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H0753aa....................................................by STATE AFFAIRS
FIRE INSURANCE - Amends existing law relating to standard fire policies to
set forth notice provisions applicable to policy cancellation based upon
nonpayment of premium; and to provide when the notification period shall
begin.
03/01 House intro - 1st rdg - to printing
03/02 Rpt prt - to Bus
03/14 Rpt out - to Gen Ord
03/15 Rpt out amen - to engros
03/16 Rpt engros - 1st rdg - to 2nd rdg as amen
03/17 2nd rdg - to 3rd rdg as amen
03/22 3rd rdg as amen - PASSED - 63-0-7
AYES -- Andrus, Barrett, Bastian, Bayer, Bedke, Bell, Bilbao, Black,
Block, Boe, Bolz, Brackett, Bradford, Cannon, Chadderdon, Clark,
Collins, Deal, Denney, Edmunson, Ellsworth, Field(18), Field(23),
Garrett, Hart, Harwood, Henbest, Henderson, Jaquet, Kemp, Lake,
LeFavour, Loertscher, Martinez, Mathews, Miller, Mitchell, Moyle,
Nielsen, Nonini, Pasley-Stuart, Pence, Raybould, Ring, Ringo,
Roberts, Rusche, Rydalch, Sali, Sayler, Schaefer, Shepherd(2),
Shepherd(8), Shirley, Skippen, Smith(30), Smith(24), Smylie,
Snodgrass, Stevenson, Trail, Wills, Wood
NAYS -- None
Absent and excused -- Anderson, Barraclough, Crow, Eskridge,
McGeachin, McKague, Mr. Speaker
Floor Sponsor - Smith(30)
Title apvd - to Senate
03/23 Senate intro - 1st rdg - to Com/HuRes
03/30 Rpt out - rec d/p - to 2nd rdg
03/31 2nd rdg - to 3rd rdg
04/03 3rd rdg - PASSED - 34-0-1
AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett,
Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis,
Fulcher, Gannon, Geddes, Goedde, Hill, Jorgenson, Kelly, Keough,
Langhorst, Little, Lodge, Malepeai, Marley, McGee, McKenzie, Pearce,
Richardson, Schroeder, Stegner, Stennett, Werk, Williams
NAYS -- None
Absent and excused -- Sweet
Floor Sponsor - Malepeai
Title apvd - to House
04/03 To enrol
04/04 Rpt enrol - Sp signed - Pres signed - To Governor
04/07 Governor signed
Session Law Chapter 359
Effective: 07/01/06
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature Second Regular Session - 2006
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 753
BY STATE AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO STANDARD FIRE POLICIES; AMENDING SECTION 41-2401, IDAHO CODE, TO
3 SET FORTH NOTICE PROVISIONS APPLICABLE TO POLICY CANCELLATION BASED UPON
4 NONPAYMENT OF PREMIUM.
5 Be It Enacted by the Legislature of the State of Idaho:
6 SECTION 1. That Section 41-2401, Idaho Code, be, and the same is hereby
7 amended to read as follows:
8 41-2401. STANDARD FIRE POLICY. (1) No fire insurer shall issue any fire
9 insurance policy covering on property or interest therein in this state, other
10 than on the form known as the New York standard as revised in 1943, except as
11 follows:
12 (a) An insurer may print on or in its policy its name, location, date of
13 incorporation, plan of operation, whether stock, mutual, reciprocal or
14 organized under special charter provisions, and if mutual or reciprocal
15 whether on cash premium or assessment plan; and if it be a stock company,
16 the amount of its paid up capital stock, the names of its officers and
17 agents, the number and date of the policy, and, if it is issued by an
18 agent, the words, "this policy shall not be valid until countersigned by
19 the duly authorized agent of the company at ...."; and, if a mutual or
20 reciprocal insurer, the policy must state the contingent liability, if
21 any, of its policyholders, members, or subscribers for payment of losses
22 and expenses not provided for by its cash funds.
23 (b) An insurer may print or use in its policies printed forms of descrip-
24 tion and specifications of the property insured.
