and take effect or that are renewed on or after January 1, 2016, requires an insurer to maintain a verifiable process or adopt a procedure that allows an applicant or policyholder to designate one additional person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of a policy for nonpayment of premium, as specified. Existing law provides that if an insurer opts to adopt the verifiable process, then the insurer, shall provide the policyholder, within 30 days after the inception of an individual policy, with notice of the right to designate one person. Existing law provides that if a policyholder pays the premium for an insurance policy through a payroll or pension deduction plan, then the notice of the right to designate one person need only be sent within 60 days after the policyholder is no longer on that deduction payment plan. Existing law further requires the application form for an insurance policy to clearly indicate the deduction payment plan selected by the applicant.
This bill would delete the requirement that the application form clearly indicate the deduction payment plan selected by the applicant. The bill would make these provisions inapplicable to a policy of disability income insurance if the premiums for the policy are paid entirely by the employer.
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, premium, and the coverage period. Existing law, commencing January 1, 2016, and with regard to private passenger automobile insurance that provides coverage for 6 months or longer, specified residential property insurance, and policies of individual disability income insurance that are issued and take effect or that are renewed on or after January 1, 2016, requires an insurer to maintain a verifiable process or adopt a procedure that allows an applicant or policyholder to designate one additional person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of a policy for nonpayment of premium, as specified. Existing law provides that if an insurer opts to adopt the verifiable process, then the insurer, shall provide the policyholder, within 30 days after the inception of an individual policy, with notice of the right to designate one person. Existing law provides that if a policyholder pays the premium for an insurance policy through a payroll or pension deduction plan, then the notice of the right to designate one person need only be sent within 60 days after the policyholder is no longer on that deduction payment plan. Existing law further requires the application form for an insurance policy to clearly indicate the deduction payment plan selected by the applicant.
This bill would delete the requirement that the application form clearly indicate the deduction payment plan selected by the applicant. The bill would make these provisions inapplicable to a policy of disability income insurance if the premiums for the policy are paid entirely by the employer.
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, premium, and the coverage period. Existing law, commencing January 1, 2016, and with regard to private passenger automobile insurance that provides coverage for 6 months or longer, specified residential property insurance, and policies of individual disability income insurance that are issued and take effect or that are renewed on or after January 1, 2016, requires an insurer to maintain a verifiable process or adopt a procedure that allows an applicant or policyholder to designate one additional person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of a policy for nonpayment of premium, as specified. Existing law provides that if an insurer opts to adopt the verifiable process, then the insurer, shall provide the policyholder, within 30 days after the inception of an individual policy, with notice of the right to designate one person. Existing law provides that if a policy holder policyholder pays the premium for an insurance policy through a payroll or pension deduction plan, then the notice of the right to designate one person need only be sent within 60 days after the policyholder is no longer on that deduction payment plan. Existing law further requires the application form for an insurance policy to clearly indicate the deduction payment plan selected by the applicant.
This bill would delete the requirement that the application form clearly indicate the deduction payment plan selected by the applicant. The bill would make these provisions inapplicable to a policy of disability income insurance if the premiums for the policy are paid entirely by the employer.
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, premium, and the coverage period. Existing law, commencing January 1, 2016, and with regard to private passenger automobile insurance that provides coverage for 6 months or longer, specified residential property insurance, and policies of individual disability income insurance that are issued and take effect or that are renewed on or after January 1, 2016, requires an insurer to maintain a verifiable process or adopt a procedure that allows an applicant or policyholder to designate one additional person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of a policy for nonpayment of premium, as specified. Existing law provides that if an insurer opts to adopt the verifiable process, then, the insurer, shall provide the policyholder, within 30 days after the inception of an individual policy, with notice of the right to designate one person. Existing law provides that if a policy holder pays the premium for an insurance policy through a payroll or pension deduction plan, then the notice of the right to designate one person need only be sent within 60 days after the policyholder is no longer on that deduction payment plan. Existing law further requires the application form for an insurance policy to clearly indicate the deduction payment plan selected by the applicant.
This bill would remove delete the requirement that the application form clearly indicate the deduction payment plan selected by the applicant. The bill would make these provisions inapplicable to a policy of disability income insurance if the premiums for the policy are paid entirely by the employer.
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, premium, and the coverage period. Existing law, commencing January 1, 2016, and with regard to private passenger automobile insurance that provides coverage for 6 months or longer, specified residential property insurance, and policies of individual disability income insurance that are issued and take effect or that are renewed on or after January 1, 2016, requires an insurer to maintain a verifiable process or adopt a procedure that allows an applicant or policyholder to designate one additional person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of a policy for nonpayment of premium, as specified. Existing law provides that if an insurer opts to adopt the verifiable process then, the insurer shall provide the policyholder, within 30 days after the inception of an individual policy, with notice of the right to designate one person. Existing law provides that if a policy holder pays the premium for an insurance policy through a payroll or pension deduction plan, then the notice of the right to designate one person need only be sent within 60 days after the policyholder is no longer on that deduction payment plan. Existing law further requires the application form for an insurance policy to clearly indicate the deduction payment plan selected by the applicant.
