California Insurance Regulator Calls for 60-day Insurance Premium Grace Period Due to COVID-19 Outbreak

Oakland, CA – Citing widespread interruptions and loss of income for many California consumers and business caused by the COVID-19 outbreak, California Insurance Commissioner Ricardo Lara has issued a Notice requesting that all insurers doing business in California grant policyholders a “grace period” of at least sixty (60) days to pay insurance premiums before canceling their policies for nonpayment of premium. This Notice applies to insurers that provide any insurance coverage in California, including but not limited to life and liability coverage.

“Now is the time to come together to help consumers weather this unprecedented period of uncertainty, and that includes helping policyholders maintain their insurance coverage if they are unable to pay their premiums,” Commissioner Lara said in a statement. “We must do everything we can to ensure that consumers and their families maintain insurance coverage protection during this public health pandemic.”

The Notice leaves unanswered the question of whether life insurers should add another 60-days to policies that already include a 60-day grace period or if such policies are compliant by their terms with the Notice.

The uncertainty insurers are now likely to face as they navigate this impromptu grace-period request is compounded by the fact that Commissioner Lara’s Notice also requests that all insurance agents, brokers, and other licensees who accept premium payments on behalf of insurers take steps to ensure that customers have the ability to make prompt insurance payments, if and where possible. This includes alternate methods of payment, such as online payments, to eliminate the need for in-person payment methods to protect the health and safety of both workers and customers. California regulators’ reactions to COVID-19 are rapidly evolving in response to the changing nature of the pandemic each day. McDowell Hetherington continues to monitor the impact of the COVID-19 pandemic on litigation in California and throughout the country

For more information, please contact McDowell Hetherington attorneys Jodi Swick and Alec DiMario.