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SB-1413 Disability insurance claims: interest payments.(1997-1998)

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SB1413:v92#DOCUMENT

Senate Bill No. 1413
CHAPTER 415

An act to add Section 10111.2 to the Insurance Code, relating to insurance.

[ Filed with Secretary of State  August 31, 1998. Approved by Governor  August 28, 1998. ]

LEGISLATIVE COUNSEL'S DIGEST


SB 1413, Knight. Disability insurance claims: interest payments.
Existing law, governing life and disability insurance, provides, among other things, that the only measure of insurer liability and damage is the sum payable to the insured in the manner and at the times as provided in the policy.
This bill would, in addition, provide that if any insurer fails to pay any benefits under a policy of disability income insurance, as defined, within 30 calendar days after the insurer has received all information needed to determine liability and has determined that liability exists, any delayed payment shall bear interest, as specified. This bill would also provide that the 30-calendar-day period shall not include any time during which the insurer is awaiting a response for relevant medical information from a health care provider, awaiting a response from the claimant, or investigating fraud, as specified. This bill would also provide that if the insurer has not received all information needed to determine liability for a claim within 30 calendar days after receipt of the claim, the insurer shall notify the insured in writing and include a written list of all information it reasonably needs to determine liability for the claim, in which case, the 30-calendar-day period shall commence when the insured has provided to the insurer all information listed in that notification.

The people of the State of California do enact as follows:


SECTION 1.

 Section 10111.2 is added to the Insurance Code, to read:

10111.2.
 (a)  Under a policy of disability income insurance, as defined in subdivision (i) of Section 799.01, payment of benefits to the insured shall be made within 30 calendar days after the insurer has received all information needed to determine liability for a claim. However, the 30-calendar-day period shall not include any time during which the insurer is doing any of the following:
(1)  Awaiting a response for relevant medical information from a health care provider.
(2)  Awaiting a response from the claimant to a request for additional relevant information.
(3)  Investigating possible fraud that has been reported to the department’s Fraud Division in compliance with subdivision (a) of Section 1872.4.
(b)  If the insurer has not received all information needed to determine liability for a claim within 30 calendar days after receipt of the claim, the insurer shall notify the insured in writing and include a written list of all information it reasonably needs to determine liability for the claim. In that event, the 30-calendar-day period set out in subdivision (a) shall commence when the insured has provided to the insurer all information in that notification. If no notice is sent by the insurer within 30 calendar days after the claim is filed by the insured, interest shall begin to accrue on the payment of benefits on the 31st calendar day after receipt of the claim, at the rate of 10 percent per year.
(c)  When the insurer has received all information needed to determine liability for a claim, and the insurer determines that liability exists and fails to make payment of benefits to the insured within 30 calendar days after the insurer has received that information, any delayed payment shall bear interest, beginning the 31st calendar day, at the rate of 10 percent per year. Liability shall, in all cases, be determined by the insurer within 30 calendar days of receiving all information set out in the insurer’s written notification to the insured.
(d)  Nothing in this section is intended to restrict any other remedies available to an insured by statute or any other law.