25 (c) An insurer insuring against damage by lightning may print in the
26 clause enumerating the perils insured against the additional words, "also
27 any damage by lightning whether fire ensues or not," and in the clause
28 providing for an apportionment of loss in case of other insurance the
29 words, "whether by fire, lightning or both."
30 (d) A domestic insurer may print in its policies any provisions which it
31 is authorized or required by the law to insert therein, and any foreign
32 insurer may, with the approval of the director, so print any provision
33 required by its charter or deed of settlement, or by the laws of its own
34 state or country, not contrary to the laws of this state; but the director
35 shall require any provision which, in his opinion modifies the contract of
36 insurance in such a way as to affect the question of loss, to be appended
37 to the policy by an endorsement or rider as hereinafter provided.
38 (e) The blanks in the standard form may be completed in print or in writ-
39 ing.
40 (f) An insurer may print upon policies issued in compliance with the pre-
41 ceding provisions of this section the words, "Idaho standard policy."
42 (g) An insurer may write upon the margin or across the face of the pol-
43 icy, or write or print in type not smaller than nonpareil upon a slip,
2
1 slips, rider or riders to be attached thereto, provisions adding to or
2 relating to those contained in the standard form; and all such slips,
3 riders, endorsements and provisions must be signed by the officers or
4 agents of the insurer so using them.
5 (h) If the policy be made by a mutual, reciprocal or other insurer having
6 special regulations lawfully applicable to its organization, membership,
7 policies or contracts of insurance such regulations shall apply to and
8 form a part of the policy as the same may be written or printed upon,
9 attached or appended thereto.
10 (i) Every policy shall have legibly inscribed upon its face and filing
11 back suitable words to designate whether the insurer making such insurance
12 be a stock, mutual or reciprocal insurer, provided, that any insurer orga-
13 nized under special charter provisions may so indicate upon its policy and
14 may add a statement of the plan under which it operates in this state.
15 (j) Every fire policy shall contain language that provides for a thirty
16 (30) day written notice to the insured prior to cancellation of the
17 policy, provided however, that where cancellation is for the nonpayment of
18 premium, at least ten (10) days' notice of such cancellation, accompanied
19 by the reason for the cancellation, shall be given. Proof of mailing of
20 notice of cancellation, or of intention not to renew, or of reasons for
21 cancellation or nonrenewal to the named insured at his address shall be
22 sufficient proof of notice.
23 (k) Every fire policy shall provide that it becomes effective at 12:01
24 a.m. of the standard time of the place where the property covered by the
25 insurance is located, on the effective date of the policy.
26 (2) An insurer issuing the standard fire policy is authorized to affix
27 thereto or include therein a written statement that the policy does not cover
28 loss or damage caused by nuclear reaction, nuclear radiation or radioactive
29 contamination, all whether directly or indirectly resulting from an insured
30 peril under the policy; but nothing herein contained shall be construed to
31 prohibit the attachment to any such policy of an endorsement or endorsements
32 specifically assuming coverage for loss or damage caused by nuclear reaction,
33 nuclear radiation or radioactive contamination.
34 (3) The standard fire policy is not mandatory for vehicle insurance, or
35 for marine insurance, or inland marine insurance as the same is defined pursu-
36 ant to section 41-1401(2), Idaho Code, or for insurance on growing crops.
37 (4) Any policy or contract otherwise subject to the provisions of subsec-
38 tion (1) hereof, which includes either on an unspecified basis as to the cov-
39 erage or for a single premium coverage against the peril of fire and substan-
40 tial coverage against other perils need not comply with the provisions of sub-
41 section (1) hereof, provided:
42 (a) Such policy or contract shall afford coverage, with respect to the
43 peril of fire, not less than the coverage afforded by such standard fire
44 policy,
45 (b) The provisions in relation to mortgagee interests and obligations in
46 such standard fire policy shall be incorporated therein without change,
47 (c) Such policy or contract is complete as to all of its terms without
48 reference to the standard form of fire insurance policy or any other pol-
49 icy, and
50 (d) The director is satisfied that such policy or contract complies with
51 the provisions hereof.
