Bill Text: CA SB1242 | 2021-2022 | Regular Session | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Insurance.
Spectrum: Committee Bill
Status: (Passed) 2022-09-18 - Chaptered by Secretary of State. Chapter 424, Statutes of 2022. [SB1242 Detail]
Download: California-2021-SB1242-Introduced.html
(i) (c) of Section 799.01, payment of benefits to the insured shall be made within 30 calendar days after the insurer has received all information needed to determine liability for a claim. However, the 30-calendar-day period shall not include any time during which the insurer is doing any of the following: (i) (c) of Section 799.01, that is of a short-term limited duration of two years or less, that is issued, amended, or renewed on or after July 1, 2014, and that provides disability income benefits shall provide coverage for disability caused by severe mental illnesses.
Bill Title: Insurance.
Spectrum: Committee Bill
Status: (Passed) 2022-09-18 - Chaptered by Secretary of State. Chapter 424, Statutes of 2022. [SB1242 Detail]
Download: California-2021-SB1242-Introduced.html
CALIFORNIA LEGISLATURE—
2021–2022 REGULAR SESSION
Senate Bill
No. 1242
| Introduced by Committee on Insurance (Senators Rubio (Chair), Archuleta, Bates, Borgeas, Dodd, Glazer, Hueso, Hurtado, Jones, Melendez, Portantino, and Roth) |
February 17, 2022 |
An act to amend Sections 106, 396, 785, 10111.2, and 10144.55 of the Insurance Code, relating to insurance.
LEGISLATIVE COUNSEL'S DIGEST
SB 1242, as introduced, Committee on Insurance.
Disability income insurance.
Existing law generally regulates classes of insurance, including disability income insurance. Existing law defines “disability income insurance” to mean insurance against loss of occupational earning capacity arising from injury, sickness, or disablement.
This bill would make technical, nonsubstantive changes to provisions cross-referencing that definition.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 106 of the Insurance Code is amended to read:106.
(a) Disability insurance includes insurance appertaining to injury, disablement or death resulting to the insured from accidents, and appertaining to disablements resulting to the insured from sickness.(b) In statutes that become effective on or after January 1, 2002, the term “health insurance” for purposes of this code shall mean an individual or group disability insurance policy that provides coverage for hospital, medical, or surgical benefits. The term “health insurance” shall not include any of the following kinds of insurance:
(1) Accidental death and accidental death and dismemberment.
(2) Disability insurance, including hospital indemnity, accident only, and specified disease insurance that pays benefits on a fixed benefit, cash payment only basis.
(3) Credit disability, as defined in subdivision (2) of Section 779.2.
(4) Coverage issued as a supplement to liability insurance.
(5) Disability income, as defined in subdivision (i) (c) of Section 799.01.
(6) Insurance under which benefits are payable with or without regard to fault and that is statutorily required to be contained in any liability insurance policy or equivalent
self-insurance.
(7) Insurance arising out of a workers’ compensation or similar law.
(8) Long-term care.
(c) In a statute that becomes effective on or after January 1, 2008, the term “specialized health insurance policy” as used in this code shall mean a policy of health insurance for covered benefits in a single specialized area of health care, including dental-only, vision-only, and behavioral health-only policies.
SEC. 2.
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 38.6 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 38.6 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 38.6 of the opportunity to make the designation. That notice shall instruct the applicant or policyholder on how he or she the applicant or policyholder 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 their 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 38.6, 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 38.6, 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) (c) 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.
SEC. 3.
Section 785 of the Insurance Code is amended to read:785.
(a) All insurers, brokers, agents, and others engaged in the transaction of insurance owe a prospective insured who is 65 years of age or older, a duty of honesty, good faith, and fair dealing. This duty is in addition to any other duty, whether express or implied, that may exist.(b) Conduct of an insurer, broker, or agent, or other person engaged in the transaction of insurance, during the offer and sale of a policy or certificate previous to the purchase is relevant to any action alleging a breach of the duty of good faith and fair dealing.
(c) Except where explicitly provided to the contrary, this article shall not apply to any of the following:
(1) Medicare supplement insurance as defined in subdivision (m) of Section 10192.4.
(2) Long-term care insurance as defined in Section 10231.2.
(3) Disability coverage provided through the insured’s employer or former employer.
(4) Disability insurance policies or certificates principally designed to provide coverage for accidents or expenses incurred while traveling if the premium for the policy or certificate is ten dollars ($10) or less.
(5) Blanket disability insurance as defined in Section 10270.3.
(6) Credit disability insurance as defined in Section 779.2.
(7) Accidental death insurance.
(8) Until January 1, 2002, disability policies or certificates that are sold through direct response methods of delivery.
(9) Disability income insurance as defined in subdivision (i)
(c) of Section 799.01.
(d) Provided that the requirements of Section 10296 are met, this article shall not apply to transportation ticket policies and baggage insurance policy types allowable for sale by travel agents pursuant to Section 1753.
SEC. 4.
Section 10111.2 of the Insurance Code is amended to read:10111.2.
(a) Under a policy of disability insurance other than health insurance, as defined in Section 106, including a policy of disability income insurance, as defined in subdivision(1) Awaiting a response for relevant medical information from a health care provider.
(2) Awaiting a response from the claimant to a request for additional relevant information.
(3) Investigating possible fraud that has been reported to the department’s Fraud Division in compliance with subdivision (a) of Section 1872.4.
(b) If the insurer has not received all information needed to determine liability for a claim within 30 calendar days after receipt of the claim, the insurer shall notify the insured in writing and include a written list of all information it reasonably needs to determine liability for the claim. In that event, the 30-calendar-day period set out in subdivision (a) shall commence when the insured has provided to the insurer all information in that notification. If no notice is sent by the insurer within 30 calendar days after the claim is filed by the insured, interest shall begin to
accrue on the payment of benefits on the 31st calendar day after receipt of the claim, at the rate of 10 percent per year.
(c) When the insurer has received all information needed to determine liability for a claim, and the insurer determines that liability exists and fails to make payment of benefits to the insured within 30 calendar days after the insurer has received that information, any delayed payment shall bear interest, beginning the 31st calendar day, at the rate of 10 percent per year. Liability shall, in all cases, be determined by the insurer within 30 calendar days of receiving all information set out in the insurer’s written notification to the insured.
(d) Nothing in this section is intended to restrict any other remedies available to an insured by statute or any other law.
SEC. 5.
Section 10144.55 of the Insurance Code is amended to read:10144.55.
(a) Every policy of disability income insurance, as defined in subdivision(b) For the purposes of this section, “severe mental illnesses” shall include:
(1) Schizophrenia.
(2) Schizoaffective disorder.
(3) Bipolar disorder (manic-depressive illness).
(4) Major depressive disorders, including postpartum depression.
(5) Panic disorder.
(6) Obsessive-compulsive disorder.
(7) Pervasive developmental disorder or autism.
(8) Anorexia nervosa.
(9) Bulimia nervosa.
