Section 2248.7 - Provisions of Policies and Certificates of Insurance: Disclosure to Debtors(a) An individual credit insurance policy or a certificate of group credit insurance shall be delivered to the debtor within thirty (30) days after the debtor becomes insured in connection with the indebtedness, as evidence of such insurance.(b) Each individual policy or group certificate of credit insurance delivered or issued for delivery in this State shall, in addition to the other requirements of law, set forth: (1) the name and home office address of the insurer, and, on group certificates, an identification of the master policy;(2) the identity of the insured debtor by name or any other reasonable alternative method of identification approved by the Commissioner;(3) the full amount of premium or identifiable insurance charge to the debtor, separately for the credit life insurance and credit disability insurance; except that in lieu of so stating the full amount of premium or identifiable insurance charge, there may be set forth, separately for credit life insurance and credit disability insurance, the rate of insurance premium or payment per unit of coverage in case the indebtedness is a revolving loan or charge account or in cases where the debtor obligates himself to pay the insurance premium or payment periodically with the debt payments on the decreasing amount of the insurance;(4) a description of the coverage including the amount and term thereof;(5) any exceptions, reductions, limitations and restrictions;(6) a statement that the benefits will be paid to the creditor to reduce or extinguish the indebtedness, and if the policy provides coverage which may exceed the amount to which the creditor is entitled under the contract of indebtedness, any such excess shall be paid to a beneficiary other than the creditor, named by the debtor or to his estate; and(7) a statement that in the event the indebtedness is discharged due to renewal or refinancing prior to the scheduled maturity date, the insurance in force shall be terminated before any new insurance may be issued in connection with the renewed or refinanced indebtedness, and in the event the indebtedness is discharged due to payment prior to the scheduled maturity date, the insurance in force shall be terminated, unless payments are made to the debtor during the period of disability under the provisions of Section 2248.7(c)(2)(E).(c) A policy, certificate of credit insurance or notice of proposed insurance shall not contain provisions which would encourage misrepresentation or which are unjust, unfair, inequitable, misleading, deceptive or contrary to law or to the public policy of this State. (1) A credit life insurance policy violates this subsection if it contains any limitation or exclusion other than as provided in California Administrative Code, Title 10, Chapter 5, Article 6.9.(2) A credit disability insurance policy violates this subsection if it: (A) restricts coverage to permanent disabilities where the debtor is in fact totally disabled for the period required by the policy, although such disability may be of temporary nature;(B) defines disability as an inability to perform any occupation. Disability may be defined as the inability to perform any occupation for which the debtor is reasonably fitted by education, training or experience after the period of total disability has existed for 18 consecutive months. During the first 18 months of disability, the definition must relate the disability to the occupation of the debtor at the time such disability occurred;(C) restricts benefits to those periods of total disability when the insured is under the regular and continuing care of a physician, but this provision does not limit the right of the insurer to require evidence of actual disability at reasonable intervals in order to justify the continued payment of benefits;(D) does not set forth clearly on the insured debtor's policy or certificate in bold print or in some other prominent way, the type of benefit payable, i.e., amount of monthly indemnity and a provision that the daily indemnity will be calculated at the rate of 1/30 of the monthly indemnity;(E) does not provide that if a debtor refinances or renews his indebtedness while disabled and insured, the refinancing or renewal shall be disregarded for the purposes of applying elimination periods and applying waiting periods and applying time limitations applicable to pre-existing conditions to the extent such time limitations had expired prior to such refinancing or renewal to the extent of the amount and term of the insured indebtedness outstanding at the time of the renewal and refinancing of the debt or if the indebtedness is prepaid by the debtor during any period of disability for which benefits are payable, the disability coverage shall either continue in force and the insurer shall make periodic payments directly to the debtor until such time as the disability no longer exists or to the end of the term of insurance, whichever first occurs, or provides for refund of the unearned premium for such period of time;(F) contains any other exclusion, reduction or limitation except as provided in California Administrative Code, Title 10, Chapter 5, Article 6.9.