Governor Murphy’s Executive Order 123 has mandated a 90-day “grace period” on all property and casualty insurance, life insurance, as well as insurance premium financing. It also requires a 60-day grace period for all health insurance and dental insurance. The order notes that these grace periods might be extended “still further as necessary to protect the interests of policyholders, beneficiaries, and the public.”
The order was issued on the statutory authority of N.J.S.A. App. A:9-47, which authorizes the Governor to “suspend” any “regulatory provision of law, the enforcement of which will be detrimental to the public welfare” during a declared emergency. The regulatory provisions of law being suspended, as referenced in the executive order, are the statutory requirements limiting the various lines of insurance from canceling policies prior to respective statutory grace periods. The order also cites the statutory authority of the Department of Banking and Insurance (DoBI) to “make, alter, amend and rescind rules and regulations” during a declared emergency – N.J.S.A. App.A:7-1 – though DoBI itself has not issued such amended regulations.
The order provides that the DoBI Commissioner shall direct the amortization of unpaid premiums over a period of time. Recognizing that these are challenging times for everyone, we will note that the order risks claims being paid on essentially expired policies, with policyholders never returning to pay the unpaid premiums. The order does preserve the logistical nightmare of permitting carriers to pursue policyholders for unpaid premiums. The timeline for the 90 and 60 day grace periods is not entirely clear, but likely begins on the due date of the next payment on the policy.
Please email Alida if you would like to discuss further.