Insurance companies will need to return premiums to customers and business affected by the novel coronavirus pandemic by order of California Insurance Commissioner Ricardo Lara, his office announced early Monday.
The commissioner’s office said the shelter-in-place order across the state has reduced the overall risk of loss.
Lara said in a statement:
“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.”
“Today’s mandatory action will put money back in people’s pockets when they need it most.”
Per the commissioner’s decree, the premiums covered are for the months of March, April and May if the shelter-in-place order continues through then.
The six categories of premiums covered by the order are: 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.”
Insurance companies have until August to comply with the order — whether through premium credits, reductions, return of premiums or other appropriate premium adjustments.
The commissioner’s office said Lara had previously requested a 60-day grace period for policyholders to avoid cancellation of nonpayment due to the crisis.
Some companies, including State Farm and AAA, have already announced premium refunds or discounts.