52 (5) With respect to a commercial insurance policy, such standard fire
53 insurance policy may exclude coverage for loss by fire or other perils insured
54 against if the fire or other perils are caused directly or indirectly by ter-
55 rorism. As used in this section, the term "terrorism" means a violent act or
3
1 an act that:
2 (a) Is dangerous to human life, property or infrastructure;
3 (b) Results in damage within the United States, or outside of the United
4 States in the case of an air carrier or vessel or the premises of a United
5 States mission; and
6 (c) Is committed by an individual or individuals acting on behalf of any
7 foreign person or foreign interest, as part of an effort to coerce the
8 civilian population of the United States or to influence the policy or
9 affect the conduct of the United States government by coercion.
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature Second Regular Session - 2006
Moved by Black
Seconded by Collins
IN THE HOUSE OF REPRESENTATIVES
HOUSE AMENDMENT TO H.B. NO. 753
1 AMENDMENT TO SECTION 1
2 On page 2 of the printed bill, in line 19, delete "given." and insert:
3 "given. If delivered via United States mail, such ten (10) day notification
4 period shall begin to run five (5) days following the date of postmark.".
5 AMENDMENT TO THE BILL
6 On page 3, following line 9, insert:
7 "SECTION 2. That Section 41-1842, Idaho Code, be, and the same is hereby
8 amended to read as follows:
9 41-1842. COMMERCIAL INSURANCE -- CANCELLATION -- NONRENEWAL. (1) Applica-
10 bility. The provisions of this section apply only to:
11 (a) Commercial property insurance policies;
12 (b) Commercial liability insurance policies other than aviation and
13 employer's liability insurance policies;
14 (c) Commercial multiperil insurance policies.
15 The provisions of this section do not apply to: block cancellations or
16 block nonrenewals as provided in section 41-1841, Idaho Code, reinsurance,
17 excess and surplus lines insurance, residual market risks, worker's compensa-
18 tion insurance, multistate location risks, policies subject to retrospective
19 rating plans, excess or umbrella policies and such other policies that are
20 exempted by the director of the department of insurance.
21 (2) Definitions. For the purposes of this section:
22 (a) "Cancellation" means termination of a policy at a date other than its
23 expiration date.
24 (b) "Expiration date" means the date upon which coverage under a policy
25 ends. It also means, for a policy written for a term longer than one (1)
26 year or with no fixed expiration date, each annual anniversary date of
27 such policy.
28 (c) "Nonpayment of premium" means the failure or inability of the named
29 insured to discharge any obligation in connection with the payment of pre-
30 miums on a policy of insurance subject to this section, whether such pay-
31 ments are payable directly to the insurer or its agent or indirectly pay-
32 able under a premium finance plan or extension of credit.
33 (d) "Nonrenewal" or "not to renew" means termination of a policy at its
34 expiration date.
35 (e) "Renewal" or "to renew" means the issuance, or the offer so to
36 issue, by an insurer of a policy succeeding a policy previously issued and
37 delivered by the same insurer or an insurer within the same group of
38 insurers, or the issuance of a certificate or notice extending the term of
39 an existing policy for a specified period beyond its expiration date.
40 (3) Notice of cancellation.
2
1 (a) Permissible cancellations. If coverage under a policy has not been in
2 effect for sixty (60) days and the policy is not a renewal, cancellation
3 of such policy shall be effected by mailing or delivering a written notice
4 to the first-named insured at the last known mailing address shown on the
5 policy at least thirty (30) days before the effective date of the cancel-
6 lation, provided however, if such cancellation is for the reason stated in
7 subsection (3)(a)(i) of this section, the time such cancellation may be
8 effective following notice shall be as provided in subsection (3)(b)(i) of
9 this section. A cancellation requested by the insured shall be effective
10 on the later of the date requested by the insured or the date it is
11 received by the insurer. After coverage has been in effect for more than
12 sixty (60) days or after the effective date of a renewal policy, whichever
13 is earlier, no insurer shall cancel a policy unless the cancellation is
14 based on at least one (1) of the following reasons:
15 (i) Nonpayment of premium.
16 (ii) Fraud or material misrepresentation made by or with the knowl-
17 edge of the named insured in obtaining the policy, continuing the
18 policy, or in presenting a claim under the policy.
