California Insurance Commissioner Ricardo Lara has issued a notice to insurers ordering them to stop enforcing policy or statutory deadlines on policyholders for claims or coverage until 90 days after the statewide “state of emergency” or other “state of emergency” has ended related to COVID-19.
The California Department of Insurance said the aim of the notice is to protect policyholders from losing, limiting, or waiving policy benefits as a result of the current national state of emergency.
Insurers have been notified that they should not attempt to enforce statutory deadlines on their policyholders for claim forms, proof of loss, medical examinations, and physical inspections, or any other deadlines which, if not met, could force policyholders to lose their coverage.
CDI additionally said it has received complaints from consumers indicating some insurance companies are telling their insureds who suffered losses from the November 2018 fires they must continue to repair or rebuild their homes during this COVID-19 crisis in order to obtain the full replacement cost and additional living expense (ALE) benefits owed to them
However, CDI said applicable law requires that insurers provide no less than 36 months, plus additional six-month extensions for “good cause,” for insureds to collect full replacement cost and ALE for delays in the reconstruction process that are the result of circumstances beyond the control of the insured such as unavoidable construction permit delays, lack of necessary construction materials, and lack of available contractors to perform the necessary work.
According to Commissioner Lara and the CDI, the current COVID-19 pandemic is a circumstance beyond the control of the insured, thereby constituting “good cause” under the applicable laws.
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