Source: https://www.scribd.com/book/397766510/2019-Cancellation-Nonrenewal
Timestamp: 2019-02-22 18:54:54
Document Index: 482481546

Matched Legal Cases: ['§2', '§27', '§35', '§27', '§27', '§27', '§27', '§ 27', '§ 27', '§27', '§21', '§21', '§21', '§21', '§25', '§25', '§06', '§21', '§21', '§21', '§21', '§21', '§21', '§21', '§21', '§21', '§21', '§26', '§ 26', '§ 26', '§26', '§26', '§20', '§20', '§20', '§20', '§44', '§20', '§23', '§20', '§6']

2019 Cancellation & Nonrenewal by Hannah E. Smith by Hannah E. Smith - Read Online
1,450 pages14 hours
This valuable resource covers these important Lines of Business:
» Agricultural Capital Assets (Output Policy)
» Businessowners
» Capital Assets Program
» Commercial Crime
» Commercial Inland Marine
» E-Commerce- Equipment Breakdown
» Management Protection
» Medical Professional Liability
» Surplus Lines
» Financed Premiums
2019 Cancellation & Nonrenewal is the authoritative reference tool for agents and underwriters who need to know how a policy may be legally terminated by an insurer.
Publisher: The National Underwriter CompanyReleased: Nov 19, 2018ISBN: 9781949506181Format: book
2019 Cancellation & Nonrenewal - Hannah E. Smith
For details on cancellation procedures for the standard policy, refer to the Standard Policy section.
On April 10, 2007, the Alabama Department of Insurance issued Regulation 136 [codified in AL ADC 482-1-136-.05] dealing with nonrenewal of a category or group of existing insureds based on the insurer’s desire to reduce exposure to a potential catastrophic event, such as a hurricane. This regulation requires the insurer to send a written notice of coverage restriction or nonrenewal to the DOI no less than 150 days prior to the effective date of any proposed effective date. The notice shall include the types of policies, the type of restriction or restrictions, whether the policies in their entirety are being nonrenewed, the category or group of policyholders to be affected, the number of policyholders to be affected, and the names of the Alabama counties in which policyholders to be affected reside.
Insurers must provide written notice to the insured no less than 120 days prior to the effective date of coverage restriction or nonrenewal.
The notice requirements apply each time an insurer makes a decision to impose a coverage restriction and/or nonrenew coverage to a separate and/or additional category or group of existing insureds.
If current policy forms remain inconsistent with this regulation, legal counsel should be consulted.
AGRICULTURAL CAPITAL ASSETS
Alabama Code §2-31-6
Alabama makes no changes from the standard policy for most applications.
All commercial grain dealers, which includes grain elevators, storage facilities, transporters, or any referred to as a grain broker other than a farmer buying grain for feed or seed or feed and seed dealers, are required to maintain an insurance policy to cover all depositors of grain.
Every fire and extended coverage insurance policy so filed shall contain a provision that it may not be cancelled by the principal or insurance company, except on ninety days prior notice in writing, by certified mail, to the commissioner mailed on the same day to the principal. The cancellation shall not affect the liability accrued or which may accrue under such insurance policy before the expiration of the ninety days. The notice shall contain the termination date.
The grain dealer shall immediately notify all depositors of grain when there is a notice of cancellation of his fire and extended coverage insurance policy, and further, the commissioner shall be responsible to assure notice of insurance cancellation is given to all depositors of grain within thirty days from date of notice from the principal or insurance company.
Alabama makes no changes from the standard policy.
AL DOI Bulletin No. 2010-10
Insurers may not cancel or nonrenew a policy based solely on a claim arising from a catastrophe, natural disaster, acts of nature, or weather-related causes. Insurers may not do any of the following acts based solely on a claim arising from a catastrophe, natural disaster, acts of nature, or weather-related causes:
1. Apply a premium surcharge.
2. Offer to place the coverage in another rating tier if the action would result in a higher premium.
3. Offer to place the coverage through an affiliated insurer if the action would result in a higher premium.
An insurer’s failure to abide by the above regulations results in a violation of the Trade Practices Law (Alabama Code §27-12-1 et seq.).
Alabama Code §35-8A-313
Alabama makes one change from the standard policy: If the policy covers a condominium, the insurer must send a thirty-day notice of cancellation or nonrenewal to the association, each unit owner, and each mortgagee or beneficiary under a deed of trust holding a certificate or memorandum of insurance.
Alabama Code §27-13-22
AL DOI Bulletin No. 2010-10; DOI Regulation 482-1-136
3. Offer to place the coverage with another insurer if the action would result in a higher premium.
An insurer’s failure to abide by the above regulations results in a violation of the Trade Practices Law (Alabama Code §27-12-1 et seq.). See Bulletin No. 2010-10 for further information regarding rating rule updates and permitted acts involving fraud, concealment, misrepresentation, or removal of discounts in relation to catastrophes, natural disasters, acts of nature, or weather-related causes.
A 150-day written notice of cancellation is required to the commissioner and 120 days’ notice to insureds when the insurer is:
1. Imposing a wind exclusion or hurricane deductible, or increasing an existing hurricane deductible, where the restriction applies to a category or group of existing insureds at renewal and is not a result of prior claims history.
2. Nonrenewing coverage to a category or group of existing insureds based upon the insurer’s desire to reduce its exposure to a potential catastrophic event.
Surplus lines policies in Alabama are not subject to regulation for cancellation and nonrenewal.
