Premium Grace Period Required

On April 1, 2020, Gov. Lamont issued Executive Order No. 7S, which addressed various health and safety measures related to the coronavirus (COVID-19) pandemic. Amongst other items, the order requires insurers to provide a premium grace period for certain individuals and businesses affected by the COVID-19 emergency.

Following the coronavirus (COVID-19) outbreak, the governor declared a public health emergency on March 10, 2020. With recognition of the worker displacement and business disruption resulting from the disease and mitigation measures, the governor had previously issued a bulletin requesting that insurers take measures to prevent unnecessary policy cancellations or nonrenewals.

Order No. 7S now requires a 60-day grace period (beginning on April 1, 2020) with respect to premium payments and policy cancellations and nonrenewals for certain insureds affected financially by the COVID-19 emergency. The grace period is not a waiver or forgiveness of the owed premium, but rather an extension of time for payment.

The requirement applies to entities licensed or regulated by the Insurance Department that provide any insurance coverage in the state including, life, health, auto, property, casualty and other types. However, the extension is not automatic; eligible individuals or businesses would need to contact their carriers to avail themselves of the temporary relief.

Specifically, insurers must provide the extension to individual policy holders who, due to the COVID-19 pandemic, were laid off, furloughed, fired from employment, or otherwise sustained a significant loss in revenue. Additionally, the grace period must also be extended to businesses that are group policyholders, have group insurance and/or property/casualty insurance, and were required to close or significantly reduce operations or suffered significant revenue loss as a result of the COVID-19 pandemic. Qualifying individuals or businesses may be required to provide a supporting affidavit or other statement acceptable to their carriers.

Although this provision of the order is primarily directed at insurers, employers should be aware of these developments and the available temporary premium relief for qualifying individuals and businesses.

Executive Order No. 7S »