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ALDOI directs insurers to offer grace period

Contact: Ragan Ingram

334-241-4146

4/28/2011

Updated May 2, 2011

The Alabama Department of Insurance issued a bulletin on April 28, 2011, instructing all insurance companies to provide a 30-day grace period to consumers affected by Wednesday’s storms who are temporarily unable to pay premiums for coverage, Commissioner Jim Ridling said.

The bulletin would prevent certain consumers from having their coverage canceled for non-payment of premium until May 27.  The bulletin does not relieve consumers of responsibility to pay for premiums, nor would prevent companies from cancelling after May 27.

“There has been a great disruption in mail service in several parts of the state and with the real possibility of extended power outages, many Alabama consumers will have great difficulty paying premiums on time,” Commissioner Ridling said. “This action has been taken by the Department in relation to previous catastrophes such as Hurricanes Katrina and Ivan and is appropriate in response to this horrible tragedy.”

“We are leaving it up to the companies to implement this directive and have not placed any geographic limitation in its application.  While we understand some folks will take advantage of this when they probably should not, we know insurance companies will ‘do the right thing’ by their customers,” said Ridling.  “Basically, we don’t want insurers to cancel coverage for nonpayment for 30 days if the reason for nonpayment is because the customer was adversely impacted by the storms.  Whatever the company has to do to see that happen is what they should do.”

“This does not cancel any obligation Alabamians have to pay for their insurance, but does recognize these extraordinary circumstances.”

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