19 (iii) Activities or omissions on the part of the named insured which
20 increase any hazard insured against, including a failure to comply
21 with loss control recommendations.
22 (iv) Change in the risk which materially increases the risk of loss
23 after insurance coverage has been issued or renewed including, but
24 not limited to, an increase in exposure to regulation, legislation or
25 court decision.
26 (v) Loss or decrease of the insurer's reinsurance covering all or
27 part of the risk or exposure by the policy.
28 (vi) Determination by the director that the continuation of the pol-
29 icy would jeopardize an insurer's solvency or would place the insurer
30 in violation of the insurance laws of this state or any other state.
31 (vii) Violation or breach by the insured of any policy terms or con-
32 ditions other than nonpayment of premium.
33 (b) Notification of cancellation.
34 (i) A notice of cancellation of insurance coverage by an insurer
35 shall be in writing and shall be mailed or delivered to the first-
36 named insured at the last known mailing address as shown on the pol-
37 icy. Notices of cancellation based on subsections (3)(a)(ii) through
38 (a)(vii) of this section shall be mailed or delivered at least thirty
39 (30) days prior to the effective date of the cancellation. Notices of
40 cancellation for the reason stated in subsection (3)(a)(i) of this
41 section without regard to when such cancellation shall be effected
42 shall be mailed or delivered at least ten (10) days prior to the
43 effective date of cancellation. If delivered via United States mail,
44 the ten (10) day notification period shall begin to run five (5) days
45 following the date of postmark. The notice shall state the effective
46 date of the cancellation.
47 (ii) The insurer shall provide the first-named insured with a writ-
48 ten statement setting forth the reason(s) for the cancellation if:
49 (1) the insured requests such a statement in writing; and (2) the
50 named insured agrees in writing to hold the insurer harmless from
51 liability for any communication giving notice of or specifying the
52 reasons for a cancellation or for any statement made in connection
53 with an attempt to discover or verify the existence of conditions
54 which would be a reason for a cancellation under this section.
55 (4) Notice of nonrenewal.
3
1 (a) An insurer may decline to renew a policy if the insurer delivers or
2 mails to the first-named insured, at the last known mailing address, writ-
3 ten notice that the insurer will not renew the policy. Such notice shall
4 be mailed or delivered at least forty-five (45) days before the expiration
5 date. If the notice is mailed less than forty-five (45) days before expi-
6 ration, coverage shall remain in effect until forty-five (45) days after
7 notice is mailed or delivered. Earned premium for any period of coverage
8 that extends beyond the expiration date shall be considered pro rata based
9 upon the previous year's rate. For purposes of this section, the transfer
10 of a policyholder between companies within the same insurance group is not
11 a nonrenewal or a refusal to renew. In addition, changes in deductibles,
12 changes in premium, and changes in the amount of insurance or reductions
13 in policy limits or coverage shall not be deemed to be nonrenewals or
14 refusals to renew. Notice of nonrenewal is not required if:
15 (i) The insurer or a company within the same insurance group has
16 offered to issue a renewal policy; or
17 (ii) Where the named insured has obtained replacement coverage or
18 has agreed in writing to obtain replacement coverage.
19 (b) If an insurer provides the notice described in subsection (4) of this
20 section and thereafter the insurer extends the policy for ninety (90) days
21 or less, an additional notice of nonrenewal is not required with respect
22 to the extension.
23 (5) Notice of premium or coverage changes. An insurer shall mail or
24 deliver to the named insured, at the last known mailing address, written
25 notice of a total premium increase greater than ten percent (10%) which is the
26 result of a comparable increase in premium rates, changes in deductibles,
27 reductions in limits, or reductions in coverages at least thirty (30) days
28 prior to the expiration date of the policy. If the insurer fails to provide
29 such thirty (30) day notice, the coverage provided to the named insured shall
30 remain in effect until thirty (30) days after such notice is given or until
31 the effective date of replacement coverage obtained by the named insured,
32 whichever first occurs. For the purposes of this section, notice is considered
33 given thirty (30) days following date of mailing or delivery of the notice to
34 the named insured. If the insured elects not to renew, any earned premium for
35 the period of extension of the terminated policy shall be calculated pro rata
36 at the lower of the current or previous year's rate. If the insured accepts
37 the renewal, the premium increase, if any, and other changes shall be effec-
38 tive on and after the first day of the renewal term.
