Bill Text: CA AB1804 | 2013-2014 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Insurance: notice of lapse.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2014-09-17 - Chaptered by Secretary of State - Chapter 380, Statutes of 2014. [AB1804 Detail]

Download: California-2013-AB1804-Introduced.html

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BILL NUMBER: AB 1804	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Perea

                        FEBRUARY 18, 2014

   An act to add Section 396 to the Insurance Code, relating to
insurance.



	LEGISLATIVE COUNSEL'S DIGEST


   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 1.  Section 396 is added to the Insurance Code, to read:
   396.  (a) An individual policy shall not be 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 a
policy for nonpayment of the premium. Upon application for issuance
of a policy, the insurer shall provide the applicant with 30 days to
do one of the following:
   (1) Designate in writing the name, address, and telephone number
of at least one individual, in addition to the applicant, who is to
receive the notice of lapse, termination, expiration, nonrenewal, or
cancellation for nonpayment of the premium.
   (2) (A) Provide a written waiver signed and dated by the applicant
electing not to designate additional persons to receive the notice
of lapse, termination, expiration, nonrenewal, or cancellation for
nonpayment of the premium.
   (B) The required waiver shall read as follows:


   "Protection Against Unintended Lapse, Termination, Expiration,
Nonrenewal, or Cancellation.
   I understand that I have the right to designate at least one
person other than myself to receive the notice of lapse, termination,
expiration, nonrenewal, or cancellation of this insurance policy for
nonpayment of the premium. I understand that notice will be given
within 10 days after a premium is due and unpaid. I elect not to
designate any person to receive the notice.
   Dated:____ Signature of Applicant:_____"


   (3) If after receiving notice from the insurer of the right to
designate additional persons to receive the notice of lapse,
termination, expiration, nonrenewal, or cancellation for nonpayment
of the premium, the applicant fails to take action pursuant to either
paragraph (1) or paragraph (2) within 30 days, the insured is deemed
to have waived the right to designate those additional persons.
   (b) 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
insured to update the written designation if the insured so
requests.
   (c) Not less than every two years, the insurer shall notify the
insured in writing of whichever of the following applies:
   (1)If an insured has previously provided a written designation
pursuant to paragraph (1) of subdivision (a), the right to change the
prior written designation by adding or deleting additional persons
to receive the notice of lapse, termination, expiration, nonrenewal,
or cancellation for nonpayment of the premium.
   (2) If the insured has previously waived the right to designate
any persons pursuant to paragraph (2) of subdivision (a), to exercise
the right to designate additional persons to receive the notice of
lapse, termination, expiration, nonrenewal, or cancellation for
nonpayment of the premium.
   (d) When the insured pays the premium for an insurance policy
through a payroll or pension deduction plan, the requirements
contained in subdivision (a) need not be met until 60 days after the
insured 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 the 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 insured and to the
individual or individuals designated pursuant to subdivision (a) at
the address provided by the insured for purposes of receiving the
notice of lapse, termination, expiration, nonrenewal, or cancellation
for nonpayment of the premium. Notice shall be given by first-class
United States mail, postage prepaid, within 10 days after the premium
is due and unpaid.
   (f) This section applies to policies of insurance, other than
workers' compensation insurance, on risks located or resident in this
state that are issued and take effect or which are renewed after the
effective date of this section and insuring any of the following
contingencies:
   (1) Loss of or damage to real property that is used predominantly
for residential purposes and that consists of not more than four
dwelling units.
   (2) Loss of or damage to personal property in which natural
persons resident in specifically described real property of the kind
described in paragraph (1) have an insurable interest, except
personal property used in the conduct of a commercial or industrial
enterprise.
   (3) Legal liability of a natural person or persons for loss of,
damage to, or injury to, persons or property, but not including
policies primarily insuring risks arising from the conduct of a
commercial or industrial enterprise.
   (4) Disability and health insurance as defined in Section 106.
   (g) This section applies to policies that are issued and take
effect or that are renewed on or after January 1, 2015.