policies - Definitions - Notice and reasons for cancellation or nonrenewal - Notice of premium increases. A. The provisions of this section apply to commercial marine policies, commercial automobile policies, commercial property insurance policies, commercial casualty insurance policies, and commercial fire insurance policies. B. As used in this section: 1. “Renewal” or “to renew” means the issuance or offer of issuance by an insurer of a policy succeeding a policy previously issued and delivered by the same insurer or an insurer within the same group of insurers, or the issuance of a certificate or notice extending the term of an existing policy for a specified period beyond its expiration date; 2. “Nonpayment of premium” means the failure or inability of the named insured to discharge any obligation in connection with the payment of premiums on a policy of insurance subject to this section, whether such payments are payable directly to the insurer or its agent or indirectly payable under a premium finance plan or extension of credit; 3. “Cancellation” means termination of a policy at a date other than its expiration date; 4. “Expiration date” means the date upon which coverage under a policy ends. It also means, for a policy written for a term longer than one (1) year or with no fixed expiration date, each annual anniversary date of such policy; and 5. “Nonrenewal” or “refusal to renew” means termination of a policy at its expiration date. C. After coverage has been in effect for more than forty-five (45) business days or after the effective date of the renewal of a commercial marine, commercial automobile, commercial property, commercial casualty or commercial fire insurance policy, a notice of cancellation shall not be issued by any licensed insurer or surplus or excess lines insurer unless it is based on at least one of the following reasons with at least ten (10) days’ notice to the insured: 1. Nonpayment of premium; 2. Discovery of fraud or material misrepresentation in the procurement of the insurance or with respect to any claims submitted thereunder; 3. Discovery of willful or reckless acts or omissions on the part of the named insured which increase any hazard insured against; 4. The occurrence of a change in the risk which substantially increases any hazard insured against after insurance coverage has been issued or renewed; 5. A violation of any local fire, health, safety, building, or construction regulation or ordinance with respect to any insured property or the occupancy thereof which substantially increases any hazard insured against; 6. A determination by the Commissioner that the continuation of the policy would place the insurer in violation of the insurance laws of this state; 7. Conviction of the named insured of a crime having as one of its necessary elements an act increasing any hazard insured against; or 8. Loss of or substantial changes in applicable reinsurance. D. An insurer may refuse to renew a policy if the insurer gives to the first-named insured at the address shown on the policy written notice that the insurer will not renew the policy. Such notice shall be given at least forty-five (45) days before the expiration date. Notice may be sent by electronic means if the recipient consents to such method of delivery and the insurer is in compliance with the provisions of the Uniform Electronic Transactions Act. Electronic delivery is considered to be equivalent to any delivery method required by law, including first- class mail, postage prepaid, certified mail, certificate of mail, or certificate of mailing. If notice is given by mail or sent by electronic means, such notice shall be deemed to have been given on the day the notice is mailed or sent electronically. If the notice is mailed or sent electronically less than forty-five (45) days before expiration, coverage shall remain in effect until forty-five (45) days after notice is mailed or sent electronically. Earned premium for any period of coverage that extends beyond the expiration date shall be considered pro rata based upon the previous year’s rate. For purposes of this section, the transfer of a policyholder between companies within the same insurance group is not a refusal to renew. In addition, changing deductibles, changes in premium, changes in the amount of insurance, or reductions in policy limits or coverage are not refusals to renew. Notice of nonrenewal shall not be required if the insurer or a company within the same insurance group has offered to issue a renewal policy, or if the named insured has obtained replacement coverage or has agreed in writing to obtain replacement coverage. If an insurer provides the notice required by this subsection and thereafter the insurer extends the policy for ninety (90) days or less, an additional notice of nonrenewal is not required with respect to the extension. E. An insurer shall give to the named insured at the mailing address shown on the policy, written notice of premium increase, change in deductible, reduction in limits or coverage at least forty-five (45) days prior to the expiration date of the policy. If the insurer fails to provide such notice, the premium, deductible, limits and coverage provided to the named insured prior to the change shall remain in effect until notice is given or until the effective date of replacement coverage obtained by the named insured, whichever first occurs. If notice is given by mail, such notice shall be deemed to have been given on the day the notice is mailed. If the insured elects not to renew, any earned premium for the period of extension of the terminated policy shall be calculated pro rata at the lower of the current or previous year’s rate. If the insured accepts the renewal, the premium increase, if any, and other changes shall be effective the day following the prior policy’s expiration or anniversary date. This subsection shall not apply to: 1. Changes in a rate or plan filed with or approved by the Insurance Commissioner or filed pursuant to the Property and Casualty Competitive Loss Cost Rating Act and applicable to an entire class of business; 2. Changes based upon the altered nature of extent of the risk insured; or 3. Changes in policy forms filed with or approved by the Insurance Commissioner and applicable to an entire class of business. F. Proof of mailing of notice of cancellation, or of nonrenewal or of premium or coverage changes, to the named insured at the address shown in the policy, shall be sufficient proof of notice. Added by Laws 1985, c. 328, § 21, emerg. eff. July 29, 1985. Amended by Laws 1987, c. 175, § 32, eff. Nov. 1, 1987; Laws 1988, c. 291, § 5, eff. Nov. 1, 1988. Renumbered from § 4807 of this title by Laws 1988, c. 291, § 6, eff. Nov. 1, 1988. Amended by Laws 2000, c. 353, § 15, eff. Nov. 1, 2000; Laws 2001, c. 363, § 19, eff. July 1, 2001; Laws 2005, c. 129, § 14, eff. Nov. 1, 2005; Laws 2006, c. 264, § 60, eff. July 1, 2006; Laws 2007, c. 125, § 19, eff. July 1, 2007; Laws 2024, c. 130, § 1, eff. Nov. 1, 2024.
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