Policy Issuance 3-99

Subject: Renewals Ineligible for Preferred Risk Policies

Policy Issuance 2-99 on the same subject is hereby rescinded. The purpose of this revised Policy Issuance is to account for situations where policyholders applied and paid for Preferred Risk Policies (PRP) prior to July 6, 1998, and where the application of the waiting period made the policy effective dates on or after July 6, 1998 but before August 5, 1998. It was the Mitigation Division's intention that these policyholders also be eligible for this benefit.

Background: The convergence of major program changes to the eligibility requirements for PRPs at approximately the same time as the implementation of the new AR zones in California in July 1998 has had a more profound impact on the residents of this area than on others around the country.

Policy Decision: The Mitigation Division has elected to retroactively reinstate the "zone grandfather" for PRPs in these areas on a temporary basis. In order to afford former PRP policyholders with an opportunity to plan for the transition to the standard rated policy, the Mitigation Division is authorizing insurers to endorse or cancel and rewrite the policies already renewed as standard rated policies back to PRPs under the following conditions.

  1. The risk must be located in an AR zone.
  2. The original effective date of the PRP must be prior to August 5, 1998.
  3. The "zone grandfather" will remain in effect for policies renewing through August 4, 2000.

Last Modified: Wednesday, 24-May-2006 12:16:28 EDT