California Assembly Bill AB1804 Amended / Bill

 BILL NUMBER: AB 1804AMENDED BILL TEXT AMENDED IN ASSEMBLY MAY 28, 2014 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, premium, and the coverage period. This bill,  commencing July 1, 2015, would 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, that an insured has the right to designate in writing one individual, in addition to the applicant, to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of the policy for nonpayment of premium, as specified.   commencing January 1, 2016, and with regard to private passenger automobile insurance, specified owner-occupied homeowners' insurance risks, and policies of individual disability income insurance that are issued and take effect or that are renewed on or after January 1, 2016, would require an insurer to maintain a process that allows an insured to designate one additional person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation of a policy for nonpayment of premium, as specified.  The bill would prohibit an insurance policy from lapsing or being 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, as provided, 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  insured has the right to designate in writing   insurer shall maintain a process that allows an insured to designate in writing  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 insured of this right at the time of the application and at least every two years thereafter. The notification described in this subdivision shall instruct the insured how to request the designation and how to replace   or delete a designee.   (b) If an insurer does not maintain the process described in subdivision (a), the insurer shall comply with subdivisions (c) to (i), inclusive.   (b)   (c)  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),   subdivision (i),  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   of the opportunity  to make the designation. That  form shall provide the opportunity for the applicant or insured   notice shall instruct the applicant or insured on how he or she is  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.  (c)   (d)  If after  receiving   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 fails to take action pursuant to subdivision (a) within 30 days, the insured shall be conclusively presumed to have declined the opportunity to exercise his or her right at that time.  (d)   (e)  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.  (e)   (f)  An insured retains the right to designate  an   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 insured, regardless of whether the insured previously declined to exercise that right.  Not less than   At least  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  subdivision (a),   subdivision (c),  the right to change the prior written designation by  adding   replacing  or deleting a person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium. (2) If the insured has  not  previously  waived   designated a person to receive the notice of lapse, termination, expiration, nonrenewal, or cancellation for   nonpayment of premium pursuant to subdivision (c),  the right to designate a person to receive notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of premium.  (3) The notice requirements in paragraphs (1) and (2) may be provided to insureds in a single notice and shall not require two separate notices.   (f)   (g)  When an insured pays the premium for an insurance policy through a payroll or pension deduction plan, the requirements contained in subdivision  (a)   (c)  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.  (g)   (h)  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) at the address provided by the insured for purposes of receiving the notice of lapse, termination, expiration, nonrenewal, or cancellation for nonpayment of 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.  (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.   (i) This section applies only to policies of private passenger automobile insurance, owner-occupied homeowners' 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 policies of individual disability income insurance as described in subdivision (i) of Section 799.01.   (i)   (j)  This section applies to policies that are issued and take effect or that are renewed on or after  July 1, 2015.   January 1, 2016.   (j)   (k)  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.  (k)   (l)  This section shall become  effective on July 1, 2015.   operative on January 1, 2016.