Alabama Code §27-40-11
If the premium finance agreement contains a power of attorney, the finance company may request, in the name of the insured, that the insurer cancel the policy due to nonpayment. The finance company must first give the insured ten days to pay. The premium service company shall also mail a notice of cancellation to the insured at his last address as set forth in its records, and such mailing shall constitute sufficient proof of delivery. After this notice has expired, if the insured fails to make payment, the premium service company may thereafter request, in the name of the insured, cancellation of such insurance contract by mailing to the insurer a notice of cancellation, and the insurance contract shall be cancelled as if such notice of cancellation had been submitted by the insured himself, but without requiring the return of the insurance contract.
All statutory, regulatory, and contractual restrictions providing that the insurance contract may not be cancelled unless notice is given to a governmental agency, mortagee, or other third party shall apply where cancellation is effected under the provisions of this section. The insurer shall give the prescribed notice on behalf of itself or the insured to any governmental agent, mortagee, or other third party on or before the second business day after the day it receives the notice of cancellation from the premium finance company and shall determine the effective date of cancellation taking into consideration the number of days’ notice to complete the cancellation.
In a letter to insurers dated August 30, 1985, titled Unfair Trade Practices, the Alabama insurance commissioner established the requirement that insurers must provide a thirty-day notice to the commissioner before sending any notice to the insureds of any premium increase upon renewal. This provision has been codified in AL ADC 482-1-091-.30 for long term care policies and certificates. This provision has not been codified for other lines of insurance. In a bulletin dated June 8, 2016, titled Bulletin No. 2016-04, the commissioner replaced the original unfair trade practices letter, but did not supersede AL ADC 482-1-136. The thirty-day notice requirement remains in place, but the circumstances have been expanded upon in Bulletin No. 2017-04, which revised and replaced Bulletin No. 2016-04 on June 22, 2017. Insurance companies are now required to give 30 days’ notice to the insured for the following actions:
1. Any company initiated premium increase on personal lines policies, and a premium increase greater than 15% for commercial lines policies.
2. Non-renewal of coverage on any personal or commercial lines policies.
Failure by companies to provide such notice will be considered by the Department to be an unfair trade practice . In addition, the commissioner reiterated the guidelines established by the NAIC in the June 1985 NAIC resolution. Contact the Alabama Department of Insurance or seek legal advice. (Bulletin No. 2017-04 available at: http://www.aldoi.gov/pdf/legal/2017-04%20-%20Cancellation%20or%20non-renewal%20of%20policies,%20premium%20increase%20notification.pdf).
Insurers may not cancel or nonrenew a policy based solely on a claim arising from a catastrophe, natural disaster, acts of nature, or weather-related causes. Insurers may not do any of the following acts based solely on a claim arising from a catastrophe, natural disaster, acts of nature, or weather-related causes on new or renewal policies:
A 150-day notice of cancellation is required to the commissioner and 120 days’ notice to insureds when the insurer is:
Insurers may not cancel or nonrenew a policy based solely on a claim arising from a catastrophe, natural disaster, acts of nature, or weather-related causes. Insurers may not do any of the following acts based solely on a claim arising from a catastrophe, natural disaster, acts of nature, or weather-related causes for new or renewal policies:
Alabama Code §27-23-20 to 27-23-28
Although ISO’s amendatory endorsement (PP 01 87) does not indicate that Alabama law is any different than the basic policy, the code is quite different. This section shows what is permitted by state law. Contact the Alabama Department of Insurance or seek legal advice. These provisions do not apply to any policy that insures more than four automobiles.
Cancellation during the Underwriting Period
Length of Underwriting Period: Sixty days.
Length of Notice: Ten days for cancellation due to nonpayment of premium, twenty days for all other situations.
Reason for Cancellation: Not required on the notice, except when cancelling for nonpayment.
Proof Required: Proof of mailing.
Cancellation after the Underwriting Period
The policy may be cancelled only for the following reasons:
2. The policy was obtained through a material misrepresentation.
3. Any insured violated any of the terms and conditions of the policy.
4. The named insured failed to disclose fully his motor vehicle accidents and moving traffic violations for the preceding thirty-six months if called for in the application.
5. The named insured failed to disclose in his written application or in response to inquiry by the broker, or insurer or its agent, information necessary for the acceptance or proper rating of the risk.
6. Any insured made a false or fraudulent claim or knowingly aided or abetted another in the presentation of such a claim.
7. Failure to maintain membership in any group or organization when such membership is a prerequisite to the purchase of such insurance.
8. The named insured or any other operator who either resides in the same household or customarily operates an automobile insured under such policy:
a. Has within the thirty-six months prior to the notice of cancellation had his driver’s license under suspension or revocation.
b. Is, or becomes, subject to epilepsy or heart attacks, and such individual does not produce a certificate from a physician testifying to his unqualified ability to operate a motor vehicle safely.
c. Has an accident record, conviction record (criminal or traffic), physical, mental or other condition which is such that his operation of an automobile might endanger the public safety.
d. Has within the thirty-six months prior to the notice of cancellation been addicted to the use of narcotics or other drugs.
e. Uses alcoholic beverage to excess.
f. Has been convicted or forfeited bail during the thirty-six months immediately preceding the notice of cancellation for:
(2) Criminal negligence resulting in death, homicide or assault arising out of the operation of a motor vehicle.
(3) Operating a motor vehicle while in an intoxicated condition or while under the influence of drugs.
(4) Being intoxicated while in, or about, an automobile or while having custody of an automobile.
(5) Leaving the scene of an accident without stopping to report.
(6) Theft or unlawful taking of a motor vehicle.
(7) Making false statements in an application for a driver’s license.
(8) Has been convicted of or forfeited bail for three or more violations, within the thirty-six months immediately preceding the notice of cancellation, of any law, ordinance or regulation limiting the speed of motor vehicle laws of any state, violation of which constitutes a misdemeanor, whether or not the violations were repetitions of the same offense or different offenses.