This bill would remove the requirement that the application form clearly indicate the deduction payment plan selected by the applicant.
(a)An insurer shall do either of the following:
(1)Maintain a verifiable process that allows a policyholder to designate in writing or by electronic transmission pursuant to Section 38.5 one additional person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of a policy for nonpayment of premium. The insurer shall notify the policyholder in writing or by electronic transmission pursuant to Section 38.5 of this right at the time of the application or within 30 days after the inception date of an individual policy described in subdivision (f), and at least every two years thereafter. The notification described in this subdivision shall instruct the policyholder how to request the designation and how to replace or delete a designee. If a policyholder initiates contact with the insurer after the insurer has provided notice and the insurer complies with the policyholders request to establish or change the additional person to receive the notice described in this section, the insurer shall not be required to maintain additional verification.
(2)Comply with subdivision (b).
(b)An insurer that adopts the following procedure shall be deemed to have complied with subdivision (a).
(1)Unless an applicant for insurance has been provided notice of the right set forth in this section prior to inception of the policy, the insurer shall provide the policyholder, within 30 days after the inception date of an individual policy described in subdivision (f), with notice of the right to designate one person, in addition to the policyholder, to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of a policy for nonpayment of premium. The insurer shall provide each applicant or policyholder with notice in writing or by electronic transmission pursuant to Section 38.5 of the opportunity to make the designation. That notice shall instruct the applicant or policyholder on how he or she is to submit the name and address of one person, in addition to the applicant or policyholder, who is to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of the policy for nonpayment of premium.
(2)If after having been provided notice from the insurer of the right to designate an individual to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium, the applicant or policyholder fails to designate an individual within 30 days, the applicant or policyholder shall be conclusively presumed to have declined the opportunity to exercise his or her right at that time.
(3)Notwithstanding subparagraph (C) of paragraph (2) of subdivision (a) of Section 791.13 or any other law, the insurer shall retain and utilize as necessary the contact information provided in the written designation for the lifetime of the policy, and allow the policyholder to update the written designation if the policyholder so requests.
(c)(1)A policyholder retains the right to designate the one additional person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium at any time, at the initiative of the policyholder, regardless of whether the policyholder previously declined to exercise that right. At least every two years, the insurer shall notify the policyholder in writing or by electronic transmission pursuant to Section 38.5, of whichever of the following applies:
(A)If a policyholder has previously provided a designation pursuant to this subdivision, in writing or by electronic transmission pursuant to Section 38.5, the right to change the prior designation by replacing or deleting a person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium.
(B)If the policyholder has not previously designated a person to receive the notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium pursuant to this subdivision, the right to designate a person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium.
(2)The notice requirements in subparagraphs (A) and (B) of paragraph (1) may be provided to a policyholder in a single notice and shall not require two separate notices.
(d)When a policyholder pays the premium for an insurance policy through a payroll or pension deduction plan, the requirements contained in paragraph (1) of subdivision (b) need not be met until 60 days after the policyholder is no longer on that deduction payment plan.
(e)An insurance policy shall not lapse or be terminated for nonpayment of premium unless the insurer, at least 10 days prior to the effective date of the lapse, termination, expiration, nonrenewal, or cancellation, gives notice to the individual designated pursuant to subdivision (a) or (b) at the address provided by the policyholder for purposes of receiving the notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium. Notwithstanding any other law, notice shall be given by first-class United States mail, postage prepaid, within 10 days after the premium is due and unpaid. This subdivision does not modify requirements for notice to the policyholder of lapse, termination, expiration, nonrenewal, or cancellation set forth in other sections of this code.
(f)This section applies only to policies of private passenger automobile insurance that provide coverage for six months or longer, policies of residential property insurance as described in subdivision (a) of Section 10087 that take effect or that are renewed after the effective date of this section, and policies of individual disability income insurance as described in subdivision (i) of Section 799.01, except if the premiums for the individual disability income policy are paid entirely by the employer.
(g)This section applies to policies that are issued and take effect or that are renewed on or after January 1, 2016.
(h)An individual designated by a policyholder pursuant to this section to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of the policy for nonpayment of premium does not have any rights, whether as an additional insured or otherwise, to any benefits under the policy, other than the right to receive notice as provided by this section.
(i)This section shall become operative on January 1, 2016.
