California Assembly Bill AB1804 Amended / Bill

 BILL NUMBER: AB 1804AMENDED BILL TEXT AMENDED IN ASSEMBLY MAY 15, 2014 AMENDED IN ASSEMBLY APRIL 29, 2014 AMENDED IN ASSEMBLY APRIL 10, 2014 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 amended, 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, commencing July 1, 2015, would  prohibit   provide, with regard to  an individual insurance policy covering real property, personal property, as described, liability, or health, issued or renewed on or after July 1, 2015,  from being issued until the applicant has been given   that an insured has  the right to designate  in writing  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.   specified.  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 designated, if any, at the address provided by the insured for these purposes. The bill would specify that an individual designated by a policyholder does not have any rights, whether as an additional insured or otherwise, to any benefits under the policy, other than the right to receive the notice of lapse, termination, expiration, nonrenewal, or cancellation  for nonpayment of premium  . 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 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 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 an individual 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 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:_____"   396.   (a) An insured has the right to designate in writing one additional person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of a policy for nonpayment of premium.   (b) 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 insured, within 30 days after the inception date of an individual policy described in subdivision (h), with notice of the right to designate one person, in addition to the insured, to receive the notice of lapse, termination, expiration, nonrenewal, or cancellation of a policy for nonpayment of premium. The insurer shall provide each applicant or insured with written notice and a form to make the designation. That form shall provide the opportunity for the applicant or insured to submit the name, address, and telephone number of one person, in addition to the applicant or insured, who is to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of the policy for nonpayment of premium.   (3)   (c)  If after receiving notice from the insurer of the right to designate an individual 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)   subdivision (a)  within 30 days, the insured  is deemed to have waived the right to designate a person.   shall be conclusively presumed to have declined the   opportunity to exercise his or her right at that time.   (b)   (d)  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:   (e) An insured retains the right to designate an additional person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium at any time, at the initiative of the insured, regardless of whether the insured previously declined to exercise that right. 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 a person 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 a  person pursuant to paragraph (2) of subdivision (a), to exercise the right to designate a  person to receive  the  notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of  the  premium.  (d)   (f)  When  the   an  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)   (g)  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 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.  This subdivision does not modify requirements for notice to the insured of lapse, termination, expiration, nonrenewal, or cancellation set forth in other sections of this code.   (f)   (h)  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 that 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)   (i)  This section applies to policies that are issued and take effect or that are renewed on or after July 1, 2015.  (h)   (j)  An individual designated by a policyholder pursuant to this section to receive  the  notice of lapse, termination, expiration, nonrenewal, or cancellation of the policy for nonpayment of  the  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  the  notice as provided by this section.  (i)   (k)  This section shall become effective on July 1, 2015.