California becomes first in the nation to increase consumer protections in pet insurance
News: 2014 Press Release
SACRAMENTO, Calif. - Today AB 2056 (Dababneh), which adds essential consumer protections to pet insurance, was signed into law by Governor Brown making it the first law of its kind in the nation. The new law will require pet insurers to disclose important information regarding their policies, standardize definitions, and provide consumers with a 30-day "free look" period; AB 2056 was sponsored by Insurance Commissioner Dave Jones and will go into effect July 1, 2015.
Under the new law, pet insurers will be required to disclose baseline information regarding their policies such as reimbursement benefits, pre-existing condition limitations, and a clear explanation of limitations of coverage including coinsurance, waiting periods, deductibles, and annual or lifetime policy limits. Consumers will also gain a 30-day "free look" period in which a pet insurance policy can be returned for a full refund.
"California consumers will now have greater protection when they purchase pet insurance," said Commissioner Jones. "In the state with the largest number of insured pets, once again California is leading the way by becoming the first state in the nation to enact a law that adds consumer protections to this rapidly growing line of insurance. I would like to thank Governor Brown for signing our bill and giving Californians peace of mind when it comes to protecting their pets."
Directly addressing the majority of the Department's complaints regarding pet insurance, consumers purchasing pet insurance will now have a better understanding of what they're getting for their money, including the vital parameters of what constitutes of pre-existing condition. Actors and Others for Animals, who has continuously supported the bill, has also seen an increase in applications from pet owners with pet insurance who need help paying for their sick or injured pets because they have come to find that the policy's exclusions exceed the benefits. AB 2056 will help consumers better understand policy terms and allow them to select a product that fits their needs.
If California consumer Gary Lucks had known that he would only be reimbursed about one third of the cost of his dog Brodie's cancer diagnosis and treatment he would have considered other options. Lucks previously obtained marketing materials that advertised a 90 percent reimbursement rate, but in reality the company only covered 90 percent of the plan's benefit schedule allowance. This bill will allow consumers like Lucks to make more informed decisions regarding pet insurance policies.
Commissioner Jones first authored this pet insurance consumer protection bill in 2008 when he served in the State Assembly. He was successful in getting the bill to the Governor's desk, only to have it vetoed by Governor Arnold Schwarzenegger. He vowed to try again with a new Governor and the result is the first in the nation per insurance consumer protection law.
- Pet insurance industry to reach $750 million by 2015 as Americans spend more than $15 billion each year on veterinary care.
- AB 2056 was supported by a number of animal welfare organizations such as the Humane Society of the United States, American Society for the Prevention of Cruelty to Animals, Social Compassion in Legislation, and the Pet Industry Joint Advisory Council, as well as consumer groups including Consumers Union and the Consumer Federation of California.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.