(a)An insurer shall do either of the following:
(1)Maintain a verifiable process that allows a policyholder to designate in writing or by electronic transmission pursuant to Section 38.5 one additional person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of a policy for nonpayment of premium. The insurer shall notify the policyholder in writing or by electronic transmission pursuant to Section 38.5 of this right at the time of the application or within 30 days after the inception date of an individual policy described in subdivision (f), and at least every two years thereafter. The notification described in this subdivision shall instruct the policyholder how to request the designation and how to replace or delete a designee. If a policyholder initiates contact with the insurer after the insurer has provided notice and the insurer complies with the policyholders request to establish or change the additional person to receive the notice described in this section, the insurer shall not be required to maintain additional verification.
(2)Comply with subdivision (b).
(b)An insurer that adopts the following procedure shall be deemed to have complied with subdivision (a).
(1)Unless an applicant for insurance has been provided notice of the right set forth in this section prior to inception of the policy, the insurer shall provide the policyholder, within 30 days after the inception date of an individual policy described in subdivision (f), with notice of the right to designate one person, in addition to the policyholder, to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of a policy for nonpayment of premium. The insurer shall provide each applicant or policyholder with notice in writing or by electronic transmission pursuant to Section 38.5 of the opportunity to make the designation. That notice shall instruct the applicant or policyholder on how he or she is to submit the name and address of one person, in addition to the applicant or policyholder, who is to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of the policy for nonpayment of premium.
(2)If after having been provided notice from the insurer of the right to designate an individual to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium, the applicant or policyholder fails to designate an individual within 30 days, the applicant or policyholder shall be conclusively presumed to have declined the opportunity to exercise his or her right at that time.
(3)Notwithstanding subparagraph (C) of paragraph (2) of subdivision (a) of Section 791.13 or any other law, the insurer shall retain and utilize as necessary the contact information provided in the written designation for the lifetime of the policy, and allow the policyholder to update the written designation if the policyholder so requests.
(c)(1)A policyholder retains the right to designate the one additional person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium at any time, at the initiative of the policyholder, regardless of whether the policyholder previously declined to exercise that right. At least every two years, the insurer shall notify the policyholder in writing or by electronic transmission pursuant to Section 38.5, of whichever of the following applies:
(A)If a policyholder has previously provided a designation pursuant to this subdivision, in writing or by electronic transmission pursuant to Section 38.5, the right to change the prior designation by replacing or deleting a person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium.
(B)If the policyholder has not previously designated a person to receive the notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium pursuant to this subdivision, the right to designate a person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium.
(2)The notice requirements in subparagraphs (A) and (B) of paragraph (1) may be provided to a policyholder in a single notice and shall not require two separate notices.
(d)When a policyholder pays the premium for an insurance policy through a payroll or pension deduction plan, the requirements contained in paragraph (1) of subdivision (b) need not be met until 60 days after the policyholder is no longer on that deduction payment plan.
(e)An insurance policy shall not lapse or be terminated for nonpayment of premium unless the insurer, at least 10 days prior to the effective date of the lapse, termination, expiration, nonrenewal, or cancellation, gives notice to the individual designated pursuant to subdivision (a) or (b) at the address provided by the policyholder for purposes of receiving the notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium. Notwithstanding any other law, notice shall be given by first-class United States mail, postage prepaid, within 10 days after the premium is due and unpaid. This subdivision does not modify requirements for notice to the policyholder of lapse, termination, expiration, nonrenewal, or cancellation set forth in other sections of this code.
(f)This section applies only to policies of private passenger automobile insurance that provide coverage for six months or longer, policies of residential property insurance as described in subdivision (a) of Section 10087 that take effect or that are renewed after the effective date of this section, and policies of individual disability income insurance as described in subdivision (i) of Section 799.01, except if the premiums for the individual disability income policy are paid entirely by the employer.
(g)This section applies to policies that are issued and take effect or that are renewed on or after January 1, 2016.
(h)An individual designated by a policyholder pursuant to this section to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of the policy for nonpayment of premium does not have any rights, whether as an additional insured or otherwise, to any benefits under the policy, other than the right to receive notice as provided by this section.
(i)This section shall become operative on January 1, 2016.
(a)An insurer shall do either of the following:
(1)Maintain a verifiable process that allows a policyholder to designate in writing or by electronic transmission pursuant to Section 38.5 one additional person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of a policy for nonpayment of premium. The insurer shall notify the policyholder in writing or by electronic transmission pursuant to Section 38.5 of this right at the time of the application or within 30 days after the inception date of an individual policy described in subdivision (f), and at least every two years thereafter. The notification described in this subdivision shall instruct the policyholder how to request the designation and how to replace or delete a designee. If a policyholder initiates contact with the insurer after the insurer has provided notice and the insurer complies with the policyholders request to establish or change the additional person to receive the notice described in this section, the insurer shall not be required to maintain additional verification.
