For Consumers

Frequently asked questions about Emergency Order 2020-03

Answers to questions submitted by the public about Insurance Commissioner Mike Kreidler’s Emergency Order 20-03 (PDF, 332KB) to all property and casualty insurers to allow policyholders a grace period for payments and protect them from policy cancellations. 

How long is the grace period?

The grace period is the length of Emergency Order 20-03, which expires on May 9.

 

Will the emergency order be extended past May 9, 2020?

This emergency order won't be extended past May 9, for a couple of reasons. The intention for the original 45-day grace period was to give consumers some time to file for unemployment and to receive their stimulus money from the federal government. We know that many people are still unable to work. However, allowing a payment grace period for longer than 45 days has the potential to negatively affect potential insurance claims. Many companies are still working with their customers on payment plans and/or have offered discounts or rebates on their premiums during the coronavirus pandemic. We encourage consumers to contact their insurers if they are having trouble paying their premiums.

 

What if the cancellation notice was issued prior to the effective date of Emergency Order 20-03, but the cancellation date falls within the order’s 45-day time period?

As stated in Emergency Order 20-03, the insurance company shall not cancel the policy for nonpayment of premium during the order’s duration, unless directed to by the insured.

 

Does Emergency Order 20-03 apply to policies that cover locations in Washington state but with a mailing address outside Washington state?

Yes, the order covers all policies that are under the authority of the Washington state insurance commissioner. Policies that have a covered property or activity located in Washington state must comply with Emergency Order 20-03.

 

Does Emergency Order 20-03 apply to policies that cover locations outside Washington state but with mailing addresses inside Washington state?

Likely, but it will depend on the individual policy and insurance transaction.

Under RCW 48.01.020, the Insurance Commissioner has authority over “All insurance and insurance transactions in this state, or affecting subjects located wholly or in part or to be performed within this state, and all persons having to do therewith.” An insurance transaction, as defined in RCW 48.01.060 “includes any: (1) Solicitation. (2) Negotiations preliminary to execution. (3) Execution of an insurance contract. (4) Transaction of matters subsequent to execution of the contract and arising out of it. (5) Insuring.”

Therefore, if any of the insurance transaction occurred in the state, or if it covers risk at least in part in the state or is to be performed in the state, then the commissioner has authority and Emergency Order 20-03 applies.

 

How does Emergency Order 20-03 apply to surplus line companies and to their brokers?

As a regulated entity under RCW 48.15, excess & surplus line companies and brokers are bound to Part A of the order, which requires grace periods and waiving otherwise applicable charges and fees associated with nonpayment of premium, such as late fees and reinstatement fees, for the duration of the order.

 

How does Emergency Order 20-03 affect premium finance companies?

As a regulated entity under RCW 48.56, premium finance companies are bound to Part A of the order, which requires grace periods and waiving otherwise applicable charges and fees associated with nonpayment of premium, such as late fees and reinstatement fees, for the duration of the order.

 

How does this order affect life insurance policies?

This order applies to only property and casualty insurance and therefore does not apply to life insurance.

 

You are only talking about property and casualty insurance. What about health, life, and long-term care insurances?

Commissioner Kreidler issued Emergency Orders 20-01 and 20-02 addressing health insurance. Emergency order 20-03 only addresses property and casualty insurance.

 

Is there an order for carriers to work with clients on pricing? I have a carrier that has agreed to drop the CGL down to Premises Liability and exclude the Operations that cannot open right now, but they are refusing to amend the Excess as they said the premium for the 04/01/2020 renewal is a "Flat Premium" of $1,575, even though the policy has a Minimum Premium endorsement that shows $35.

The order doesn't address pricing. Each company's rate filing contains pricing information.

 

Most carriers, admitted and non-admitted, require a down payment on a new or renewal policy. Does the new order eliminate that requirement?

The emergency order is related to grace periods for active policies. If premium is required to issue a policy, that requirement is not changed by the order.

 

Can property & casualty carriers still cancel for underwriting reasons during this period of time?

The emergency order requires grace periods on property and casualty policies. The order does not affect cancellations due to reasons other than nonpayment. If cancellation is for a valid reason not related to nonpayment - such as misstatement on an application - that is not subject to the order.

 

If a retail agent requests binding of an non-admitted policy, either new business or renewal, they are usually responsible to the managing general agency for the usual 25% of the premium plus taxes and fees. So, if the policy is cancelled mid-term and the agent did not collect a down payment, then the agent is out the money. How would this work with the order on cancelling of policies?

The emergency order is related to grace periods on active policies. If premium is required to issue a policy, that requirement is not changed by the order.

 

What will the insurance commissioner's office do to protect small Washington insurers, who will have policyholders walk away from the deferred payments they owe following your emergency order - and just leave to go get insurance elsewhere, walking away from debt after coverage was granted and claims paid for them, during this time of premium deferral. We have at least two insurers domiciled in Washington who don't have the national and endless bank accounts of other national insurers. Losing tens of millions of dollars for policyholders who walk away from deferred premium owed, could be catastrophic. What will you do to protect them?