(3) A credit life insurance or credit disability insurance policy violates this subsection if it: (A) contains any exclusion because of age or other eligibility requirement (including, but not limited to employment) unless such requirement is contained in a written application for insurance signed by the insured and such requirement is set forth clearly on the insured debtor's policy or certificate in bold print or in some other prominent method, such as an appropriate caption;(B) provides an illusory benefit because of a restrictive definition of total disability; for example, a disability policy with a definition of "total disability" which conditions benefits on ability to perform his occupation which is issued to a retired pensioner whose income comes from Social Security, or to a home-maker with no separate wage or salary, or to a member of the armed forces of the United States;(C) provides an amount of insurance less than the amount necessary to discharge the indebtedness, when it does not set forth clearly such information on the insured debtor's policy or certificate in bold print or in other prominent method.(4) A notice of proposed insurance violates this subsection if it does not comply with the following:(A) provides a blank space indicated as the space for signature by the debtor;(B) sets forth the name and home office address of the insurer, the name or names of the debtor, the premium or amount of payment by the debtor separately for credit life insurance and credit disability insurance, the amount, term and a brief description of the coverage provided;(C) refers exclusively to insurance coverage, and shall be separate and apart from the loan, sales or other credit statement of account, instrument or agreement, unless the information required by subparagraph (B) above is prominently set forth therein.(d) No statements made by a debtor shall be used by an insurer as a basis for denying a claim unless such statement is contained in a written application for insurance signed by the debtor, the form of which has been filed with and approved by the Commissioner for use in connection with the policy form in question.(e) An application must identify the insurer providing the coverage. An application signed by the debtor is required whenever the policy contains an exclusion on account of age or other eligibility requirement.(f) By accepting an application and issuing a policy, certificate or notice of proposed insurance, the insurer waives any limitations in the policy which the application revealed were breached on the date the application was made.(g) If the insurer accepts premiums where the applicant has correctly stated his age, insurance coverage shall be effective regardless of age limitations or exclusions if a premium refund is not actually made (finance instrument amended) within the 75-day period following the date the application for insurance was signed by the debtor.(h) A group credit insurance policy which provides for payment of single premiums to the insurer shall provide that, in the event of termination of such policy by the insurer or creditor, insurance coverage with respect to any debtor insured under such policy, shall, unless the debt is refinanced or prepaid, be continued for the entire period for which a single premium has been paid by such debtor. A group credit insurance policy under which premiums are paid to the insurer monthly on outstanding balances shall contain a provision that, in the event of termination of such policy by the insurer or creditor, thirty-one days notice of such termination shall be given to any debtor insured under the policy by the insurer where practicable, otherwise by the creditor, unless there is immediate replacement of the coverage by the same or another insurer. With respect to debtors covered at the date of termination where notice is required, coverage shall continue until notice is given as though the policy had not terminated.(i) Currently Approved Policy Forms. Nothing in these regulations require the refiling of currently approved policy forms, riders or any other approved forms. It is recognized that certain provisions of these regulations will require the refiling of rates and the reprinting of rate charts. Such currently approved forms shall be construed, however, to be in compliance with all provisions of these regulations, or the insurer shall immediately notify the Insurance Commissioner that the insurer will not issue any such forms hereafter, and will not enroll or insure any new debtors on such forms on and after the effective date of these regulations. New policy forms, riders and applications filed for approval on and after the effective date of these regulations, April 1, 1979, shall comply with all provisions of these regulations.Cal. Code Regs. Tit. 10, § 2248.7
1. Amendment of subsection (b) and NOTE filed 4-14-94; operative 5-16-94. Submitted to OAL for printing only pursuant to Government Code section 11343(a)(1) (Register 94, No. 15). Note: Authority cited: Section 779.21, California Insurance Code. Reference: Sections 779.5 through 779.9 and 779.14, California Insurance Code.
1. Amendment of subsection (b) and Note filed 4-14-94; operative 5-16-94. Submitted to OAL for printing only pursuant to Government Code section 11343(a)(1) (Register 94, No. 15).