2006 Legislation
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HOUSE BILL NO. 753 – Fire insurance, cancellatn, notice

HOUSE BILL NO. 753

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Bill Status



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

Bill Text


                                                                        
                                                                        
  ]]]]              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.

Amendment


                                                                        
                                                                        
  ]]]]              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".

Engrossed Bill (Original Bill with Amendment(s) Incorporated)


                                                                        
                                                                        
  ]]]]              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 / Fiscal Impact



                       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