The Prudential Insurance Company of America and Pruco Life Insurance Company face a proposed class action that claims the insurers have “systematically and purposely” failed to provide policyholders with proper notice of a pending lapse or termination of coverage and their right to designate someone to receive critical notices.
Under California insurance law, any policies within the state’s jurisdiction must contain a 60-day grace period before a missed premium payment can trigger a lapse or termination of coverage, the 28-page suit says. Further, insurers must send 30-day written notice of a pending lapse or termination to both the policyholder and any additional person designated by the policyholder to receive such notices, the case explains.
Still further, the case relays insurers are required to notify policyholders of their right to designate additional notice recipients on an annual basis and during the application process.
According to the lawsuit, Prudential has failed to comply with California’s Insurance Code despite being fully aware of the law’s requirements. As a result, thousands of policyholders have suffered improper lapses or terminations of coverage; forced reinstatement of their policies; loss of insurance; denials of claims; and “the loss of millions in insurance benefits” that the defendants have illegally retained, the complaint alleges.
The plaintiff claims his grandmother purchased a Prudential life Insurance policy in or before 1988 and faithfully paid the premiums for nearly 30 years. Sometime in 2016, the suit says, the plaintiff took responsibility for the premium payments in light of his grandmother’s deteriorating health and contacted the defendants with regard to a change of address in 2017. Despite receiving the plaintiff’s address, the defendants continued sending all correspondence to his ill grandmother, the lawsuit claims.
After hearing nothing from Prudential for “some length of time,” the plaintiff contacted the defendants and was informed that his grandmother’s policy had lapsed for non-payment as of May 12, 2018, per the complaint. Though the plaintiff agreed to reinstate the policy and sent Prudential the past-due premiums, the defendants now contend that the check was not honored by the plaintiff’s bank and the policy was never reinstated, according to the case. The suit alleges that all communications were once again sent to the plaintiff’s grandmother’s address despite the man providing and then confirming his address.
According to the complaint, the plaintiff eventually hired legal counsel to determine the status of his policy after Prudential claimed to have been unable to locate the policy. The suit alleges that the documents provided by Prudential to the plaintiff’s counsel, which were all addressed to the plaintiff at his grandmother’s address, did not include a lapse period as required by law nor any notification of the plaintiff’s right to designate someone to receive lapse notices.
According to the lawsuit, Prudential has not complied or attempted to comply with California insurance law in regard to the plaintiff’s policy. The termination of the policy was therefore “void and ineffective,” the case argues.
The lawsuit looks to cover the following proposed class:
“All past, present, and future owners or beneficiaries of Defendants’ life insurance policies in force on or after January 1, 2013 and governed by Sections 10113.71 and/or 10113.72, where the policies underwent or will undergo lapse, termination, and/or reinstatement without Defendants first providing written notice of and an actual 60-day grace period, a 30-day notice of pending lapse and termination, and/or an annual notice of a right to designate at least one other person to receive notice of lapse or termination of a policy for nonpayment of premium.”
Get class action lawsuit news sent to your inbox – sign up for ClassAction.org’s newsletter here.