(2)Comply with subdivision (b).
(b)An insurer that adopts the following procedure shall be deemed to have complied with subdivision (a).
(1)Unless an applicant for insurance has been provided notice of the right set forth in this section prior to inception of the policy, the insurer shall provide the policyholder, within 30 days after the inception date of an individual policy described in subdivision (f), with notice of the right to designate one person, in addition to the policyholder, to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of a policy for nonpayment of premium. The insurer shall provide each applicant or policyholder with notice in writing or by electronic transmission pursuant to Section 38.5 of the opportunity to make the designation. That notice shall instruct the applicant or policyholder on how he or she is to submit the name and address of one person, in addition to the applicant or policyholder, who is to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of the policy for nonpayment of premium.
(2)If after having been provided notice from the insurer of the right to designate an individual to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium, the applicant or policyholder fails to designate an individual within 30 days, the applicant or policyholder shall be conclusively presumed to have declined the opportunity to exercise his or her right at that time.
(3)Notwithstanding subparagraph (C) of paragraph (2) of subdivision (a) of Section 791.13 or any other law, the insurer shall retain and utilize as necessary the contact information provided in the written designation for the lifetime of the policy, and allow the policyholder to update the written designation if the policyholder so requests.
(c)(1)A policyholder retains the right to designate the one additional person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium at any time, at the initiative of the policyholder, regardless of whether the policyholder previously declined to exercise that right. At least every two years, the insurer shall notify the policyholder in writing or by electronic transmission pursuant to Section 38.5, of whichever of the following applies:
(A)If a policyholder has previously provided a designation pursuant to this subdivision, in writing or by electronic transmission pursuant to Section 38.5, the right to change the prior designation by replacing or deleting a person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium.
(B)If the policyholder has not previously designated a person to receive the notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium pursuant to this subdivision, the right to designate a person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium.
(2)The notice requirements in subparagraphs (A) and (B) of paragraph (1) may be provided to a policyholder in a single notice and shall not require two separate notices.
(d)When a policyholder pays the premium for an insurance policy through a payroll or pension deduction plan, the requirements contained in paragraph (1) of subdivision (b) need not be met until 60 days after the policyholder is no longer on that deduction payment plan.
(e)An insurance policy shall not lapse or be terminated for nonpayment of premium unless the insurer, at least 10 days prior to the effective date of the lapse, termination, expiration, nonrenewal, or cancellation, gives notice to the individual designated pursuant to subdivision (a) or (b) at the address provided by the policyholder for purposes of receiving the notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium. Notwithstanding any other law, notice shall be given by first-class United States mail, postage prepaid, within 10 days after the premium is due and unpaid. This subdivision does not modify requirements for notice to the policyholder of lapse, termination, expiration, nonrenewal, or cancellation set forth in other sections of this code.
(f)This section applies only to policies of private passenger automobile insurance that provide coverage for six months or longer, policies of residential property insurance as described in subdivision (a) of Section 10087 that take effect or that are renewed after the effective date of this section, and policies of individual disability income insurance as described in subdivision (i) of Section 799.01, except if the premiums for the individual disability income policy are paid entirely by the employer.
(g)This section applies to policies that are issued and take effect or that are renewed on or after January 1, 2016.
(h)An individual designated by a policyholder pursuant to this section to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of the policy for nonpayment of premium does not have any rights, whether as an additional insured or otherwise, to any benefits under the policy, other than the right to receive notice as provided by this section.
(i)This section shall become operative on January 1, 2016.
(a)An insurer shall do either of the following:
(1)Maintain a verifiable process that allows a policyholder to designate in writing or by electronic transmission pursuant to Section 38.5 one additional person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of a policy for nonpayment of premium. The insurer shall notify the policyholder in writing or by electronic transmission pursuant to Section 38.5 of this right at the time of the application or within 30 days after the inception date of an individual policy described in subdivision (f), and at least every two years thereafter. The notification described in this subdivision shall instruct the policyholder how to request the designation and how to replace or delete a designee. If a policyholder initiates contact with the insurer after the insurer has provided notice and the insurer complies with the policyholders request to establish or change the additional person to receive the notice described in this section, the insurer shall not be required to maintain additional verification.
(2)Comply with subdivision (b).
(b)An insurer that adopts the following procedure shall be deemed to have complied with subdivision (a).