9. The insured automobile is:
a. so mechanically defective that its operation might endanger public safety;
b. used in carrying passengers for hire or compensation; except the use of an automobile for a car pool shall not be considered use of an automobile for hire or compensation;
c. used in the business of transportation of flammables or explosives;
d. an authorized emergency vehicle;
e. changed in shape or condition during the policy period so as to increase the risk substantially;
f. subject to an inspection law and has not been inspected or, if inspected, has failed to qualify.
Length of Notice: Ten days for nonpayment of premium; twenty days for any other reason.
Reason for Cancellation: Not required.
Length of Notice: Twenty days.
Reason for Nonrenewal: Not required.
Other Cancellation/Nonrenewal Provisions
Insured must request the reason(s) for cancellation not less than fifteen days prior to the effective date of cancellation. The insurer must mail or deliver to the insured within five days the reason(s) for cancellation within five days after nonpayment of the premium. When the cancellation is for reasons other than nonpayment of premium, the insurer must notify the insured of the availability of the assigned risk plan.
Even though the Alabama amendatory endorsement (PP 01 87) does not indicate any changes to the standard cancellation provisions of the personal auto policy, insurers must follow the Alabama Code. The Alabama Code has no provisions for nonrenewal, so the provisions of the policy will apply, unless the insurer decides to nonrenew a category or group of insureds in order to reduce exposure to a potential catastrophic event. (See Alabama DOI Bulletin dated Jan. 3, 2007).
There shall be no liability on the part of and no cause of action of any nature shall arise against any insurer, its authorized representative, its agents, its employees, or any firm, person, or corporation furnishing to the insurer information as to reasons for cancellation for any statement made by any of them in any written notice of cancellation, for the providing of information pertaining thereto, or for statements made or evidence submitted at the hearings conducted in connection therewith.
An insurer shall not cancel or nonrenew an automobile insurance policy if based solely on a claim arising from a catastrophe, natural disaster, acts of nature, or weather-related causes. (See Alabama DOI Bulletin No. 2010-10).
An insurer shall neither: 1) apply a premium surcharge to an automobile insurance policy, nor 2) offer to place the coverage of an automobile insurance policy in another rating tier with the same insurer or place the coverage through an affiliated insurer if either such action would result in a higher premium if based solely on a claim arising from a catastrophe, natural disaster, acts of nature, or weather-related causes.
Alabama makes no changes to the standard policy.
Ala. Code § 27-12A-1 to 42
Alabama has a comprehensive statutory scheme with the passage of Act No. 2012-429 (HB-323), to define insurance fraud, to authorize the department to oversee and investigate fraud, to provide confidentiality of information and files, to provide assessments on insurer, to establish the Insurance Fraud Unit, to provide certain immunity from civil liability for certain persons reporting and investigating suspected insurance fraud, to provide civil and criminal penalties, to authorize the commissioner of insurance to promulgate rules necessary to implement, and administer this act for the purpose to amend 10A-20-6.16 and 27-21A-23 Code of Alabama 1975.
Reporting insurance fraud is mandatory for insurance professionals in Alabama. Report at http://www.aldoi.gov/FraudUnit/ReportFraud.aspx or 1-800-654-0775. (Ala. Code § 27-12A-21).
Insurers must include a fraud warning in insurance paperwork that states the following:
Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or who knowingly presents false information in an application for insurance is guilty of a crime and may be subject to restitution, fines, or confinement in prison, or any combination thereof. Ala. Code §27-12A-20.
FAIR CLAIMS PROCESSING
Alabama does not have a comprehensive statutory scheme outlining insurer duties and standards of operation when processing claims at this time.
For details on cancellation procedures for the standard policy, refer to the Standard Policy section. For details on state fraud provisions and fair claims processing procedures, refer to the end of this section.
AGRICULTURAL CAPITAL ASSETS; BOP; C. AUTO; CRIME; CGL (CGL; LIQUOR; MARKET SEGMENTS; OCP; POLLUTION; PRODUCTS; RR PROT); CIM; C. PROP.; C. UMB.; EQUIPMENT BREAKDOWN; FARM; PRO. LIAB.
Alaska Stat. §§21.36.220, 21.36.235, 21.36.240, 21.36.255 and 21.36.260
Length of Underwriting Period: N/A.
Length of Notice: Twenty days for nonpayment of premium or if insured does not provide underwriting information; ten days for either conviction of a crime that involves increasing an insured-against hazard or discovery of fraud in obtaining the policy or pursing a claim; sixty days for any other reason.
Reason for Cancellation: Required on the notice.
Proof Required: Certificate of mailing or electronic confirmation of receipt by intended recipient.
Length of Notice: Forty-five days.
Proof Required: Certificate of mailing or electronic confirmation of receipt by the intended recipient.
1. Cancellation by the insurer requires a pro rata refund of the unearned premium. Cancellation by the insured is at pro rata less a maximum fee of 7.5 percent.
2. A forty-five day written notice is required in the event of a premium increase of more than 10 percent—for a reason other than an increase in coverage or exposure—or a material restriction or reduction in coverage that the insured did not request.
3. Under the OCP Coverage Part notice of cancellation or nonrenewal must also be sent to the listed contractor.
4. Under the Railroad Protective Coverage Part notice of cancellation or nonrenewal must also be sent to the listed contractor and any involved governmental authority.
Alaska Stat. §§21.36.220, 21.36.235, 21.36.240 and 21.36.255
Length of Notice: Twenty days for nonpayment of premium or failure to provide underwriting information; ten days for either conviction of a crime that involves increasing an insured-against hazard or discovery of fraud in obtaining a policy or in pursuing a claim; sixty days for any other reason.