39 (6) Proof of notice. Proof of mailing of notice of cancellation, or of
40 nonrenewal or of premium or coverage changes, to the named insured at the last
41 known mailing address showing on the policy, shall be sufficient proof of
42 notice.
43 (7) Application, effective date and termination. The provisions of this
44 section shall apply only to policies with coverage effective dates after the
45 effective date of this section.
46 (8) Regulations Rules. The director may promulgate rules and regulations
47 to implement the provisions of this section. Every rule and regulation promul-
48 gated within the authority conferred by this act shall be of temporary effect
49 and shall become permanent only by enactment by statute at the regular session
50 of the legislature first following adoption of the rule. or regulation. Rules
51 and regulations not approved in the above manner shall be rejected, null, void
52 and of no force and effect on July 1, following submission of the rules and
53 regulations to the legislature.".
4
1 CORRECTION TO TITLE
2 On page 1, in line 4, following "PREMIUM" insert: "; AND AMENDING SECTION
3 41-1842, IDAHO CODE, TO PROVIDE WHEN THE NOTIFICATION PERIOD SHALL BEGIN AND
4 TO MAKE TECHNICAL CORRECTIONS".
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature Second Regular Session - 2006
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 753, As Amended
BY STATE AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO STANDARD FIRE POLICIES; AMENDING SECTION 41-2401, IDAHO CODE, TO
3 SET FORTH NOTICE PROVISIONS APPLICABLE TO POLICY CANCELLATION BASED UPON
4 NONPAYMENT OF PREMIUM; AND AMENDING SECTION 41-1842, IDAHO CODE, TO PRO-
5 VIDE WHEN THE NOTIFICATION PERIOD SHALL BEGIN AND TO MAKE TECHNICAL COR-
6 RECTIONS.
7 Be It Enacted by the Legislature of the State of Idaho:
8 SECTION 1. That Section 41-2401, Idaho Code, be, and the same is hereby
9 amended to read as follows:
10 41-2401. STANDARD FIRE POLICY. (1) No fire insurer shall issue any fire
11 insurance policy covering on property or interest therein in this state, other
12 than on the form known as the New York standard as revised in 1943, except as
13 follows:
14 (a) An insurer may print on or in its policy its name, location, date of
15 incorporation, plan of operation, whether stock, mutual, reciprocal or
16 organized under special charter provisions, and if mutual or reciprocal
17 whether on cash premium or assessment plan; and if it be a stock company,
18 the amount of its paid up capital stock, the names of its officers and
19 agents, the number and date of the policy, and, if it is issued by an
20 agent, the words, "this policy shall not be valid until countersigned by
21 the duly authorized agent of the company at ...."; and, if a mutual or
22 reciprocal insurer, the policy must state the contingent liability, if
23 any, of its policyholders, members, or subscribers for payment of losses
24 and expenses not provided for by its cash funds.
25 (b) An insurer may print or use in its policies printed forms of descrip-
26 tion and specifications of the property insured.
27 (c) An insurer insuring against damage by lightning may print in the
28 clause enumerating the perils insured against the additional words, "also
29 any damage by lightning whether fire ensues or not," and in the clause
30 providing for an apportionment of loss in case of other insurance the
31 words, "whether by fire, lightning or both."
32 (d) A domestic insurer may print in its policies any provisions which it
33 is authorized or required by the law to insert therein, and any foreign
34 insurer may, with the approval of the director, so print any provision
35 required by its charter or deed of settlement, or by the laws of its own
36 state or country, not contrary to the laws of this state; but the director
37 shall require any provision which, in his opinion modifies the contract of
38 insurance in such a way as to affect the question of loss, to be appended
39 to the policy by an endorsement or rider as hereinafter provided.
40 (e) The blanks in the standard form may be completed in print or in writ-
41 ing.
42 (f) An insurer may print upon policies issued in compliance with the pre-
43 ceding provisions of this section the words, "Idaho standard policy."