(1)Unless an applicant for insurance has been provided notice of the right set forth in this section prior to inception of the policy, the insurer shall provide the policyholder, within 30 days after the inception date of an individual policy described in subdivision (f), with notice of the right to designate one person, in addition to the policyholder, to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of a policy for nonpayment of premium. The insurer shall provide each applicant or policyholder with notice in writing or by electronic transmission pursuant to Section 38.5 of the opportunity to make the designation. That notice shall instruct the applicant or policyholder on how he or she is to submit the name and address of one person, in addition to the applicant or policyholder, who is to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of the policy for nonpayment of premium.
(2)If after having been provided notice from the insurer of the right to designate an individual to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium, the applicant or policyholder fails to designate an individual within 30 days, the applicant or policyholder shall be conclusively presumed to have declined the opportunity to exercise his or her right at that time.
(3)Notwithstanding subparagraph (C) of paragraph (2) of subdivision (a) of Section 791.13 or any other law, the insurer shall retain and utilize as necessary the contact information provided in the written designation for the lifetime of the policy, and allow the policyholder to update the written designation if the policyholder so requests.
(c)(1)A policyholder retains the right to designate the one additional person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium at any time, at the initiative of the policyholder, regardless of whether the policyholder previously declined to exercise that right. At least every two years, the insurer shall notify the policyholder in writing or by electronic transmission pursuant to Section 38.5, of whichever of the following applies:
(A)If a policyholder has previously provided a designation pursuant to this subdivision, in writing or by electronic transmission pursuant to Section 38.5, the right to change the prior designation by replacing or deleting a person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium.
(B)If the policyholder has not previously designated a person to receive the notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium pursuant to this subdivision, the right to designate a person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium.
(2)The notice requirements in subparagraphs (A) and (B) of paragraph (1) may be provided to a policyholder in a single notice and shall not require two separate notices.
(d)When a policyholder pays the premium for an insurance policy through a payroll or pension deduction plan, the requirements contained in paragraph (1) of subdivision (b) need not be met until 60 days after the policyholder is no longer on that deduction payment plan.
(e)An insurance policy shall not lapse or be terminated for nonpayment of premium unless the insurer, at least 10 days prior to the effective date of the lapse, termination, expiration, nonrenewal, or cancellation, gives notice to the individual designated pursuant to subdivision (a) or (b) at the address provided by the policyholder for purposes of receiving the notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium. Notwithstanding any other law, notice shall be given by first-class United States mail, postage prepaid, within 10 days after the premium is due and unpaid. This subdivision does not modify requirements for notice to the policyholder of lapse, termination, expiration, nonrenewal, or cancellation set forth in other sections of this code.
(f)This section applies only to policies of private passenger automobile insurance that provide coverage for six months or longer, policies of residential property insurance as described in subdivision (a) of Section 10087 that take effect or that are renewed after the effective date of this section, and policies of individual disability income insurance as described in subdivision (i) of Section 799.01. 799.01, except if the premiums for the policy are paid entirely by the employer.
(g)This section applies to policies that are issued and take effect or that are renewed on or after January 1, 2016.
(h)An individual designated by a policyholder pursuant to this section to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of the policy for nonpayment of premium does not have any rights, whether as an additional insured or otherwise, to any benefits under the policy, other than the right to receive notice as provided by this section.
(i)This section shall become operative on January 1, 2016.
(a)An insurer shall do either of the following:
(1)Maintain a verifiable process that allows a policyholder to designate in writing or by electronic transmission pursuant to Section 38.5 one additional person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of a policy for nonpayment of premium. The insurer shall notify the policyholder in writing or by electronic transmission pursuant to Section 38.5 of this right at the time of the application or within 30 days after the inception date of an individual policy described in subdivision (f), and at least every two years thereafter. The notification described in this subdivision shall instruct the policyholder how to request the designation and how to replace or delete a designee. If a policyholder initiates contact with the insurer after the insurer has provided notice and the insurer complies with the policyholders request to establish or change the additional person to receive the notice described in this section, the insurer shall not be required to maintain additional verification.
(2)Comply with subdivision (b).
(b)An insurer that adopts the following procedure shall be deemed to have complied with subdivision (a).
(1)Unless an applicant for insurance has been provided notice of the right set forth in this section prior to inception of the policy, the insurer shall provide the policyholder, within 30 days after the inception date of an individual policy described in subdivision (f), with notice of the right to designate one person, in addition to the policyholder, to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of a policy for nonpayment of premium. The insurer shall provide each applicant or policyholder with notice in writing or by electronic transmission pursuant to Section 38.5 of the opportunity to make the designation. That notice shall instruct the applicant or policyholder on how he or she is to submit the name and address of one person, in addition to the applicant or policyholder, who is to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of the policy for nonpayment of premium.
