COVID-19 Updates – Orders from the California Department of Insurance

We have been receiving a number of questions regarding insurance premiums and coverage specifically as it pertains to the Coronavirus. Many insureds are wondering if they will get refunds from insurance companies because certain operations have ceased and others have been substantially cut back and many others are wondering if they may have coverage for loss of income due to the Government Mandates.

California’s Insurance Commissioner Ricardo Lara issued two orders this week addressing both these issues. These orders apply to among others, insurance companies and insurance brokers.

Click here for information that pertains to Premium Refunds, Credits, and Reductions. The order requires:

Insurers to make an initial premium refund for the months of March and April to all adversely impacted California policyholders in the following lines of insurance, as quickly as practicable, but in any event no later than 120 days after the date of this Bulletin:

  • Private passenger automobile insurance
  • Commercial automobile insurance
  • Workers’ compensation insurance
  • Commercial multiple peril insurance
  • Commercial liability insurance
  • Medical malpractice insurance
  • Any other line of coverage where the measures of risk have become substantially overstated as a result of the pandemic.

If the COVID-19 pandemic continues beyond May, Commissioner Lara will send out a subsequent Bulletin to insurers and provide appropriate instructions.

Several alternatives are available to the individual insurance company but notice to policyholders must go out within 120 days of the date of the bulletin (April 13th 2020). These credits are intended to reflect the insurance companies reduction in risk due to lower exposures. At this point we don’t know how these refunds will be calculated or how much they will be. We will keep you posted as we learn more. 

Click here for information that addresses Business Interruption claims and requires all brokers to “accept, forward, acknowledge, and fairly investigate all business interruption claims submitted by businesses.” This was sent because some “insurers, agents, brokers, and insurance company representatives are attempting to dissuade policyholders from filing a notice of claim under its Business Interruption insurance coverage, or refusing to open and investigate these claims upon receipt of a notice of claim.” The statement while general in nature does not apply to all brokers and it does not apply to Cavignac. We are a broker and place coverage with various insurance companies. It is the insurance companies responsibility to determine coverage not the broker. Since the advent of the Coronavirus we have recommended to all our clients that if they have a quantifiable business interruption loss it should be turned in to the insurance company. While the issue of whether or not a Government Mandate will trigger coverage under a Business Interruption Policy is questionable, we will work with our clients on submitting the claim and advocate for them in obtaining coverage.