News: 2020 Press Release
For Release: April 13, 2020
Media Calls Only: 916-492-3566
Email Inquiries: cdipress@insurance.ca.gov
Commissioner Lara Orders Insurance Companies to Refund Premiums to Drivers and Businesses Affected by the COVID-19 Emergency
Commissioner’s action reflects reduced risk of loss due to “shelter in place” restrictions
LOS ANGELES, Calif. — Insurance Commissioner Ricardo Lara ordered insurance companies to return insurance premiums to consumers and businesses and provide much-needed financial relief during the COVID-19 emergency. The Commissioner's Bulletin covers premiums paid for at least the months of March and April — including the month of May if “shelter in place” restrictions continue — in at least six different insurance lines: private passenger automobile, commercial automobile, workers' compensation, commercial multi-peril, commercial liability, medical malpractice, and any other insurance line where the risk of loss has fallen substantially as a result of 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 Commissioner Lara. “Today's mandatory action will put money back in people’s pockets when they need it most.”
The Commissioner's Bulletin requires insurance companies to provide a premium credit, reduction, return of premium, or other appropriate premium adjustment as soon as possible, and no later than August 2020. Commissioner Lara has already requested at least a 60-day grace period for policyholders to pay their premiums so that insurance policies are not cancelled for nonpayment of premium during this challenging time. Together, these two actions will give consumers and businesses substantial financial relief.
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 also dramatically reduced risk of a liability loss for businesses.
Several auto insurance companies have recently announced voluntary premium refunds to drivers. Today's Bulletin extends these private personal auto policy reductions to more companies and adds commercial lines while monitoring insurance companies’ compliance with California’s consumer protection laws so that refunds are not discriminatory or inadequate.
A premium refund will not require prior approval by the Department of Insurance if an insurance company follows certain methods outlined in the Commissioner’s Bulletin, such as using an average percentage based on estimated change in risk or exposure. Consumers will also have the opportunity to provide their individual actual or estimated experience to their insurance company.
Commissioner Lara also ordered insurance companies to report back to the Department of Insurance all premium refunds they have issued or expect to issue within 60 days, in order to provide oversight and ensure companies are complying with the Bulletin.
“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 Commissioner Lara. “We must do more to help our hard-working families and small businesses.”
Today's action builds on other steps the Department of Insurance has taken 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” or any other “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 California’s 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 increased telehealth access for consumers
- Directing health insurance companies to submit emergency plans on prescriptions and health access
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Media note:
Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.
FAQs
“Today's mandatory action will put money back in people's pockets when they need it most.” The Commissioner's Bulletin requires insurance companies to provide a premium credit, reduction, return of premium, or other appropriate premium adjustment as soon as possible, and no later than August 2020.
Do insurance companies have to refund unused premiums? ›
If you paid your premium in advance and cancel your policy before the end of the term, the insurance company might refund the remaining balance. Most auto insurers will prorate your refund based on the number of days your current policy was in effect.
Can insurance premium be refunded? ›
The insurance company can cancel your group health insurance policy. For that, they too have to provide a 30 days notice period. They will also have to refund the unused premium amount only if no claims have been raised during the policy tenure. The parameters of the refund stay the same.
Can health insurance premiums be refunded? ›
For each taxable year beginning on or after January 1, 2020, this bill, under the PITL, would allow a qualified individual a refundable health insurance premium credit.
Why did I get a refund from my car insurance? ›
One of the most common reasons for a car insurance refund is if you cancel your policy in the middle of your term. You may have found a better rate elsewhere, sold your car or moved to another state.
Can you get back the money paid for insurance premiums? ›
Am I entitled to return of premium on my term life insurance? You're typically only entitled to getting your term life insurance money back if you purchased a return of premium rider with your term policy, you made your payments on time, and you're still living when the term ends.
How many days must the insurer refund all premiums? ›
All premiums paid and any policy fee paid for the policy shall be refunded by the insurer to the owner within 30 days from the date that the insurer is notified that the owner has canceled the policy.
What are the situations where premiums can be refunded? ›
An insurance refund occurs when the insurance company returns a portion of the premium paid by the policyholder under specific circ*mstances, such as policy cancellation, overpayment, or policy adjustments.
What is the premium refund clause? ›
A premium refund is a clause in some insurance policies that grants the beneficiaries a refund to the total amount of premiums paid to date. Depending on the contract and type of insurance, it will grant a refund of the premiums you paid if you die before that term runs out or if you voluntarily end your coverage.
How long does an insurance company have to refund your money? ›
In terms of processing time, acquiring a refund for your classic car insurance claim typically spans approximately two weeks. This duration, which encompasses roughly 10 business days, accommodates payment methods such as checks or direct deposits.
The 80/20 Rule generally requires insurance companies to spend at least 80% of the money they take in from premiums on health care costs and quality improvement activities. The other 20% can go to administrative, overhead, and marketing costs. The 80/20 rule is sometimes known as Medical Loss Ratio, or MLR.
How much are premium refunds? ›
A return of premium (ROP) life insurance policy can refund up to 100% of your premiums at the end of the term. Find out more about how it works in our guide.
Is an insurance premium refund considered income? ›
@pgarside You will report your Refund of Premiums as 'Other Income'. You are only being taxed on this income once. If you were able to deduct all or part of the premiums as a Self Employment Expense previously, you are actually only paying tax on any amount that exceeded your expenses.
Why did my car insurance company send me a check? ›
Whenever a car accident claim is filed, and fault is undisputable, auto insurance companies will send out a check with a brief contract after the insurance adjuster reviews and provides an analysis of the accident. This check comes in the mail, typically a few days to a couple weeks after a car accident.
Do insurance companies refund? ›
You should get a refund of any premiums you have already paid. However, your insurer may take off a small amount to cover days when the policy was in force. They may also charge you a small administration fee. Some insurers may give you a longer cooling-off period.
How do I cancel my car insurance and get a refund? ›
Some insurance companies permit you to cancel right over the phone or online. Other insurers may require written notification or a signed document. Generally, insurers will refund you the money for the unused portion of your policy, assuming you paid in advance.
Can you get a refund for unused insurance? ›
If you initiated the process of cancelling your car insurance, then you may be able to get most, if not all, of your unused amount back. There might be some cancellation fees involved. There are several reasons why you may choose to cancel an insurance policy early.
What is a prorated refund of unused premium? ›
A prorated refund is the amount paid back to you, the policyholder, based on the proportion of coverage utilized. Assume you paid your annual auto insurance premium in full. Six months into coverage, you decide to cancel the subscription. Your insurer would pay back the premium you paid for the unused 6-month coverage.
What is the return of unused premiums? ›
Return of premium (ROP) life insurance is term life insurance that refunds your premium payments if you outlive the term of your coverage. In exchange for this benefit, you'll pay more in premiums while the policy is in force.