Length of Notice: Sixty days.
Proof Required: Certificate of mailing.
3. The Alaska code calls for a forty-five day notice of nonrenewal for all commercial policies. If an insurer has adopted the ISO amendatory endorsement (CG 30 07), it must give a sixty-day notice on underground storage tank (UST) policies. Also, although the code does not require mailing via certified mail, if the insurer has adopted the ISO’s endorsement, it must send notices on UST policies via certified mail.
Alaska Stat. §§21.36.220 and 21.36.240
The policy may be cancelled for any reason.
Length of Notice: Twenty days for nonpayment of premium or failure by the insured to provide the necessary underwriting information; ten days for reasons 1 and 2; sixty days for any other reason.
1. If the insured is convicted of a crime that increases the hazard.
2. Fraud or material misrepresentation in obtaining the insurance or in pursuing a claim under the policy.
Proof Required: Certificate of mailing or certified mailing receipt or electronic confirmation of receipt by intended recipient.
Proof Required: Certificate of mailing or certified mailing receipt.
1. All notices must also be sent to the Alaska Workers Compensation Board.
Note: The above cancellation requirements are those contained on NCCI’s Cancellation and Nonrenewal Endorsement, WC 54 06 02. That endorsement also refers the reader to code sections 21.36.220 and 21.36.240. The requirements laid out in the NCCI endorsement differ from those outlined in the Alaska Code. Insurers may want to seek legal advice or contact the Alaska Department of Insurance.
Alaska Stat. §21.34.110 and 3 Alaska Admin. Code §25.070
A nonadmitted insurer may not issue a notice of cancellation for nonpayment of premium and a contract of insurance placed by a surplus lines broker is not binding upon the insured and a premium charged is not due and payable until one of these requirements are satisfied:
1. The surplus lines broker has notified the insured in writing, that the insurer with whom the surplus lines broker places the insurance does not hold a certificate of authority issued by Alaska and is not subject to its supervision, and, in the event of the insolvency of the surplus lines insurer, losses will not be covered under the Alaska Insurance Guaranty Association Act. A copy of said notice shall be maintained by the surplus lines broker with the records of the contract, available for examination.
2. The producing broker has notified the insured and the surplus lines broker in writing that the insurer with whom the surplus lines is placed does not hold a certificate of authority issued by Alaska and is not subject to Alaska’s supervision, and, in the event of the insolvency of the surplus lines insurer, losses will not be covered under the Alaska Insurance Guaranty Association Act. A copy of said notice shall be maintained by the producing broker and the surplus lines broker with the records of the contract, available for examination.
An eligible surplus lines insurer shall include in each policy an Alaska Policyholder Notice regarding nonrenewal and premium increase, in a format approved by the director. A licensed surplus lines broker shall ensure the required notice is part of each surplus lines policy. The latest format is in Bulletin B 08-06 https://www.commerce.alaska.gov/web/portals/11/pub/Bulletins/B08-06.pdf (3 Alaska Admin Code §25.050).
Alaska Stat. §06.40.140
If the premium finance agreement contains a power of attorney, the finance company shall give not less than ten days’ written notice to the borrower, by mailing by certified mail or documented by an affidavit of mailing, of the licensee’s intent to cancel the insurance policy unless the default is cured within that ten-day period. A copy of the notice shall also be mailed by certified mail or documented by an affidavit of mailing to the insurance agent indicated on the premium finance agreement. The finance company must first give the insured ten days to pay. If the insured fails to make payment within that ten day period, then the finance company may, in the name of the insured, cancel the insurance policy by mailing by certified mail or documented by an affidavit of mailing to the insurer a notice of cancellation. The insurance policy shall be cancelled as if the notice of cancellation had been submitted by the named insured. Return of the policy by the insured is not required. All statutory, regulatory, and contractual restrictions providing that the insurance policy may not be cancelled unless notice is given to a governmental agency, mortgagee, or other third-party shall apply. The insurer shall give the prescribed notice on behalf of itself or the borrower to any governmental agency, mortgagee, or other third-party on or before the fifth business day after the day it receives the notice of cancellation from the licensee and shall determine the effective date of cancellation taking into consideration the number of days’ notice required to complete the cancellation.
Alaska Stat. §§21.36.210, 21.36.220, 21.36.235, 21.36.255
Length of Notice: Ten days for reasons 2 and 3 below; twenty days for nonpayment of premium; thirty days for reasons 4 and 5, below.
Reason for Cancellation: Required on the notice, even though ISO’s amendatory endorsements say nothing about the reason being shown.
1. Nonpayment of premium, including nonpayment of additional premium, justified by a physical change in the insured property or a change in its occupancy or use.
2. Conviction of the named insured of a crime having as one of its necessary elements an act increasing an insured-against hazard.
3. Discovery of fraud or material misrepresentation made by the insured or a representative of the insured in obtaining the insurance or by the insured in pursuing a claim under the policy.
4. Discovery of a grossly negligent act or omission by the insured that substantially increases the insured-against hazards.
5. Physical changes in the insured property that results in the property becoming uninsurable.
6. Entire abandonment of the property that increases a hazard insured against; if a policy is cancelled under this paragraph, in addition to the notice required under AS 21.36.220, the insurer shall give notice of cancellation of the policy to lender on file with the insurer at the time of the cancellation; in this paragraph, entire abandonment means the property is no longer occupied by the insured as defined by the policy and does not have contents of substantial utility; however, property is not entirely abandoned if the insured or an agent for the insured demonstrates that the property is being reasonably maintained and monitored for a condition that might cause damage to the property.
