Bonds: public entities as beneficiaries.

Plain English Breakdown

The official source material does not include information about the definition of when bonds given for construction or property improvements become effective, which was mentioned in the candidate explanation.

Insurance Cancellation Notice and Bond Beneficiaries

This legislation requires insurance companies to give customers at least 30 days' notice before canceling automobile insurance policies and sets rules for bonds given to public entities.

What This Bill Does

• Requires insurance companies to provide at least 30 days' notice before canceling an automobile insurance policy.
• Specifies that a bond is not effective unless the beneficiary, which can be a public entity, agrees to make payments to the principal and fulfill obligations under the contract.

Who It Names or Affects

• Insurance companies
• Public entities receiving bonds
• People with automobile insurance policies

Terms To Know

Beneficiary

A person or organization that receives the benefits of a bond.

Principal

The main party in a contract who is responsible for completing work or fulfilling obligations.

Limits and Unknowns

• Does not specify what happens if the beneficiary does not agree to the terms.
• It's unclear how this will affect existing bonds and insurance policies.
• The bill text does not provide details on enforcement mechanisms.

Official Summary Text

SB 425, as amended, Rubio.
Automobile insurance: notice of cancellation.
Bonds: public entities as beneficiaries.
Existing law, the Bond and Undertaking Law, prescribes procedures for a bond or undertaking that is executed, filed, posted, furnished, or otherwise given as a security pursuant to any statute, except as specified. Unless a statute providing for a bond indicates that the bond becomes effective at a different time, a bond is effective at the time it is given or, if the statute requires that the bond be approved, at the time it is approved.
This bill would specify that if a statute provides for a bond to be given to or in favor of a beneficiary that is a public entity, as defined, in connection with the purchase, construction, expansion, improvement, or rehabilitation of any real or other tangible personal property, that bond is not effective unless the beneficiary agrees to (1) make all payments to the principal, or to the surety if
the surety agrees to complete the work upon the principal’s default, and (2) perform all necessary obligations owed to the principal under the contract for the work.
Under existing law, a notice of cancellation of an automobile insurance policy is not effective unless mailed or delivered by the insurer to the named insured, lienholder, or additional interest at least 20 days prior to the effective date of cancellation.
This bill, instead, would require the notice of cancellation to be mailed or delivered by the insurer at least 30 days prior to the effective date of cancellation to be effective.

Current Bill Text

Download Bill PDF