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Consumer protection bill helps Californians avoid losing their insurance coverage

News: 2014 Press Release

For Release: September 17, 2014
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Consumer protection bill helps Californians avoid losing their insurance coverage
Back-up contact will help prevent unintentional insurance lapses

SACRAMENTO, Calif. - Insurance policyholders will now be able to designate a backup contact to receive notices of lapse or missed payment on their insurance bills, thanks to legislation signed by Governor Jerry Brown.

Assembly Bill 1804 (Perea), sponsored by Insurance Commissioner Dave Jones, will allow consumers to designate a third party as their back-up contact to receive notification from their insurance carrier if the consumer's policy is in danger of lapsing, expiring, being terminated or cancelled due to nonpayment of premium.

"Policyholders can now have peace of mind knowing that they can depend on a loved one or trusted friend to help make sure they pay their insurance bills and respond to notices," said Insurance Commissioner Jones. "This additional point of contact can help consumers who have difficulty managing their insurance responsibilities in a timely fashion due to health issues or moving to a new location. Enactment of this bill is another success in carrying out the department's mission to protect California consumers and ensure fair insurance market practices."

This new law will benefit both insurers and consumers by promoting continual insurance among policyholders, especially seniors and members of the military who are often moved or deployed, and who may otherwise unintentionally have their policies terminated due to nonpayment. 

"This measure protects consumers who might be incapacitated from having their insurance policy lapse," said Assembly member Perea. "This is an important consumer protection issue. I applaud the Governor for signing this bill."

Currently, only life insurance and long-term care policyholders have this benefit which must be offered to them by their insurance carriers. AB 1804 expands this benefit to include automobile, homeowners, renters, and disability income insurance policies. The bill will go into effect January 1, 2016.

AB 1804 received strong bipartisan support in the Legislature and is supported by several consumer protection, senior citizen and military veterans' organizations.


Media Notes:

The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $289 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 web site at Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP or 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.

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