Length of Notice: Ten days for reasons 2 and 3; twenty days for nonpayment of premium; thirty days for reasons 4 and 5.
Reason for Cancellation: Required on the notice, even though the amendatory endorsement says nothing about the reason being shown.
Length of Notice: Thirty days. Even though the Alaska Code calls only for a twenty day notice of nonrenewal, a thirty day notice must be given if an insurer is using the ISO policy. That policy calls for a thirty day notice and the Alaska Special Provisions endorsements (DP 01 54 and HO 01 54) make no change to the nonrenewal provision.
Cancellation by the insurer requires a pro rata refund of the unearned premium. Cancellation by the insured is at pro rata less a maximum fee of 7.5 percent. If the policy is written for a period of more than one year, the insurer may cancel on the anniversary date with a thirty-day written notice. If an insurer is not using the ISO policy, Alaska Stat. §21.36.240 only requires a twenty-day written notice.
If the named insured is age seventy or older, any notice must also be sent to his or her designee. Any insured age seventy or older must receive an annual notice of his or her right to a designee.
A twenty-day written notice is required in the event of a premium increase of more than 10 percent—for a reason other than an increase in coverage or exposure—or a material restriction or reduction in coverage that the insured did not request.
Alaska Stat. §§21.36.210, 21.36.220 and 21.36.235 through 21.36.260
Length of Notice: Ten days after sixty day underwriting period when insured is convicted of a crime that has as one of its necessary elements an act increasing the insured against hazard or for fraud or material misrepresentation in obtaining the policy or pursuing a claim; twenty days for nonpayment of premium; thirty days for any other reason.
Reason for Cancellation: Required.
2. Revocation or suspension of the driver’s license of the named insured; or that of any driver who lives with the named insured or customarily uses the named insured’s auto.
Such revocation or suspension must have occurred during the policy period. If the policy is a renewal, the revocation or suspension must occur during the policy period or 180 days immediately preceding its effective date.
Length of Notice: Twenty days for nonpayment of premium. Statute allows for shorter notice periods. However insurers using unaltered ISO forms comply with the twenty-day notice requirement.
If the named insured cancels the policy, the insurer retains a maximum cancellation fee of 7.5 percent of the unearned premium. However, there are certain conditions under which that fee is not kept. These include the following: after disposing of the car, the insured purchases another policy from the insurer within thirty days; the insured’s auto is repossessed; the insured enters the armed forces; the insured’s car was destroyed or stolen and the insured requests cancellation within thirty days; the policy is written for longer than one year and the cancellation is after the first year.
A twenty-day written notice is required in the event of a premium increase of more than 10 percent—for a reason other than an increase in coverage or exposure—or a material restriction or reduction in coverage that the insured did not request. Note: Even though the requirement for this notice does not appear on the Alaska Amendatory Endorsement, it still must be sent.
If the policy is cancelled for other than nonpayment, the insured must be notified of possible eligibility for automobile insurance through the assigned risk or automobile insurance plan. The notification must be included in the notice of cancellation or nonrenewal.
Alaska Stat. §§21.36.210, 21.36.220, 21.36.255
Length of Notice: Twenty days for nonpayment of premium; ten days for conviction of insured of a crime that has as one of its necessary elements an act that increases the insured against hazard or discovery of a fraud or material misrepresentation in obtaining the policy or pursuing a claim; thirty days for any other reason.
2. Conviction of the insured of a crime having as one of its necessary elements an act increasing an insured-against hazard.
5. Physical changes in the insured property that causes the property to become uninsurable.
6. Entire abandonment of the property that increases a hazard insured against.
Length of Notice: Thirty days.
If the insured is seventy years of age or older and has made a written request, the insurer must also notify a designee of a termination of coverage. Any insured age seventy or older must receive an annual notice of his or her right to a designee.
Alaska Stat. §§21.36.360 and 21.36.390
A fraudulent insurance act is one that is committed by a person who, with intent to injure, defraud, or deceive:
1. Collects a sum as premium or charge for insurance if the insurance has not been provided or is not in due course going to be provided, subject to acceptance of the risk by the insurer.
2. Presents to an insurer a written or oral statement in support of a claim for payment or other benefit under an insurance policy knowing that the statement contains false, incomplete, or misleading information or omits information concerning a matter material to the claim.
3. Assists or conspires with another to prepare or make a written or oral statement that is presented to an insurer in support of a claim for a benefit under an insurance policy, knowing that the statement contains false, incomplete, or misleading information or omits information concerning a matter material to the claim.
4. Willfully collects as premium or charge for insurance a sum in excess of the premium or charge applicable to the insurance as specified in the policy by the insurer in accordance with the applicable classifications and rates approved by the director, or, in cases where classifications and rates are not subject to approval, the premiums collected are in excess of the premiums and charges applicable to the insurance as specified in the policy and fixed by the insurer.
5. Fails to make disposition of funds received or held or misappropriates funds received or held representing premiums or return premiums.
6. Fails to pay its tax liability when due.
7. Makes a written or oral statement in response to an insurer’s inquiries related to another person’s claim for payment or other benefit under an insurance policy, knowing that the statement contains false, incomplete, or misleading information or omits information concerning a matter material to the claim.
8. A fraudulent insurance act is committed by a person forming or proposing to form an insurer, an insurance holding corporation, a stock corporation to finance an insurer or insurance production, a corporation to manage an insurer, a corporation to be attorney-in-fact for a reciprocal insurer, or a syndicate for any of these purposes that advertises, or solicits or receives funds, agreement, stock subscription, or membership on account unless the person has applied for and has received from the director a solicitation permit as required by AS 21.69.
9. A fraudulent insurance act is committed by a person who makes a false sworn statement that the person does not believe to be true as to matter material to an examination, investigation, or hearing of the division.
