CCLME.ORG - IC 481
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State
California
IC Sec 480-491 PREMIUM

INSURANCE CODE
SECTION 480-491





480. An insurer is entitled to payment of the premium as soon as
the subject matter insured is exposed to the peril insured against.



481. (a) Unless the insurance contract otherwise provides, a person
insured is entitled to a return of premium if the policy is
canceled, rejected, surrendered, or rescinded, as follows:
(1) To the whole premium, if the insurer has not been exposed to
any risk of loss.
(2) Where the insurance is made for a definite period of time and
the insured surrenders his policy, to such proportion of the premium
as corresponds with the unexpired time, after deducting from the
whole premium any claim for loss or damage under the policy which has
previously accrued. The provisions of Section 482 apply only to the
expired time.
(b) No contract for individual motor vehicle liability or
homeowners' multiple-peril insurance may contain a provision which
mandates that the premium for such policy shall be fully earned upon
the happening of any contingency except the expiration of the policy
itself. This subdivision shall not apply to policy fees or
membership fees.
(c) This section shall not apply to policies of ocean marine
insurance. For purposes of this section, "ocean marine insurance"
means insurance of vessels or crafts, their cargos, marine builders'
risks, marine protection and indemnity, or other risks commonly
insured under marine insurance governed by the provisions of Chapter
1 (commencing with Section 1880) of Part 1 of Division 2, and as
distinguished from inland marine insurance policies.



481.1. (a) In the event any conditional receipt, binder, or other
evidence of temporary or implied insurance, except ocean marine
insurance as defined in Section 481 and those classes of insurance as
defined in Sections 101, 104, and 106, is canceled, rejected, or
surrendered by the insurer, the coverage thereby extended shall
terminate 10 days after written notice to the named insured is
deposited, properly addressed with postage prepaid, with the United
States Postal Service.
(b) Any conditional receipt, binder, or other evidence of
temporary or implied insurance described in subdivision (a) shall
remain in force for a period of at least 30 days from the date of its
issuance unless sooner canceled, rejected, or surrendered pursuant
to the provisions of subdivision (a).



