Life Insurance Consumer Advocacy Center

California Supreme Court to Decide Whether California’s Lapse Statutes Apply to Policies Originally Issued in Another State but Later Renewed in California

 

On April 16, 2025, the California Supreme Court granted a request from the federal 9^th Circuit Court of Appeals for the California Supreme Court to decide an important issue of California law regarding California’s Lapse Statutes (Insurance Code Section 10113.71 and 10113.72).  Those statutes require insurers to provide a 60 grace period for premium payments, give a life insurance policyholder and a designated additional person at least 30 days’ written notice of a potential lapse for nonpayment of premium, and provide an annual notice to life insurance policyholders of their right to designate an additional person to receive notice of a potential policy lapse.  The law was intended to help people (often seniors) avoid policy lapses if they miss their premium payments due to forgetfulness, hospitalization, lost mail, glitches with auto-pay arrangements, or other problems.

Insurers have argued that the Statutes do not apply to policies originally issued in another state.  Consumers and their advocates have argued that after the policyholder moves to California and renews the policy in California, the policyholder is entitled to the protections of California’s Lapse Statutes.

LICAC filed an amicus letter with the California Supreme Court on March 12, 2025, urging the Court to accept the request from the 9^th Circuit (in the case of Susan Pitt v. Metropolitan Tower Life Ins. Co.) and issue an opinion making clear that California’s Lapse Statutes “apply to all life insurance policies renewed in California without regard to whether they were originally issued in another state.”  Among other things, LICAC pointed out that the number of consumers affected by this issue is quite large – close to 200,000 people with existing life insurance policies move to California every year.  See https://www.lifeinsuranceconsumeradvocacycenter.org/wp-content/uploads/2025/05/LICAC-Amicus-Letter-to-California-Supreme-Court-re-Pitt-v-Metropolitan-Tower-3.12.25.pdf for the full text of LICAC’s amicus letter.

Now that the Court has agreed to decide the issue, we hope that the Court will extend the protections of California law to all residents of the Golden State!