10. A fraudulent insurance act is committed by a person if:
(1) as to a matter material to an examination, investigation, or hearing by the division, the person makes two or more sworn statements that are irreconcilably inconsistent to the degree that one of them is necessarily false; and
(2) the person does not believe one of the statements to be true at the time the statement is made.
11. A fraudulent insurance act is committed by a person who with intent to deceive, knowingly exhibits a false account, document, or advertisement, relative to the affairs of an insurer, a corporation, or syndicate of the kind described in AS 21.69.060, formed or proposed to be formed.
12. A fraudulent insurance act is committed by a person who wrongfully removes or attempts to remove records from the place where they are required to be kept under AS 21.69.390(a) or who conceals or attempts to conceal records from the director.
13. A criminal insurance act is committed by a person doing business in this state or relative to a subject resident, located, or to be performed in this state who knowingly:
(1) writes, places, or causes to be written or placed in this state or relative to a subject resident, located, or to be performed in this state a policy, duplicate policy, or contract of insurance of any kind or character, or general or floating policy upon persons or property resident, situated, or located in this state, from or through a person not authorized to transact business under AS 21.27 or a risk retention group or purchasing group not registered under AS 21.96.090; or
(2) pays a commission or other form of remuneration to a person, firm, or organization for the writing or placing of insurance coverage in this state or relative to a subject resident, located, or to be performed in this state unless that person, firm, or organization is authorized under AS 21.27 to transact the kind or class of insurance written or placed, or, in the case of a risk retention group or purchasing group, is registered under AS 21.96.090.
14. A criminal insurance act is committed by a person in this state or relative to a subject resident, located, or to be performed in this state who acts as an insurance producer, managing general agent, third-party administrator, reinsurance intermediary broker, reinsurance intermediary manager, surplus lines broker, or independent adjuster without being licensed by the director as required under this title or as a risk retention group or purchasing group without being registered as required under AS 21.96.090. A criminal insurance act is committed by an insurance producer, managing general agent, third-party administrator, reinsurance intermediary broker, reinsurance intermediary manager, or surplus lines broker who solicits or takes application for, procures, or places for others any insurance for which the person is not licensed as required under AS 21.27 or for which the license of the person has been suspended or revoked. A criminal insurance act is committed by a person in this state or relative to a subject resident, located, or to be performed in this state who acts as or on behalf of a risk retention group or a purchasing group that is not registered under AS 21.96.090.
15. A criminal insurance act is committed by an insurance producer, managing general agent, third-party administrator, reinsurance intermediary broker, reinsurance intermediary manager, or surplus lines broker who knowingly compensates or offers to compensate in any manner a person other than an insurance producer, managing general agent, third-party administrator, reinsurance intermediary broker, reinsurance intermediary manager, or surplus lines broker licensed as required under this title in this or another jurisdiction, for procuring or in any manner helping to procure applications for or to place insurance in this state. A criminal insurance act is committed by a person in this state or relative to a subject resident, located, or to be performed in this state who acts as or on behalf of a risk retention group or a purchasing group that is not registered under AS 21.96.090. This subsection does not apply to the payment of compensation that is not contingent upon volume of business transacted in the form of salaries to the regular employees of the insurance producer, managing general agent, third-party administrator, reinsurance intermediary broker, reinsurance intermediary manager, or surplus lines broker.
16. A criminal insurance act is committed by a person who has placed insurance with an unauthorized insurer and refuses to obey an order by the director to produce for examination all policies and other documents evidencing the insurance and the amount of premiums paid or agreed to be paid for the insurance.
17. A criminal insurance act is committed by a director of a domestic stock or mutual insurer who votes for or concurs in a declaration or payment of a dividend to stockholders or members other than as authorized under AS 21.69.490 - 21.69.500.
18. A criminal insurance act is committed by an agent, managing general agent, third-party administrator, reinsurance intermediary broker, reinsurance intermediary manager, or other representative of an insurer involved in the procuring or issuance of an insurance contract who intentionally fails to report to the insurer the exact amount of consideration charged as premium for the contract and to maintain records showing that information.
19. A fraudulent insurance act is committed by a person who, with intent to injure, defraud, or deceive, knowingly makes a false or fraudulent statement or representation in or with reference to an application for insurance.
20. A fraudulent insurance act is committed by a person who
1. violates a provision of this title or a regulation issued under it;
2. falsely makes, completes, or alters a certificate of insurance or other document relating to insurance;
3. knowingly possesses a forged certificate of insurance or other document relating to insurance; or
4. knowingly issues a forged certificate of insurance or other document relating to insurance.
An insurer or licensee that has reason to believe that a fraudulent claim has been made against it must send the director a report disclosing information that the director may require.
An insurer or licensee that has reason to believe that an insurance producer with which it is doing business is involved in a defalcation, embezzlement or a violation of the provisions of AS §21.36.360, §21.36.030, or §21.36.050 shall immediately send the director a report disclosing the basis for that belief and any other information that the director may require.
A Uniform Fraud Report Form is available on the Alaska Division of Insurance Web site at https://www.commerce.alaska.gov/web/ins/Resources/Fraud.aspx.
Corroborating documentation may be requested, such as: the name, address, and telephone number of any suspects or witnesses; color copies of any photos or videos concerning the matter; and the name of the insurance company, if known.
550 W 7th Ave. Ste 1560
Alternatively, persons with reason to believe that insurance fraud is being committed can speak to an investigator at 907-269-7900 or 1-800-467-8725.
AS §§21.36.360 and 21.36.910
Upon the institution of proceedings, if the director determines that a person violated the Alaska fraud provisions, the director will serve the person an order requiring that person to cease and desist from engaging in the act or practice.