481.5. (a) Whenever a policy of personal lines insurance terminates
for any reason, or there is a reduction in coverage, the insurer
shall tender the gross unearned premium resulting from the
termination, or the amount of the unearned premium generated by the
reduction in coverage, resulting from the termination, or the amount
of the unearned premium generated by the reduction in coverage, to
the insured or, pursuant to Section 673, to the insured's premium
finance company. The gross unearned premium shall be tendered within
25 business days after the insurer either receives notice of the
event that generated the gross unearned premium, or receives notice
from a premium finance company of a cancellation.
(b) (1) Whenever a policy other than a policy of personal lines
insurance terminates for any reason, or there is a reduction in
coverage, the gross unearned premium shall be tendered to the insured
or, pursuant to Section 673, to the insured's premium finance
company. If the policy is not auditable, the gross unearned premium
shall be tendered within 80 business days after the insurer either
receives notice of the event that generated the gross unearned
premium, or receives notice from a premium finance company of a
cancellation. If the policy is auditable, the gross unearned premium
shall be tendered within 80 business days after the insured provides
all requested audit information to the insurer or the insurer's
designee.
(2) Notwithstanding paragraph (1), an insurer shall not be
required to tender the unearned premium within 80 business days if
the final unearned premium amount cannot be determined due to the
insured's failure, in breach of a policy requirement, to cooperate
with the insurer in a premium audit, or if the amount of the unearned
premium determined by a premium audit remains in dispute.
(c) An insurer may tender gross or net unearned premium to an
agent or broker, or net unearned premium to a finance company, but
shall remain liable to the insured or finance company for payment of
any portion of the gross unearned premium that the agent or broker
fails to remit to the insured or premium finance company.
(d) Any unearned premium that an insurer fails to tender within
the time periods specified in subdivisions (a) and (b) shall bear
interest at the rate of 10 percent per annum from and after the date
on which the unearned premium was required to be tendered. For the
purposes of this section, the tender of any unearned premium to the
insured or premium finance company shall be deemed complete upon the
deposit of the unearned premium in the United States mail, prepaid,
addressed to the named insured or premium finance company at the last
known address, or to an agent or broker with an assignment pursuant
to paragraph (1) of subdivision (g).
(e) For the purpose of this section, the following definitions
apply:
(1) "Gross unearned premium" means the unearned portion of the
full amount of the premium charged to the insured, including the
unearned portion of any amount of the premium the insurer allocated
to an agent or broker as commission.
(2) "Net unearned premium" means the gross unearned premium minus
the unearned commission.
(3) "Policy of personal lines insurance" means an insurance policy
that is designed for and bought by individuals, and includes, but is
not limited to, homeowners' and automobile policies.
(f) The interest penalty required by this section shall not apply
to any insurer in conservatorship or liquidation, nor shall such an
insurer be subject to any other penalty for failure to remit unearned
premium in accordance with the time periods required by this
section.
(g) (1) An assignment by an insured to an agent or broker of the
insured's right to receive unearned premium shall be valid only for
the purpose set forth in Section 1735.5.
(2) If the insured notifies the insurer, 25 or more days after the
insurer's tender of unearned premium to an agent or broker with an
assignment pursuant to paragraph (1), that the agent or broker has
failed to issue to the insured an accounting of an offset permitted
by Section 1735.5, the insurer shall, within an additional 15 days,
either tender the unearned premium directly to the insured or provide
the insured with the agent's or broker's accounting of the offset
permitted by Section 1735.5.
(3) Whenever an insurer tenders the net rather than gross unearned
premium to an agent or broker or premium finance company, the
insurer shall contemporaneously notify the agent or broker of the
amount of the unearned commission.
(4) If an insurer elects to tender the net rather than the gross
unearned premium to a premium finance company, the insurer shall
document that the agent or broker tendered unearned commission to the
premium finance company within the period required under subdivision
(a) or (b) after the insurer either receives notice of the event
that generated the unearned premium, or receives notice from a
premium finance company of a cancellation.
(h) Whenever an agent or broker receives a refund from a premium
finance company, the agent or broker shall tender that money to the
insured within 25 days. Whenever an agent or broker with an
assignment from the insured receives unearned premium from an
insurer, the agent or broker shall account to the insured for any
offset permitted by Section 1735.5 within 25 days. If the agent or
broker fails to tender payment of any remaining unearned premium
after the offset within 25 days, the agent or broker shall pay the
insured interest at the rate of 10 percent per annum from and after
the 26th day after the agent or broker receives the refund.
(i) In addition to the required unearned premium refund, an
insurer shall provide both the insured and the agent or broker, upon
the request of either, with an accounting and explanation of how the
amount of the refund was calculated. The explanation shall be clear,
concise, and easy to comprehend. The commissioner may adopt
regulations setting forth standards to govern this subdivision.
(j) For purposes of subdivisions (a) to (c), inclusive, if the
unearned premium is not assigned as security to a premium finance
agency pursuant to a premium finance agreement and the amount of
unearned premium is less than twenty-five dollars ($25), tender of
unearned premium shall include applying the amount of unearned
premium either to the renewal premium at the next renewal date or to
other premiums due, provided written notice of either application is
given to the insured within 30 days after the endorsement, rejection,
declination, cancellation, or surrender of a policy of insurance. At
the time of endorsement or surrender of a policy of insurance or,
within 15 days after the mailing of the written notice required by
this subdivision, the insured may request in writing that the
unearned premium be tendered as provided in subdivisions (a) to (c),
inclusive. Whenever the amount of unearned premium is less than five
dollars ($5), tender shall be effective and the written notice
required by this subdivision shall not be required if the unearned
premium is applied either to the renewal premium at the next renewal
date or to other premiums due.
(k) Notwithstanding subdivisions (a) to (c), inclusive, an insurer
may at any time solicit the insured's consent, or may in its policy
reserve the right, to apply the unearned premium generated by an
amendment or endorsement removing or reducing coverage for an insured
person or property to the balance owed on the policy as a whole,
rather than tendering a refund of the unearned premium. This
subdivision shall not apply if the unearned premium is assigned as
security to a premium finance company.
(l) The amount of unearned premium required to be refunded by an
insurer pursuant to this section shall not exceed the amount paid to
the insurer by the insured or by a premium finance company.



482. Except as provided by section 481, or by the insurance
contract, if a peril insured against has existed, and the insurer has
been liable for any period, however short, the insured is not
entitled to return of premiums, so far as that particular risk is
concerned.



483. A person insured is entitled to a return of the premium:
(a) When the contract is voidable, on account of the fraud or
misrepresentation of the insurer.
(b) When the contract is voidable on account of facts, of the
existence of which the insured was ignorant without his fault.
(c) When, by any default of the insured other than actual fraud,
the insurer did not incur any liability under the policy.



484. An acknowledgment in a policy of the receipt of premium is
conclusive evidence of its payment, so far as to make the policy
binding. Notwithstanding such acknowledgment, a policy may be
canceled effective at such times as otherwise permitted by law for
nonpayment of all or any portion of the premium which is actually
unpaid if such cancellation right is reserved to the insurer in the
policy.



