On April 13, California Insurance Commissioner Ricardo Lara ordered insurance companies to return premiums to consumers and businesses to provide financial relief during the COVID-19 emergency.
His order covers premiums paid for March and April — and May if “shelter in place” restrictions continue — to insure private passenger automobiles, commercial automobiles, workers’ compensation, commercial multi-peril, commercial liability and medical malpractice insurance, and any other line where the risk of loss has fallen substantially due to the COVID-19 pandemic.
“With Californians driving fewer miles and many businesses closed due to the COVID-19 emergency, consumers need relief from premiums that no longer reflect their present-day risk of accident or loss,” said Lara. “Today’s mandatory action will put money back in people’s pockets when they need it most.”
Insurance companies are required to provide a premium credit, reduction, return of premium, or other adjustment as soon as possible, and no later than August.
According to the Insurance Information Institute, the largest auto insurers providing relief are: Geico, Progressive, Allstate, USAA, Liberty Mutual, Farmers, Travelers, American Family, State Farm and Nationwide.
Ricardo Lara
Lara earlier requested a 60-day grace period for policyholders to pay premiums so that insurance policies are not cancelled for nonpayment during this challenging time.
According to a UC Davis Special Report on the Impact of COVID-19 on California Traffic Accidents, reduced driving has resulted in fewer accidents, injuries, and fatalities on public highways and roads. Falling payroll and receipts due to closure orders have dramatically reduced risk of a liability loss for businesses.
A premium refund will not require prior approval by the Department of Insurance if an insurance company follows methods outlined in the commissioner’s bulletin, such as using an average percentage based on estimated change in risk or exposure. Consumers will have the opportunity to provide their individual actual or estimated experience to their insurance company.
Lara also ordered insurance companies to report to the Department of Insurance within 60 days all premium refunds they have issued or expect to issue.
“I applaud efforts made by insurance companies to date that have offered grace periods and flexibility to consumers and businesses during this national emergency,” added Lara.
Previous actions by the Department of Insurance to assist consumers during the COVID-19 emergency:
- Requesting a 60-day grace period for consumers and businesses to pay insurance premiums
- Extending deadlines for insurance claims until 90 days after the statewide “state of emergency has ended related to COVID-19
- Maintaining auto insurance for those with an expired license and/or car registration
- Extending personal auto coverage for delivery drivers for essential businesses
- Eliminating cost-sharing for COVID-19 testing and screening
- Reminding insurance companies that workers’ compensation insurance applies regardless of a worker’s immigration status
- Urging uninsured Californians to obtain insurance to protect their health
- Directing health insurance companies to provide more telehealth access for consumers
- Directing health insurance companies to submit emergency plans on prescriptions and health access