The order is in effect until May 9, 2020. It does not waive the payment of premiums permanently. It only delays when premiums are required to be paid and prohibits the charging of late fees or other fees for nonpayment during the grace period.

 

We have a couple of clients that cancelled for nonpayment after the order went into effect but with a cancellation effective date prior to the order date. The effective date of cancellation would have been the date of cancellation regardless of the order, but I am wondering about the timing.

If the clients are consumers, this is allowed. If the clients are regulated entities, it is not allowed, as regulated entities are not allowed to retroactively set the effective date to avoid the order's effect.

 

How does the Emergency Order affect a policy renewing between March 25, 2020, and May 9, 2020, and the Insurance Company (which is the same carrier as expiring) is requiring a down payment to bind the renewal coverage?

The order is specific to grace periods for non-payment of premium. A policy has to be in-force for grace periods to be offered.

 

Is there a link to show what other states are requiring or putting in place, such as Washington has done?

The National Association of Insurance Commissioners (NAIC) is compiling information from all states (naic.org).

 

Is there a grace period to pay small business insurance premiums?

If your small business insurance is property and casualty coverage, there is a grace period for paying premiums until May 9 under Emergency Order 20-03.

 

With respect to Emergency Order 20-03, does the OIC take the same position as Texas on canceling back to the date of equity where deferred payment plans have not been honored (excluding those with claims)? TDI is allowing insurers that set up deferred payment plans to retroactively cancel back to equity date if the insured does not make their deferred payments. Will insurers be able to do that in Washington?

No. During the timeframe outlined in the order, P&C carriers must provide a grace period, not cancel policies for nonpayment and must waive all late fees and other fees. The date of equity has no importance.

 

Under OIC Emergency Order 20-03, may insurers subject to the order deduct unpaid premium from a claim payment on a first-party loss ?

No. During the timeframe outlined in the order, P&C carriers must provide a grace period, not cancel policies for nonpayment and must waive all late fees and other fees. There is nothing that allows an insurer to deduct unpaid premium from a claim payment.

 

I was just notified on April 6 that my home insurance is going to be canceled on May 27 due to aged roofing and siding. I was planning on fixing both this summer before I got the notice. I feel like now is a bad time to be inviting a roofing team and siding and painting team to my house to do work and would not comply with the state's orders for social distancing. What can I do to get an extension on my insurance during these unprecedented times?

An insurance company is required to give you 45 days’ notice of their decision to nonrenew or cancel an insurance policy. The company must give you the actual reason for the decision to cancel the policy. During the Stay Home, Stay Healthy order, it may be difficult to get the repairs completed in a timely manner. You should contact your insurance company and see if there are any options available to get an extension for the repairs. If your insurance company is not willing to provide you with any extension options, you can file a complaint with us.

 

Do I need to get my continuing education for a June 2020 renewal for my P&C and Life & health?

Yes, all continuing education requirements remain in place.

 

Does Emergency Order 20-03 provide any premium relief to insureds that have financed their premium through premium finance companies? I have seen recent documents that were released by premium finance companies that are charging late fees and notifying insureds that policies will be canceled prior to May 9.

The emergency order explicitly prohibits regulated entities, which includes premium finance companies, from charging late fees or other penalties for nonpayment through May 9, 2020. Regulated entities must also provide a grace period through that same date. Cancellation for nonpayment prior to May 9 violates the order. You can file a complaint if you would like us to contact the company on your behalf.

 

My insurer canceled my policy because it was up for renewal and I wasn't able to pay. Contacting the insurer did not help even though they acknowledged the impact of COVID-19. My insurer says I have until May 5 to make a payment but has not reactivated my insurance. What can I do?

The insurer may be violating the commissioner's emergency order 20-03. You can file a complaint with us if you would like us to contact the company on your behalf.

 

Does the emergency order 20-03 apply to nonrenewals for any reason, or are there acceptable nonrenewal reasons?

The emergency order requires grace periods on property and casualty policies. The order does not affect nonrenewals due to reasons other than nonpayment. If nonrenewal is for a valid reason not related to nonpayment - such as misstatement on an application - that is not subject to the order. In order for an insurance company to nonrenew an insurance policy, they are required to provide you written notice 45 days prior to the effective date and provide you with the actual reason for their decision to nonrenew the policy.

 

Does Emergency Order No 20-03 allow for an extension of other timelines for coverage under RCW 48.02.060(4)(b) which applies to "grace periods for payment of insurance premiums and performance of other duties by the insured?" What happens when I miss a deadline that is not related to premium payment, even by one day? Does the stay-at-home order and my high-risk status change this?

EO 20-03 only applies to nonpayment of premium and the related grace period. It does not apply to timelines or obligations other than those concerning payment of premium and related issues.