(2)If after having been provided notice from the insurer of the right to designate an individual to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium, the applicant or policyholder fails to designate an individual within 30 days, the applicant or policyholder shall be conclusively presumed to have declined the opportunity to exercise his or her right at that time.
(3)Notwithstanding subparagraph (C) of paragraph (2) of subdivision (a) of Section 791.13 or any other law, the insurer shall retain and utilize as necessary the contact information provided in the written designation for the lifetime of the policy, and allow the policyholder to update the written designation if the policyholder so requests.
(c)(1)A policyholder retains the right to designate the one additional person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium at any time, at the initiative of the policyholder, regardless of whether the policyholder previously declined to exercise that right. At least every two years, the insurer shall notify the policyholder in writing or by electronic transmission pursuant to Section 38.5, of whichever of the following applies:
(A)If a policyholder has previously provided a designation pursuant to this subdivision, in writing or by electronic transmission pursuant to Section 38.5, the right to change the prior designation by replacing or deleting a person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium.
(B)If the policyholder has not previously designated a person to receive the notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium pursuant to this subdivision, the right to designate a person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium.
(2)The notice requirements in subparagraphs (A) and (B) of paragraph (1) may be provided to a policyholder in a single notice and shall not require two separate notices.
(d)When a policyholder pays the premium for an insurance policy through a payroll or pension deduction plan, the requirements contained in paragraph (1) of subdivision (b) need not be met until 60 days after the policyholder is no longer on that deduction payment plan. The application form for an insurance policy shall clearly indicate the deduction payment plan selected by the applicant.
(e)An insurance policy shall not lapse or be terminated for nonpayment of premium unless the insurer, at least 10 days prior to the effective date of the lapse, termination, expiration, nonrenewal, or cancellation, gives notice to the individual designated pursuant to subdivision (a) or (b) at the address provided by the policyholder for purposes of receiving the notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium. Notwithstanding any other law, notice shall be given by first-class United States mail, postage prepaid, within 10 days after the premium is due and unpaid. This subdivision does not modify requirements for notice to the policyholder of lapse, termination, expiration, nonrenewal, or cancellation set forth in other sections of this code.
(f)This section applies only to policies of private passenger automobile insurance that provide coverage for six months or longer, policies of residential property insurance as described in subdivision (a) of Section 10087 that take effect or that are renewed after the effective date of this section, and policies of individual disability income insurance as described in subdivision (i) of Section 799.01.
(g)This section applies to policies that are issued and take effect or that are renewed on or after January 1, 2016.
(h)An individual designated by a policyholder pursuant to this section to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of the policy for nonpayment of premium does not have any rights, whether as an additional insured or otherwise, to any benefits under the policy, other than the right to receive notice as provided by this section.
(i)This section shall become operative on January 1, 2016.
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| Jun 1, 2015 | From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on INS. |
| Jul 14, 2015 | Chaptered by Secretary of State - Chapter 95, Statutes of 2015. |
| Jul 14, 2015 | Approved by the Governor. |
| Jul 2, 2015 | Enrolled and presented to the Governor at 1 p.m. |
| Jun 25, 2015 | Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 80. Noes 0.). |
| Jun 25, 2015 | Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 80. Noes 0. Page 2142.). |
| Jun 23, 2015 | In Assembly. Concurrence in Senate amendments pending. May be considered on or after June 25 pursuant to Assembly Rule 77. |
| Jun 22, 2015 | Read third time. Passed. Ordered to the Assembly. (Ayes 37. Noes 0. Page 1551.). |
| Jun 22, 2015 | Read third time. Passed. Ordered to the Assembly. |
| Jun 17, 2015 | Ordered to special consent calendar. |
| Jun 15, 2015 | Read second time. Ordered to third reading. |
| Jun 11, 2015 | From committee: Do pass. (Ayes 9. Noes 0.) (June 10). |
| Mar 5, 2015 | Read first time. To print. |
| May 7, 2015 | Referred to Com. on INS. |
| Apr 16, 2015 | Read third time. Passed. Ordered to the Senate. (Ayes 79. Noes 0. Page 977.) |
| Apr 16, 2015 | Read third time. Passed. Ordered to the Senate. |
| Apr 16, 2015 | In Senate. Read first time. To Com. on RLS. for assignment. |
| Apr 9, 2015 | Read second time. Ordered to consent calendar. |
| Apr 8, 2015 | From committee: Do pass. To Consent Calendar. (Ayes 12. Noes 0.) (April 8). |
| Apr 8, 2015 | From committee: Do pass. Ordered to Consent Calendar. (Ayes 12. Noes 0.) (April 8). |
| Apr 7, 2015 | Re-referred to Com. on INS. |
| Apr 6, 2015 | From committee chair, with author's amendments: Amend, and re-refer to Com. on INS. Read second time and amended. |
| Mar 26, 2015 | Referred to Com. on INS. |
| Mar 6, 2015 | From printer. May be heard in committee April 5. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Jun 25, 2015 | AB 1512 INS. Concurrence in Senate Amendments By DALY | Assembly Floor |
Passed |
|
| Jun 22, 2015 | Special Consent #3 AB1512 Committee On INS. (Roth) | Senate Floor |
Passed |
|
| Jun 10, 2015 | Do pass | Senate Standing Committee on Insurance |
Passed |
|
| Apr 16, 2015 | AB 1512 INS. Consent Calendar Second Day Regular Session | Assembly Floor |
Passed |
|
| Apr 8, 2015 | Do pass. To Consent Calendar. | Assembly Standing Committee on Insurance |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| American Council Of Life Insurers | ** Support | Jun 25, 2015 |
AB 1512
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1512
(Committee on Insurance)
As Amended June 1, 2015
Majority vote
ASSEMBLY: |
79-0 |
(April 16, 2015) |
SENATE: |
37-0 |
(June 22, 2015) |
Original Committee Reference: INS.
