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 you get a refund for health insurance premiums? ›
If your insurance company doesn't meet its 80/20 targets for the year, you'll get back some of the premium that you paid. You may see the rebate in a number of ways: A rebate check in the mail. A lump-sum deposit into the same account that was used to pay the premium, if you paid by credit card or debit card.
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.
How long does an insurance company have to refund your money? ›
The time it takes to get your money back depends on how you choose to get your refund. For example, a direct deposit typically takes around two weeks to show up in your account. It may take longer if the insurance company sends a check since you'll have to wait for it to arrive.
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.
Why did I get a premium refund check? ›
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 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.
Do you have to pay back a premium tax credit for health insurance? ›
If at the end of the year you've taken more premium tax credit in advance than you're due based on your final income, you'll have to pay back the excess when you file your federal tax return. If you've taken less than you qualify for, you'll get the difference back.
Who is not eligible for premium tax credit? ›
To be eligible for the premium tax credit, your household income must be at least 100 percent and, for years other than 2021 and 2022, no more than 400 percent of the federal poverty line for your family size, although there are two exceptions for individuals with household income below 100 percent of the applicable ...
There are several circ*mstances that could trigger a return premium, including the policyholder canceling the policy before its expiration date, the insurer canceling the policy, or changes in the policy that result in a lower premium.
How to calculate insurance premium refund? ›
Pro-rata calculation: To calculate a pro-rata refund, insurers divide the total premium by the number of days in the policy term, then multiply by the number of unused days. Example: If you paid $600 for a 12-month policy and cancel after six months, the calculation is $600 / 365 days * 183 unused days = $300 refund.
Is the premium credit refundable? ›
The Premium Tax Credit—also known as PTC—is a refundable credit that helps eligible individuals and families cover the premiums for their health insurance purchased through the federal government's health insurance marketplace.
Do insurance companies refund unused premiums? ›
Your insurance company may issue a refund if your policy is canceled, and you've paid your premium in advance. Receiving an insurance refund will largely depend on why you're canceling the policy and how much of the premium you paid in advance.
How many days must the insurer refund all premiums and policy fees? ›
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.
Why am I getting a refund from my insurance company? ›
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.
How many days does an insurer have to return unearned premiums to an insured? ›
If the policy is not auditable, the gross unearned premium shall be tendered within 80 business days after the insurer either receives notice of the event that generated the gross unearned premium, or receives notice from a premium finance company of a cancellation.
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.
What is an unearned premium refund? ›
Unearned premiums are parts of the insurance premiums that are collected in advance by the insurers. The insurer is subject to refund the unearned premium if the insured decides to terminate the policy before the policy period ends.
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.