In addition to a cease and desist order, the director may, after a hearing, order restitution, assess a penalty of not more than $2,500 for each violation or $25,000 for engaging in a general business practice in violation of the Alaska fraud provisions.
If the director determines after a hearing that the person charged knew or should have known that the person was in violation of the Alaska fraud provisions, in addition to the penalty described above, a suspension or revocation of the person’s license and a penalty of not more than $25,000 for each violation or $250,000 for engaging in the general business practice in violation of this chapter may also be ordered by the director.
If a cease and desist order has been violated, the director may certify the relevant facts to the superior court for proceedings under AS 44.62.590. The superior court may order the violator to comply with the order, pay an additional penalty of not more than $1,000,000 for each violation, may revoke or suspend the violator’s license, and may bar the violator from transacting the business of insurance in the future.
In determining the penalty imposed, the director will consider the amount of loss or harm caused by the violation and the amount of benefit derived by the person by reason of the violation, the seriousness of the violation, the promptness and completeness of remedial action, whether the violation was a single act or a trade practice, and deterrence of the violator or others.
A fraudulent or criminal insurance act that is committed to obtain $10,000 or more is a class B felony; a defendant convicted of a class B felony may be sentenced to a definite term of imprisonment of not more than ten years.
A fraudulent or criminal insurance act that is committed to obtain $500 or more but less than $10,000 is a class C felony; a defendant convicted of a class C felony may be sentenced to a definite term of imprisonment of not more than five years.
A fraudulent or criminal insurance act that is committed to obtain less than $500 is a class A misdemeanor; a defendant convicted of a class A misdemeanor may be sentenced to a definite term of imprisonment of not more than one year.
Alaska Stat. §21.36.125;
3 Alaska Admin. Code §§26.010 through 26.300 (amended by 2015 AK REG TEXT 368106 (NS))
Any person transacting a business of insurance who participates in the investigation, adjustment, negotiation, or settlement of a claim shall promptly undertake the investigation of a claim after notification of the claim is received, and shall complete the investigation within thirty working days, unless the investigation cannot reasonably be completed using due diligence.
Any person transacting a business of insurance who participates in the investigation, adjustment, negotiation, or settlement of a first-party or third party claim must:
1. Within ten working days after receipt of notification of a claim, give written acknowledgement to the claimant identifying the person handling the claim, including the person’s name, address, telephone number, the firm name, and the file number; payment of the claim within ten working days after notification is satisfactory acknowledgement; provision of necessary claim forms, written instructions, and assistance as required in (3) of this subsection is satisfactory acknowledgement; notification of a claim to an agent constitutes notification to the principal.
2. Within fifteen working days after receipt, make an appropriate reply to all other communications from a claimant which reasonably indicates that a response is expected; receipt of a communication by an agent constitutes receipt by the principal.
3. Upon receipt of notification of a claim, promptly provide necessary claim forms, instructions, and assistance so that the claimant is able to comply with legal, policy, or contract provisions and other reasonable requirements. (3 Alaska Admin. Code § 26.040).
Any person transacting a business of insurance who participates in the investigation, adjustment, negotiation, or settlement of a first-party claim:
1. Shall advise a first-party claimant in writing of the acceptance or denial of the claim within fifteen working days after receipt of a properly executed statement of claim, proof of loss, or other acceptable evidence of loss unless another time limit is specified in the insurance policy, insurance contract, or other coverage document; payment of the claim within this time limit constitutes written acceptance; a written denial of the claim must state the specific provisions, conditions, exclusions, and facts upon which the denial is based; if additional time is needed to determine whether the claim should be accepted or denied, written notification giving the reasons that more time is needed shall be given to the first-party claimant within the deadline.
While the investigation remains incomplete, additional written notification shall be provided forty-five working days from the initial notification, and no more than every forty-five working days thereafter giving the reasons that additional time is necessary to complete the investigation; if there is a reasonable basis supported by specific information for suspecting that a first-party claimant has fraudulently caused or wrongfully contributed to the loss, and the basis is documented in the claim file, this reason need not be included in the written request for additional time to complete the investigation or the written denial; however, within a reasonable time for completion of the investigation and after receipt of a properly executed statement of claim, proof of loss, or other acceptable evidence of loss, the first-party claimant shall be advised in writing of the acceptance or denial of the claim.
2. Shall, within thirty working days after receipt of a properly executed statement of claim, proof of loss, or other acceptable evidence of loss, pay those portions of the claim not in dispute.
3. May not fail to settle first-party claims on the basis that responsibility for payment must be assumed by others, except as may be expressly provided by provisions of the insurance policy, insurance contract, or other coverage document. (3 Alaska Admin. Code § 26.070).
A person transacting a business of insurance who participates in the investigation, adjustment, negotiation, or settlement of a first-party or third-party property claim or motor vehicle claim shall:
1. Offer specific comparable replacement property or cash settlement.
2. Provide reasonable written explanation of the valuation.
3. Include the first party claimant’s deductible if any.
Note: Insurer may not recommend that a third-party claimant make a claim under the claimant’s own coverage in order to delay or avoid paying a claim where liability and damages are reasonably clear. (3 Alaska Admin. Code §26.080 and 3 Alaska Admin. Code §26.090).
AGRICULTURAL CAPITAL ASSETS; BOP; CAPITAL ASSETS; C. AUTO; CRIME; CGL (all coverage parts); CIM; C. PROP.; C. UMB; EQUIPMENT BREAKDOWN; FARM; AND PROFESSIONAL LIABILITY
Arizona Revised Statutes §§20-1671 to 20-1677; ISO form CA 02 02 for commercial auto policies.
