California Property & Casualty Broker-AgentCalifornia LawEasy
A California Property & Casualty Broker-Agent receives a request from a client to cancel their policy. The client specifically asks for the cancellation to be effective immediately, and the policy has a clause allowing for pro-rata refunds. How long does the insurer have to return any unearned premium to the client after the effective date of cancellation?
- A30 business days
- B10 calendar days
- C25 calendar days
- D15 business days
Show answer & explanationAnswer & explanation
Correct answer: C. 25 calendar days
California Insurance Code mandates that an insurer must return unearned premiums to the insured within 25 calendar days of the effective date of cancellation. This ensures prompt refunds to policyholders.
Why the other options are wrong
- A. This timeframe is incorrect and exceeds the legal requirement.
- B. This timeframe is incorrect; 10 days is often associated with other notification periods.
- D. This timeframe is incorrect and uses business days, whereas the code specifies calendar days.
Unearned Premium Refund Timeline
In California, insurers must return any unearned premium to a policyholder within 25 calendar days after the effective date of policy cancellation.
- Applies to pro-rata and short-rate cancellations where a refund is due.
- Timeline starts from the effective date of cancellation.
- Ensures timely return of funds to consumers.
Memory trick: Twenty-five days, the refund arrives, no delays!