In response to numerous complaints received from businesses, public officials, and other stakeholders of certain insurance representatives about attempts to dissuade business policyholders affected by COVID-19 from filing notice of claims under business interruption insurance coverage, California Insurance Commissioner Ricardo Lara issued a Notice dated April 14, 2020. The Notice advised all agents, brokers, insurance companies, and other Department licensees that they are required to comply with their contractual, statutory, regulatory, and other legal obligations set forth in the California Fair Claims Settlement Practices Regulations (Cal. Code Regs. tit. 10; sections 2695.1 et seq.) (the “Regulations”) in connection with all California insurance claims and in this instance, particularly Business Interruption insurance claims, event cancellation claims, and other related claims. The Statutory authority for these long-enacted Regulations can be found in California Insurance Code Section 790.10.
As stated in Commissioner Lara’s press release announcing and summarizing the Notice, the Regulations require insurance companies and other licensees to:
- Acknowledge the notice of claim immediately, but in no event more than 15 calendar days after receipt of the notice of claim.
- Provide the policyholder with the necessary forms, instructions, and reasonable assistance, including but not limited to, specifying the information the policyholder must provide in connection with the proof of claim and begin any necessary investigation of the claim.
- Accept or deny the claim, in whole or in part, immediately, but in no event more than 40 days after receipt of the proof of claim. The amount of the claim accepted or denied by the insurer must be clearly documented in the claim file unless the claim has been denied in its entirety.
Unlike the recent April 13, 2020 Bulletin # 2020-3, which ordered insurance companies to refund premiums to policyholders affected by COVID-19, the Notice specifically and comprehensively stated the insurance business entities to which it applied and enumerated in detail the provisions in the Regulations with which the business entities must comply. The complete text of the Notice may be found here
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