N.Y. BNK Law § 576 — New York Code / Act BNK / Article 12-B / Section 576
Cancellation of insurance contract upon default
Status: in_force

§ 576. Cancellation of insurance contract upon default. 1. When a\npremium finance agreement contains a power of attorney or other\nauthority enabling the premium finance agency to cancel any insurance\ncontract or contracts listed in the agreement, the insurance contract or\ncontracts shall not be cancelled unless such cancellation is effectuated\nin accordance with the following provisions:\n  (a) Not less than ten days written notice shall be mailed to the\ninsured at his last known address as shown on the records of the premium\nfinance agency, of the intent of the premium finance agency to cancel\nthe insurance contract unless the default is cured within such ten day\nperiod and that at least three days for mailing such notice is added to\nthe ten day notice. A copy of the notice of intent to cancel shall also\nbe mailed to the insurance agent or broker.\n  (b) Service of the notice of intent to cancel or notice of\ncancellation by mail shall be effective provided that the notices are\nmailed to the insured's last known address as shown on the records of\nthe premium finance agency. The records of the premium finance agency\nshall be presumptive evidence as to the correctness of such address.\n  (c) If the insurance contract or contracts provide motor vehicle\nliability insurance, every such notice of cancellation shall include in\ntype or print, of which the face shall not be smaller than twelve point,\na statement that proof of financial security is required to be\nmaintained continuously throughout the registration period and a notice\nprescribed by the commissioner of motor vehicles indicating the punitive\neffects of failure to maintain continuous proof of financial security\nand actions which may be taken by the insured to avoid punitive effects.\n  (d) After the notice in paragraph (a) above has expired, the premium\nfinance agency may thereafter, in the name of the insured, cancel such\ninsurance contract by mailing to the insurer a notice of cancellation\nstating when thereafter the policy shall be cancelled, and the insurance\ncontract shall be cancelled as if such notice of cancellation had been\nsubmitted by the insured himself, but without requiring the return of\nthe insurance contract. A copy of the notice of cancellation shall also\nbe mailed to the insured.\n  (e) All statutory, regulatory and contractual restrictions providing\nthat the insured may not cancel his insurance contract unless he or the\ninsurer first satisfies such restrictions by giving a prescribed notice\nto a governmental agency, the insurance carrier or an individual or a\nperson designated to receive such notice for said governmental agency,\ninsurance carrier or individual, shall apply where cancellation is\neffected under the provisions of this section. The insurer shall in\naccordance with said prescribed notice where it is required to give such\nnotice in behalf of itself or the insured give notice to such\ngovernmental agency, person or individual and it shall determine and\ncalculate the effective date of cancellation from the day it receives\nthe copy of the notice of cancellation from the premium finance agency;\nprovided (1) where the aforementioned prescribed notice requires that\nmore than ten days' notice be given, the prescribed time for such notice\nshall control as to the effective date of cancellation, and (2) where\nless than ten days' notice is required by the aforementioned prescribed\nnotice the effective date of cancellation shall not be prior to the date\ncontained in the copy of the cancellation notice sent by the premium\nfinance agency.\n  Notwithstanding that certain provisions of section ninety-three-c of\nthe vehicle and traffic law as added by chapter six hundred fifty-five\nof the laws of nineteen hundred fifty-six and its successor statute,\nsection three hundred thirteen of the vehicle and traffic law, as\nenacted by chapter seven hundred seventy-five of the laws of nineteen\nhundred fifty-nine are consistent with certain of the provisions of this\narticle, those sections shall not be applicable to concellation of\ninsurance by a premium finance agency under the provisions of this\narticle.\n  (f) The insurer or insurers within a reasonable time not to exceed\nsixty days after the effective date of cancellation, shall return\nwhatever gross unearned premiums are due under the insurance contract or\ncontracts on a pro rata basis to the premium finance agency for the\nbenefit of the insured or insureds.  However, upon such cancellation the\ninsurer or insurers shall be entitled to retain a minimum earned premium\non the policy of ten percent of the gross premium or sixty dollars,\nwhichever is greater.\n  (g) Upon the cancellation of motor vehicle liability insurance by a\npremium finance agency, unless a notice of such cancellation is not\nrequired by the vehicle and traffic law or by the regulations of the\ncommissioner of motor vehicles, a notice of such cancellation under the\nprovisions of this article, shall be filed by the insurer or insurers\nwith the commissioner of motor vehicles not later than thirty days\nfollowing the effective date of such cancellation where such a filing is\nrequired pursuant to section ninety-three-c of the vehicle and traffic\nlaw, as added by chapter six hundred fifty-five of the laws of nineteen\nhundred fifty-six or its successor statute, section three hundred\nthirteen of the vehicle and traffic law as enacted by chapter seven\nhundred seventy-five of the laws of nineteen hundred fifty-nine.\n  2. The provisions of subdivision one relating to cancellation by a\npremium finance agency of an insurance contract and the return by an\ninsurer of unearned premiums to the premium finance agency also apply to\nthe surrender by a premium finance agency of an insurance contract\nproviding life insurance and the payment by the insurer of the cash\nvalue of the contract to the premium finance agency, except that the\ninsurer may require the surrender of the insurance contract.\n  3. In this section, unless the context otherwise requires:\n  (a) "Premium finance agency" includes (1) a lending institution making\na loan for the purpose of financing insurance premiums in accordance\nwith the applicable provisions of other laws authorizing and regulating\nthe making of loans by the lending institution, and (2) a bank, or a\nsales finance company licensed under article eleven-b of this chapter;\n  (b) "Premium finance agreement" includes (1) a promissory note or\nother written agreement or obligation evidencing or securing such a loan\nby a lending institution, and (2) a retail instalment contract or\nobligation held by a bank, or a sales finance company so licensed; and\n  (c) "Insured" includes (1) each borrower or other obligor under or\nupon a promissory note or other written agreement or obligation\nevidencing or securing such a loan by a lending institution, and (2)\neach buyer under a retail instalment contract or obligation held by a\nbank, or a sales finance company so licensed.\n