California orders insurers to reimburse 6 types of policies, including auto insurance, due to coronavirus

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California insurance commissioner Ricardo Lara on Monday ordered insurance companies to grant partial credits or premium refunds for March, April and – if on-site housing restrictions remain – for May in at least six Insurance lines “where the risk of loss has decreased” substantially “because coronavirus makes you work and drive less.

The ordinance applies, as a minimum, to the passenger car, the commercial automobile, compensation for industrial accidents, commercial multi-risk, commercial civil liability and medical malpractice insurance. in California. The credit, discounts or rebates should be given as soon as possible, but no later than August, he said.

Last week, more than a dozen major auto insurance companies announced that they would offer general discounts on personal auto insurance policies, as most customers drive less and are therefore less likely to be involved. in accidents. The most common deal was a 15% credit on the April and May premiums, although some offered more or less. All discounts are pending approval from state regulators. It was unclear, at least in California, whether insurers would have to file a new rate plan and have it approved before they could offer such discounts. This process could take months.

Lara said companies could make such offers without obtaining prior approval if they follow certain methods described in a bulletin, such as using an average percentage based on estimated changes in risk or reducing the exposure. Alternatively, they could refund the premiums on a case-by-case basis. “An example would be to reclassify a personal exposure to the automobile from“ the use of the home-work trip ”to“ the use of pleasure ”and to reduce the estimated number of kilometers traveled by the insured while the pandemic COVID-19 continues to significantly reduce the number of kilometers traveled, ”said the bulletin. said.

“Consumers will also have the opportunity to provide their actual or estimated individual experience to their insurance company,” the department said in a press release.

“If a company chooses to make a general reimbursement and the policyholder then contacts their company with specific information that would further reduce the premium, then the company would adjust the premium to reflect this specific information,” said the carrier. – word of the Michael department. Soller said in an email. “If the average amount of premium reimbursement offered by the insurance company still reflects a higher premium than the current driving activity of the policyholder, the driver may then be eligible for additional reimbursement. But the reverse is also possible. Note that refunds only reflect a short-term change. “

He added that each insurer will have to provide details of its announcements from last week “so that the department can assess whether each action was reasonable”. Lara’s actions go far beyond last week’s announcements, as they apply to many other assurances.



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