2
1 (g) An insurer may write upon the margin or across the face of the pol-
2 icy, or write or print in type not smaller than nonpareil upon a slip,
3 slips, rider or riders to be attached thereto, provisions adding to or
4 relating to those contained in the standard form; and all such slips,
5 riders, endorsements and provisions must be signed by the officers or
6 agents of the insurer so using them.
7 (h) If the policy be made by a mutual, reciprocal or other insurer having
8 special regulations lawfully applicable to its organization, membership,
9 policies or contracts of insurance such regulations shall apply to and
10 form a part of the policy as the same may be written or printed upon,
11 attached or appended thereto.
12 (i) Every policy shall have legibly inscribed upon its face and filing
13 back suitable words to designate whether the insurer making such insurance
14 be a stock, mutual or reciprocal insurer, provided, that any insurer orga-
15 nized under special charter provisions may so indicate upon its policy and
16 may add a statement of the plan under which it operates in this state.
17 (j) Every fire policy shall contain language that provides for a thirty
18 (30) day written notice to the insured prior to cancellation of the
19 policy, provided however, that where cancellation is for the nonpayment of
20 premium, at least ten (10) days' notice of such cancellation, accompanied
21 by the reason for the cancellation, shall be given. If delivered via
22 United States mail, such ten (10) day notification period shall begin to
23 run five (5) days following the date of postmark. Proof of mailing of
24 notice of cancellation, or of intention not to renew, or of reasons for
25 cancellation or nonrenewal to the named insured at his address shall be
26 sufficient proof of notice.
27 (k) Every fire policy shall provide that it becomes effective at 12:01
28 a.m. of the standard time of the place where the property covered by the
29 insurance is located, on the effective date of the policy.
30 (2) An insurer issuing the standard fire policy is authorized to affix
31 thereto or include therein a written statement that the policy does not cover
32 loss or damage caused by nuclear reaction, nuclear radiation or radioactive
33 contamination, all whether directly or indirectly resulting from an insured
34 peril under the policy; but nothing herein contained shall be construed to
35 prohibit the attachment to any such policy of an endorsement or endorsements
36 specifically assuming coverage for loss or damage caused by nuclear reaction,
37 nuclear radiation or radioactive contamination.
38 (3) The standard fire policy is not mandatory for vehicle insurance, or
39 for marine insurance, or inland marine insurance as the same is defined pursu-
40 ant to section 41-1401(2), Idaho Code, or for insurance on growing crops.
41 (4) Any policy or contract otherwise subject to the provisions of subsec-
42 tion (1) hereof, which includes either on an unspecified basis as to the cov-
43 erage or for a single premium coverage against the peril of fire and substan-
44 tial coverage against other perils need not comply with the provisions of sub-
45 section (1) hereof, provided:
46 (a) Such policy or contract shall afford coverage, with respect to the
47 peril of fire, not less than the coverage afforded by such standard fire
48 policy,
49 (b) The provisions in relation to mortgagee interests and obligations in
50 such standard fire policy shall be incorporated therein without change,
51 (c) Such policy or contract is complete as to all of its terms without
52 reference to the standard form of fire insurance policy or any other pol-
53 icy, and
54 (d) The director is satisfied that such policy or contract complies with
55 the provisions hereof.
3
1 (5) With respect to a commercial insurance policy, such standard fire
2 insurance policy may exclude coverage for loss by fire or other perils insured
3 against if the fire or other perils are caused directly or indirectly by ter-
4 rorism. As used in this section, the term "terrorism" means a violent act or
5 an act that:
6 (a) Is dangerous to human life, property or infrastructure;
7 (b) Results in damage within the United States, or outside of the United
8 States in the case of an air carrier or vessel or the premises of a United
9 States mission; and
10 (c) Is committed by an individual or individuals acting on behalf of any
11 foreign person or foreign interest, as part of an effort to coerce the
12 civilian population of the United States or to influence the policy or
13 affect the conduct of the United States government by coercion.
14 SECTION 2. That Section 41-1842, Idaho Code, be, and the same is hereby
15 amended to read as follows:
16 41-1842. COMMERCIAL INSURANCE -- CANCELLATION -- NONRENEWAL. (1) Applica-
17 bility. The provisions of this section apply only to:
18 (a) Commercial property insurance policies;
19 (b) Commercial liability insurance policies other than aviation and
20 employer's liability insurance policies;
21 (c) Commercial multiperil insurance policies.