SUMMARY: Exempts certain employer-paid disability income policies from the recently enacted right to designate a third party to receive notices of termination.
The Senate amendments clarify which disability income policies this exemption applies to.
EXISTING LAW: Provides, starting January 1, 2016, that the policyholder of defined insurance policies has a right to designate a third party who must be notified by the insurer, in addition to any notice to the policyholder, that the policy is at risk of lapsing due to the failure to have paid the premium.
FISCAL EFFECT: None
COMMENTS: The recently enacted right to designate a third party who will receive lapse notices is intended to protect policyholders who, for any reason, but commonly due to age, infirmity, mental deterioration, or extensive travel, fail to respond to lapse notices on their insurance policies. In cases of employer paid insurance, the actual policyholder never receives these notices, so it makes little sense to mandate an insurer to provide notice to a designated third party. This clarification satisfies a commitment made late last Session to clarify the issue prior to the January 1, 2016, effective date.
Analysis Prepared by: Mark Rakich / INS. / (916) 319-2086 FN: 0000993
AB 1512
Page 3
|
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 |
THIRD READING
Bill No: AB 1512
Author: Committee on Insurance
Amended: 6/1/15 in Senate
SENATE INSURANCE COMMITTEE: 9-0, 6/10/15
AYES: Roth, Gaines, Berryhill, Glazer, Hall, Hernandez, Liu, Mitchell, Wieckowski
ASSEMBLY FLOOR: 79-0, 4/16/15 (Consent) - See last page for vote
SUBJECT: Insurance: notice of lapse
SOURCE: Association of California Life and Health Insurance Companies
DIGEST: This bill clarifies the rules related to an insurer’s obligation to provide a policyholder with the opportunity to designate a third-party recipient to receive an additional lapse notice in connection with employer-provided individual disability income insurance.
Existing law:
Requires an insurer, commencing January 1, 2016, to maintain a process that allows policyholders of individual disability income insurance policies to designate one additional person to receive a notice of pending termination of the policy for nonpayment of premium (“designation process”).
Requires an insurer to notify policyholders of the designation process within 30 days of the inception date of a policy and at least every two years thereafter.
Suspends the designation process requirement when the premium is paid through a payroll or pension deduction plan until 60 days after the policyholder is no longer on the deduction plan.
Requires the application form for an insurance policy to clearly indicate the deduction plan selected by the applicant.
This bill:
Clarifies that policies of individual disability income insurance are not subject to the designation process requirement when payments are made entirely by an employer.
Eliminates the requirement that the application form clearly indicate the deduction plan selected by the applicant.
Background
This bill is a cleanup measure to AB 1804 (Perea, Chapter 380, Statutes 2014), that requires, beginning January 1, 2016, carriers of individual disability income insurance, and others, to provide policyholders with the opportunity to designate a third party to receive an additional notice when the policy will terminate due to nonpayment. The extra notice is intended to provide a failsafe against unintentional lapse. However, some individual disability income policies are paid by or through the insured’s employer, so the designation would serve little, if any, purpose.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
Association of California Life and Health Insurance Companies (source)
American Council of Life Insurers
OPPOSITION: (Verified 6/16/15)
None received
ARGUMENTS IN SUPPORT: Proponents explain that this bill represents a minor clarification needed to ensure that additional lapse notifications are not required in a group context where the premiums are entirely paid by the employer.
