§ 2232.19. Grace Period.

COMPULSORY UNIFORM PROVISIONS

A grace period of 31 days will be granted for the payment of premiums accruing after the first premium, during which grace period the policy shall continue in force, but the employer shall be liable to the insurer for the payment of the premium accruing for the period the policy continues in force.

Instructions

1. The termination of the group policy by the mutual consent of the parties, express or implied, terminates the entire contract, including the “Grace Period” uniform provision. Therefore, a provision in the policy, otherwise lawful, to the effect that the termination of the policy by the employer or by mutual consent, express or implied, of the employer and insurer, effective as of a premium due date or during a period of grace will terminate the period of grace for the payment of premiums as of the date of such termination of the policy is not inconsistent with this uniform provision.

2. The right of the insurer to cut off the grace period on five days' written notice, which is found in the corresponding individual uniform provision, is not applicable to group insurance, since five days is not sufficient time to replace a group policy, and this provision has been eliminated. Likewise, grace periods of shorter than 31 days are inappropriate to the peculiar group situation, and no provision for a shorter grace period has been permitted. Furthermore, it is inconsistent with the nature of group insurance to allow coverage during a grace period without requiring the payment of premiums accruing during such period. It follows that premiums on group policies containing the above grace period or its substance will continuously accrue until the policy is terminated, and the insurer, acting alone, cannot cut off the right of the employer to pay such accruing premiums on less than 31 days' notice. (Ins. C. 10350.3.)