22 The provisions of this section do not apply to: block cancellations or
23 block nonrenewals as provided in section 41-1841, Idaho Code, reinsurance,
24 excess and surplus lines insurance, residual market risks, worker's compensa-
25 tion insurance, multistate location risks, policies subject to retrospective
26 rating plans, excess or umbrella policies and such other policies that are
27 exempted by the director of the department of insurance.
28 (2) Definitions. For the purposes of this section:
29 (a) "Cancellation" means termination of a policy at a date other than its
30 expiration date.
31 (b) "Expiration date" means the date upon which coverage under a policy
32 ends. It also means, for a policy written for a term longer than one (1)
33 year or with no fixed expiration date, each annual anniversary date of
34 such policy.
35 (c) "Nonpayment of premium" means the failure or inability of the named
36 insured to discharge any obligation in connection with the payment of pre-
37 miums on a policy of insurance subject to this section, whether such pay-
38 ments are payable directly to the insurer or its agent or indirectly pay-
39 able under a premium finance plan or extension of credit.
40 (d) "Nonrenewal" or "not to renew" means termination of a policy at its
41 expiration date.
42 (e) "Renewal" or "to renew" means the issuance, or the offer so to
43 issue, by an insurer of a policy succeeding a policy previously issued and
44 delivered by the same insurer or an insurer within the same group of
45 insurers, or the issuance of a certificate or notice extending the term of
46 an existing policy for a specified period beyond its expiration date.
47 (3) Notice of cancellation.
48 (a) Permissible cancellations. If coverage under a policy has not been in
49 effect for sixty (60) days and the policy is not a renewal, cancellation
50 of such policy shall be effected by mailing or delivering a written notice
51 to the first-named insured at the last known mailing address shown on the
52 policy at least thirty (30) days before the effective date of the cancel-
53 lation, provided however, if such cancellation is for the reason stated in
4
1 subsection (3)(a)(i) of this section, the time such cancellation may be
2 effective following notice shall be as provided in subsection (3)(b)(i) of
3 this section. A cancellation requested by the insured shall be effective
4 on the later of the date requested by the insured or the date it is
5 received by the insurer. After coverage has been in effect for more than
6 sixty (60) days or after the effective date of a renewal policy, whichever
7 is earlier, no insurer shall cancel a policy unless the cancellation is
8 based on at least one (1) of the following reasons:
9 (i) Nonpayment of premium.
10 (ii) Fraud or material misrepresentation made by or with the knowl-
11 edge of the named insured in obtaining the policy, continuing the
12 policy, or in presenting a claim under the policy.
13 (iii) Activities or omissions on the part of the named insured which
14 increase any hazard insured against, including a failure to comply
15 with loss control recommendations.
16 (iv) Change in the risk which materially increases the risk of loss
17 after insurance coverage has been issued or renewed including, but
18 not limited to, an increase in exposure to regulation, legislation or
19 court decision.
20 (v) Loss or decrease of the insurer's reinsurance covering all or
21 part of the risk or exposure by the policy.
22 (vi) Determination by the director that the continuation of the pol-
23 icy would jeopardize an insurer's solvency or would place the insurer
24 in violation of the insurance laws of this state or any other state.
25 (vii) Violation or breach by the insured of any policy terms or con-
26 ditions other than nonpayment of premium.
27 (b) Notification of cancellation.
28 (i) A notice of cancellation of insurance coverage by an insurer
29 shall be in writing and shall be mailed or delivered to the first-
30 named insured at the last known mailing address as shown on the pol-
31 icy. Notices of cancellation based on subsections (3)(a)(ii) through
32 (a)(vii) of this section shall be mailed or delivered at least thirty
33 (30) days prior to the effective date of the cancellation. Notices of
34 cancellation for the reason stated in subsection (3)(a)(i) of this
35 section without regard to when such cancellation shall be effected
36 shall be mailed or delivered at least ten (10) days prior to the
37 effective date of cancellation. If delivered via United States mail,
38 the ten (10) day notification period shall begin to run five (5) days
39 following the date of postmark. The notice shall state the effective
40 date of the cancellation.