485. In case of an overinsurance by several insurers, the insured
is entitled to a ratable return of the premium, proportioned to the
amount by which the aggregate sum insured in all the policies exceeds
the insurable value of the subject at risk.



486. When an overinsurance is effected by simultaneous policies,
the insurers contribute to the premium to be returned in proportion
to the amount insured by their respective policies.



487. When an overinsurance is effected by successive policies,
those only contribute to a return of the premium who are exonerated
by prior insurance from the liability assumed by them, and in
proportion as the sum for which the premium was paid exceeds the
amount for which, on account of prior insurance, they could be made
liable.



488. No insurer shall, in issuing or renewing a private passenger
automobile insurance policy, increase the premium on that policy for
the reason that the insured or applicant for insurance has been
convicted for traffic violations committed while operating a motor
vehicle for compensation during the hours of his employment if, with
respect to a conviction, the employee or applicant has submitted to
the insurer a written declaration made by the employee under penalty
of perjury that the applicant or insured was, at that time, operating
a motor vehicle for compensation during the hours of his or her
employment. This section applies only to those individuals whose
specific duties include driving their employer's motor vehicles or
individuals who have authority in their name from the Public
Utilities Commission to operate as a highway carrier and who are the
registered owners or lease operators of the motor vehicle used in the
operation as a highway carrier.
This section does not apply to any insured or applicant for
insurance convicted of any of the following:
(a) Homicide or assault arising out of the operation of a motor
vehicle for compensation during the hours of employment.
(b) A violation while operating a motor vehicle for compensation
during the hours of employment of any of the following sections or
section subdivisions of the Vehicle Code:
(1) Subdivision (a) of Section 14601.
(2) Subdivision (a) of Section 14601.1.
(3) Subdivision (a) of Section 14601.2.
(4) Section 20001 or 20002.
(5) Subdivision (a) of Section 20008.
(6) Section 23103, 23104, 23152, or 23153.
This section shall not apply to any person insured under the
California assigned risk plan prescribed by Article 4 (commencing
with Section 11620), Chapter 1, Part 3, Division 2 of this code.




488.5. (a) No insurer shall, in issuing or renewing a private
automobile insurance policy to a peace officer, member of the
California Highway Patrol, or firefighter, with respect to his or her
operation of a private motor vehicle, increase the premium on that
policy for the reason that the insured or applicant for insurance has
been involved in an accident while operating an authorized emergency
vehicle, as defined in subdivision (a) or (f) of Section 165 of the
Vehicle Code or in paragraph (1) or (2) of subdivision (b) of Section
165 of the Vehicle Code, in the performance of his or her duty
during the hours of his or her employment.
(b) No insurer shall, in issuing or renewing a private automobile
insurance policy to a federal officer or federal customs agent, with
respect to his or her operation of a private motor vehicle, increase
the premium on that policy for the reason that the insured or
applicant for insurance has been involved in an accident while
operating an official government vehicle in the performance of his or
her duty during the hours of his or her employment.
(c) As used in this section:
(1) "Peace officer" means every person defined in Chapter 4.5
(commencing with Section 830) of Title 3 of Part 2 of the Penal Code.

(2) "Policy" shall have the same meaning as defined in subdivision
(a) of Section 660.



489. (a) Upon issuance of a policy of insurance described in
Section 660, the insurer or its agent shall deliver to the named
insured a notice explaining the manner in which the insurer's rating
plan provides for an increase in the premium based upon accidents or
convictions within the meaning of Sections 13103 and 13105 of the
Vehicle Code.
Every insurer or its agent, not less than 20 days prior to renewal
of a policy covered by this section, shall inform the named insured
of the named insured's right to be informed, upon request, of any
increase in the premium, in whole or in part, charged the named
insured by virtue of the involvement in any accident, or conviction
within the meaning of Section 13103 and 13105 of the Vehicle Code, by
the insured or any operator of the motor vehicle.
(b) Every insurer shall, after March 1, 1977, as part of the first
offer required by Section 663, deliver to everyone who was a named
insured under a policy of insurance described in Section 660 on March
1, 1977, a notice explaining the manner in which the insurer's
rating plan provides for an increase in the premium, based upon
accidents or convictions within the meaning of Sections 13103 and
13105 of the Vehicle Code. The provisions of this subdivision shall
expire on March 1, 1978.



491. The rating plan of a motor vehicle liability insurer shall not
provide for an increase in the premium if based upon an accident in
which the insured is not at fault, in any manner, as determined by
either the accident report or the insurer. In the event the insurer
determines that its insured is at fault contrary to an accident
report's specific finding that the insured is not at fault, the
insurer shall reach its conclusion only after an investigation.