ASSEMBLY FLOOR: 79-0, 4/16/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Quirk
Prepared by: Hugh Slayden / INS. / (916) 651-4110
6/17/15 13:58:25
**** END ****
AB 1512 (Committee on Insurance) Page 2 of 2
SENATE COMMITTEE ON INSURANCE
Senator Richard Roth, Chair
2015 - 2016 Regular
Bill No: AB 1512 Hearing Date: June 10, 2015
Author: |
Committee on Insurance |
||
Version: |
June 1, 2015 Amended |
||
Urgency: |
No |
Fiscal: |
No |
Consultant: |
Hugh Slayden |
||
Subject: Insurance: notice of lapse.
SUMMARY
Clarifies the rules related to an insurer’s obligation to provide a policyholder with the opportunity to designate a third-party recipient to receive an additional lapse notice in connection with employer-provided individual disability income insurance.
DIGEST
Existing law
Requires an insurer, commencing January 1, 2016, to maintain a process that allows policyholders of individual disability income insurance policies (insurance that partially replaces lost income due to disability) to designate one additional person to receive a notice of pending termination of the policy for nonpayment of premium (“designation process”).
Requires an insurer to notify policyholders of the designation process within 30 days of the inception date of a policy and at least every two years thereafter.
Suspends the designation process requirement when the premium is paid through a payroll or pension deduction plan until 60 days after the policyholder is no longer on the deduction plan.
Requires the application form for an insurance policy to clearly indicate the deduction plan selected by the applicant.
This bill
Clarifies that policies of individual disability income insurance are not subject to the designation process requirement when payments are made entirely by an employer.
Eliminates the requirement that the application form clearly indicate the deduction plan selected by the applicant.
COMMENTS
Purpose of the bill AB 1512 is a cleanup measure to AB 1804 (Perea), Chapter 380, Statutes 2014.
Background Beginning January 1, 2016, AB 1804 requires carriers of auto, homeowner’s, or individual disability income insurance to provide policyholders with the opportunity to designate a third party to receive an additional notice when the policy will terminate due to nonpayment. The extra notice is intended to provide a failsafe against unintentional lapse, including circumstances when a policyholder may be unable to manage or monitor his or her own affairs due to cognitive impairment, travel, etc. However, some individual disability income policies are paid by or through the insured’s employer, so the designation would serve little, if any, purpose.
Last year, the author of AB 1804 included an exemption for policies
paid through a payroll or pension deduction but some stakeholders
remained concerned that the existing language could still cause
unwarranted problems. This bill reflects an agreement to clarify
that language before AB 1804 takes effect.
Support The Association of California Life and Health Insurance Companies and the American Council of Life Insurers explain that this bill represents a minor clarification needed to ensure that additional lapse notifications are not required in a group context where the premiums are entirely paid by the employer.
Opposition None received.
POSITIONS
Support
Association of California Life and Health Insurance Companies (Sponsor)
American Council of Life Insurers
Oppose
None received
-- END --
AB 1512
Page 2
Date of Hearing: April 8, 2015
ASSEMBLY COMMITTEE ON INSURANCE
Tom Daly, Chair
AB 1512
(Committee on Insurance) – As Amendeded April 6, 2015
SUBJECT: Insurance: notice of lapse
SUMMARY: Clarifies the application of rules authorizing the designation of third party recipients to receive lapse notices in connection with employer-provided disability income insurance. Specifically, this bill:
Deletes a requirement that the payroll deduction method be disclosed on an insurance application form.
Exempts disability income insurance policies from application of the lapse notice requirement if the premiums for the policy are entirely paid by the employer.
EXISTING LAW:
Establishes, commencing January 1, 2016, that people who have homeowners insurance, automobile insurance, and individual disability income insurance have the right to designate a third party who will receive a copy of any notice that the policy is about to lapse.
Establishes the procedures that insurers must comply with in order to satisfy their obligations under this new law.
Includes, within the scope of disability income insurance, policies that are employer provided and paid.
FISCAL EFFECT: Undetermined.
COMMENTS: AB 1512 was introduced by the Committee on Insurance to correct a minor error in the application of AB 1804 (Perea) – Statutes 2014, Chapter 380 – which created the right to designate a third party recipient of lapse notices. Late in the Session last year, at a date when amending measures was difficult, life and disability insurers pointed out language that would apply these new lapse rules in a context – employer provided and paid coverage – where the third party lapse notice did not fit, and might cause unwarranted problems. Since AB 1804 had a delayed implementation date, an agreement was reached to address the issue this year, before the law takes effect. AB 1512 accomplishes that goal.
REGISTERED SUPPORT / OPPOSITION:
Support
Association of California Life and Health Insurance Companies
Opposition
None received.
Analysis Prepared by: Mark Rakich / INS. / (916) 319-2086
Discussed in Hearing
View Older Hearings
Bill Author
Bill Co-Author(s):