41 (ii) The insurer shall provide the first-named insured with a writ-
42 ten statement setting forth the reason(s) for the cancellation if:
43 (1) the insured requests such a statement in writing; and (2) the
44 named insured agrees in writing to hold the insurer harmless from
45 liability for any communication giving notice of or specifying the
46 reasons for a cancellation or for any statement made in connection
47 with an attempt to discover or verify the existence of conditions
48 which would be a reason for a cancellation under this section.
49 (4) Notice of nonrenewal.
50 (a) An insurer may decline to renew a policy if the insurer delivers or
51 mails to the first-named insured, at the last known mailing address, writ-
52 ten notice that the insurer will not renew the policy. Such notice shall
53 be mailed or delivered at least forty-five (45) days before the expiration
54 date. If the notice is mailed less than forty-five (45) days before expi-
55 ration, coverage shall remain in effect until forty-five (45) days after
5
1 notice is mailed or delivered. Earned premium for any period of coverage
2 that extends beyond the expiration date shall be considered pro rata based
3 upon the previous year's rate. For purposes of this section, the transfer
4 of a policyholder between companies within the same insurance group is not
5 a nonrenewal or a refusal to renew. In addition, changes in deductibles,
6 changes in premium, and changes in the amount of insurance or reductions
7 in policy limits or coverage shall not be deemed to be nonrenewals or
8 refusals to renew. Notice of nonrenewal is not required if:
9 (i) The insurer or a company within the same insurance group has
10 offered to issue a renewal policy; or
11 (ii) Where the named insured has obtained replacement coverage or
12 has agreed in writing to obtain replacement coverage.
13 (b) If an insurer provides the notice described in subsection (4) of this
14 section and thereafter the insurer extends the policy for ninety (90) days
15 or less, an additional notice of nonrenewal is not required with respect
16 to the extension.
17 (5) Notice of premium or coverage changes. An insurer shall mail or
18 deliver to the named insured, at the last known mailing address, written
19 notice of a total premium increase greater than ten percent (10%) which is the
20 result of a comparable increase in premium rates, changes in deductibles,
21 reductions in limits, or reductions in coverages at least thirty (30) days
22 prior to the expiration date of the policy. If the insurer fails to provide
23 such thirty (30) day notice, the coverage provided to the named insured shall
24 remain in effect until thirty (30) days after such notice is given or until
25 the effective date of replacement coverage obtained by the named insured,
26 whichever first occurs. For the purposes of this section, notice is considered
27 given thirty (30) days following date of mailing or delivery of the notice to
28 the named insured. If the insured elects not to renew, any earned premium for
29 the period of extension of the terminated policy shall be calculated pro rata
30 at the lower of the current or previous year's rate. If the insured accepts
31 the renewal, the premium increase, if any, and other changes shall be effec-
32 tive on and after the first day of the renewal term.
33 (6) Proof of notice. Proof of mailing of notice of cancellation, or of
34 nonrenewal or of premium or coverage changes, to the named insured at the last
35 known mailing address showing on the policy, shall be sufficient proof of
36 notice.
37 (7) Application, effective date and termination. The provisions of this
38 section shall apply only to policies with coverage effective dates after the
39 effective date of this section.
40 (8) Regulations Rules. The director may promulgate rules and regulations
41 to implement the provisions of this section. Every rule and regulation promul-
42 gated within the authority conferred by this act shall be of temporary effect
43 and shall become permanent only by enactment by statute at the regular session
44 of the legislature first following adoption of the rule. or regulation. Rules
45 and regulations not approved in the above manner shall be rejected, null, void
46 and of no force and effect on July 1, following submission of the rules and
47 regulations to the legislature.
STATEMENT OF PURPOSE
RS 16152
This legislation allows for ten days' notice of cancellation of a
fire insurance policy for nonpayment of premium. The reason for
the cancellation shall be given to the insured.
FISCAL NOTE
None.
Contact
Name: Paul Jackson
Phone: (208) 794-6218
STATEMENT OF PURPOSE/FISCAL NOTE H 753