Length of Underwriting Period: Fifty-nine days.
Length of Notice: Ten days for nonpayment of premium; forty-five days for any other reason.
Reason for Cancellation: Specific facts must be stated.
Proof Required: Proof of mailing (certified) or first class mail using intelligent mail barcode or another similar tracking method used or approved by the United States Postal Service.
The policy may be cancelled only for the following reasons (reasons 2-8 must be stated in the policy):
2. If the insured is convicted of a crime that increases the hazard insured against.
3. Fraud or material misrepresentation on the application, in continuing the policy, or in pursuit of a claim.
4. Substantial change in the risk assumed (if such change should not have been foreseen by the insurer or contemplated in the rate).
5. Substantial breach of contractual duties or conditions.
6. If the insurer loses its reinsurance for the risk.
7. If the director of insurance determines that to continue on the policy would be a violation of the state’s insurance laws or would jeopardize the insurer’s solvency.
8. Acts or omissions by the insured that materially increase the hazard insured against.
Length of Notice: Ten days for nonpayment; forty-five days for any other allowable reason.
1. The insurer does not have to send notice of nonrenewal under these conditions:
a. The insurer or a company in the same insurance group offers to issue a renewal policy; or
b. The insured obtains (or agrees in writing to obtain) coverage elsewhere.
2. If the insurer renews under any of the following conditions, a thirty-day advance notice is required:
a. Premium increase.
b. Deductible changed.
c. Reduced limits.
d. Substantial reduction in coverage.
These notices must be sufficiently specific for the insured to make an informed decision and not just a vague notice that these things may change.
3. The notice of cancellation and any refund of unearned premium may be mailed separately, but both must be mailed within the same time frame as required for length of notice. If a premium has been financed, a refund of unearned premium shall be returned as provided in section 6-1416. (Arizona Revised Statutes §20-1674 as amended by 2017 Ariz. HB 2232).
4. If the insurer does not provide such a thirty-day notice, the coverage provided to the named insured remains in effect until notice is given or until the effective date of replacement coverage obtained by the named insured, whichever occurs first.
5. For the purposes of this section, notice shall be considered given if an insurer delivers new policy terms and conditions thirty days before the expiration date of the policy.
6. Cancellation and nonrenewal notices may be delivered electrically, consistent with title 44, chapter 26, if both parties have agreed to this ahead of time. (A.R.S. §20-1676, A.R.S. §20-1674, A.R.S. §44-7005).
AGRICULTURAL CAPITAL ASSETS; FARM
Arizona Revised Statutes §§20-1651 to 20-1656.
(Applicable when the policy covers a one to four family dwelling that is used for residential purposes or when it covers personal property of a person residing in such a dwelling.)
Length of Notice: Ten days for nonpayment; thirty days for any other reason.
4. Grossly negligent acts or omissions by the insured that substantially increases any of the hazards insured against.
5. Substantial change in the risk assumed (if such change should not have been foreseen by the insurer or contemplated in the rate).
6. If the director of insurance determines that to continue on the policy would be a violation of the state’s insurance laws or would jeopardize the insurer’s solvency.
7. If the insured does not take reasonable steps to eliminate or reduce any conditions at the insured premises which contributed to a loss in the past or will increase the probability of future losses.
Length of Notice: Ten days for nonpayment; thirty days for any other allowable reason.
Reason for Nonrenewal: Required on the notice. The amendatory endorsement says nothing about providing the reason, implying that the reason does not need to be shown. However, the statute clearly says that the reason for nonrenewal is required.
If the insurer nonrenews based on the condition of the premises, the insured must be given thirty days to rectify that condition, after which time the policy will be renewed. If the insured does not take care of the matter within thirty days, he must be given another thirty days, subject to payment of the premium. Also, a thirty-day notice must be given if the insurer conditions renewal upon the reduction or elimination of coverages.
Even though the Arizona statute says that the above paragraph is the only condition that applies to nonrenewal of such policies, the ISO Cancellation and Nonrenewal endorsement (IL 02 58) is arranged in such a manner that it also applies the sixty-day notice requirement on CP and farm policies that cover residential properties, under the following circumstances:
1. Premium increase.
2. Deductible changed.
3. Reduced limits.
4. Substantial reduction in coverage.
It is clear this provision applies when more than four dwellings are insured. It is unclear if this provision would apply to a policy covering one to four dwellings. Legal advice should be obtained in the event of any questions. Also, if these provisions do not apply to CP and farm policies covering residential properties, the amendatory endorsement needs to be clarified.
Arizona Revised Statutes §23-961
A thirty-day notice must be mailed (with proof of mailing) to the insured and to the Industrial Commission of Arizona for cancellation. The Arizona statute also allows for nonrenewal with a thirty-day notice.
Arizona Revised Statutes §20-1671
Arizona cancellation and nonrenewal laws do not apply to surplus lines policies.
Arizona Revised Statutes §6-1415
If the premium finance agreement contains a power of attorney enabling the licensee to cancel any insurance contract or contracts listed in the agreement, the insurance contract or contracts shall not be cancelled by the licensee unless the cancellation is in accordance with this section. The finance company must first give the insured ten days to pay. If the insured fails to make payment within that ten day period, then the finance company mails the notice of cancellation to the insurer and the cancellation is processed as of the finance company’s original default date. Return of the policy by the insured is not required. If statutory, regulatory and contractual restrictions provide that the insurance contract may not be cancelled unless notice is given to a governmental agency, mortgagee or other third party, the insurer shall give the prescribed notice on behalf of itself or the insured to any governmental agency, mortgagee or other third party on or before the fifth business day after the day it receives the notice of cancellation from the finance