Bill Text: CA AB1512 | 2015-2016 | Regular Session | Chaptered
Bill Title: Insurance: notice of lapse.
Sponsorship: Unknown
Status: (Passed) 2015-07-14 - Chaptered by Secretary of State - Chapter 95, Statutes of 2015. [AB1512 Detail]
Download: California-2015-AB1512-Chaptered.html
BILL NUMBER: AB 1512 CHAPTERED
BILL TEXT
CHAPTER 95
FILED WITH SECRETARY OF STATE JULY 14, 2015
APPROVED BY GOVERNOR JULY 14, 2015
PASSED THE SENATE JUNE 22, 2015
PASSED THE ASSEMBLY JUNE 25, 2015
AMENDED IN SENATE JUNE 1, 2015
AMENDED IN ASSEMBLY APRIL 6, 2015
INTRODUCED BY Committee on Insurance
MARCH 5, 2015
An act to amend Section 396 of the Insurance Code, relating to
insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 1512, Committee on Insurance. 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,
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.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 396 of the Insurance Code is amended to read:
396. (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 policyholder's
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.
