26.1-30.1 Cancellation and Nonrenewal of Commercial Insurance - North Dakota Statutes

Download pdf

Loading PDF...

CHAPTER 26.1-30.1CANCELLATION AND NONRENEWAL OF COMMERCIAL INSURANCE26.1-30.1-01.Application.This chapter applies to policies primarily insuring risksarising from the conduct of a commercial or industrial enterprise except workforce safety and
insurance policies, private passenger automobile policies, inland marine policies, excess
umbrella liability policies, errors and omissions policies, and officers and directors liability
policies.26.1-30.1-01.1. Unlawful grounds for declination. The declination or termination of acommercial insurance policy subject to sections 26.1-30.1-01 through 26.1-30.1-08 by an insurer
or insurance producer is prohibited if the declination or termination is based solely upon any of
the following reasons:1.The race, religion, nationality, ethnic group, disability, age, sex, or marital status of
the applicant or named insured, except this subsection does not prohibit rating
differentials based upon age, sex, or marital status.2.The lawful occupation or profession of the applicant or named insured, except that
this provision does not apply to an insurer or insurance producer that limits its
market to one lawful occupation or profession or to several related occupations or
professions.3.The age or location of the property of the applicant or named insured, unless the
decision is for a business purpose that is not a mere pretext for unfair discrimination.4.The principal location of the insured motor vehicle, unless the decision is for a
business purpose which is not a mere pretext for unfair discrimination.5.The fact that another insurer previously declined to insure the applicant or
terminated an existing policy in which the applicant was the named insured.6.The fact that the applicant or named insured previously obtained insurance coverage
through a residual market insurance mechanism or an insurance company that
insures substandard risks.26.1-30.1-01.2. Policy transfer.1.A policy transferred to an insurer within the same insurance holding company
system is not subject to sections 26.1-30.1-02, 26.1-30.1-03, 26.1-30.1-03.1, and
26.1-30.1-06.2.The transferring insurer shall give notice to the policyholder of the policy transfer.26.1-30.1-02. Midterm cancellation of commercial insurance. No insurer may cancela policy of commercial insurance during the term of the policy, except for one or more of the
following reasons:1.Nonpayment of premiums;2.Misrepresentation or fraud made by or with the knowledge of the insured in obtaining
the policy or in pursuing a claim under the policy;3.Actions by the insured that have substantially increased or substantially changed the
risk insured;4.Refusal of the insured to eliminate known conditions that increase the potential for
loss after notification by the insurer that the condition must be removed;Page No. 15.Substantial change in the risk assumed, except to the extent that the insurer should
reasonably have foreseen the change or contemplated the risk in writing the
contract;6.Loss of reinsurance by the insurer which provided coverage to the insurer for a
significant amount of the underlying risk insured. Any notice of cancellation pursuant
to this subsection must advise the policyholder that the policyholder has ten days
from the date of receipt of the notice to appeal the cancellation to the insurance
commissioner and that the commissioner will render a decision as to whether the
cancellation is justified because of the loss of reinsurance within five business days
after receipt of the appeal;7.A determination by the insurance commissioner that the continuation of the policy
could place the insurer in violation of the insurance laws of this state;8.Nonpayment of dues to an association or organization, other than an insurance
association or organization, when payment of dues is a prerequisite to obtaining or
continuing such insurance; except this provision for cancellation for failure to pay
dues does not apply to persons who are retired at sixty-two years of age or older or
to any person who is disabled according to social security standards; or9.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.26.1-30.1-03.Notice.Cancellation under subsections 2 through 9 of section26.1-30.1-02 is not effective prior to thirty days after notice to the policyholder. The notice of
cancellation must contain a specific reason for cancellation as provided in section 26.1-30.1-02.
A policy may not be canceled for nonpayment of premium pursuant to subsection 1 of section
26.1-30.1-02 unless the insurer, at least ten days prior to the effective cancellation date, has
given notice to the policyholder of the amount of premium due and the due date. The notice
must state the effect of nonpayment by the due date.No cancellation for nonpayment ofpremium is effective if payment of the amount due is made prior to the effective date set forth in
the notice.26.1-30.1-03.1. Five-day notice exception for cancellation. Policies subject to thischapter may be canceled upon five days' written notice to the named insureds if one or more of
the following conditions exist:1.Buildings with at least sixty-five percent of the rental units in the building unoccupied.2.Buildings that have been damaged by a peril insured against and the insured has
stated or such time has elapsed as clearly indicates that the damage will not be
repaired.3.Buildings to which, following a fire, permanent repairs have not commenced within
sixty days following satisfactory adjustment of loss.4.Buildings that have been unoccupied sixty consecutive days, except buildings that
have a seasonal occupancy, and buildings actually in the course of construction or
repair and reconstruction which are properly secured against unauthorized entry.5.Buildings that are in danger of collapse because of serious structural conditions or
those buildings subject to extremely hazardous conditions not contemplated in filed
rating plans such as those buildings that are in a state of disrepair as to be
dilapidated.Page No. 26.Buildings on which, because of their physical condition, there is an outstanding order
to vacate or an outstanding demolition order, or which have been declared unsafe in
accordance with applicable law.7.Buildings from which fixed and salvageable items have been or are being removed
and the insured can give no reasonable explanation for the removal.8.Buildings on which there is reasonable knowledge and belief that the property is
endangered and is not reasonably protected from possible arson for the purpose of
defrauding an insurer.9.Buildings with any of the following conditions:a.Failure to furnish heat, water, sewer service, or public lighting for thirty
consecutive days or more.b.Failure to correct conditions dangerous to life, health, or safety.c.Failure to maintain the building in accordance with applicable law.d.Failure to pay property taxes for more than one year.10.Buildingsthathave characteristics of ownership condition, occupancy, ormaintenance which are violative of law or public policy.26.1-30.1-04. New policies. Sections 26.1-30.1-02 and 26.1-30.1-03 do not apply toinsurance policies which have been in effect less than ninety days at the time the notice of
cancellation is mailed or delivered. No cancellation under this section is effective until at least
ten days after the written notice to the policyholder.26.1-30.1-05. Longer term policies. A policy may be issued for a term longer than oneyear or for an indefinite term with a clause providing for cancellation by the insurer for the
reasons stated in section 26.1-30.1-02 by giving a notice as required by section 26.1-30.1-03 at
least thirty days prior to any anniversary date.26.1-30.1-06.Nonrenewal of commercial insurance policies - Notice required -Exceptions.1.An insurer shall renew the policy, unless at least sixty days prior to the date of
expiration provided in the policy, a notice of intention not to renew the policy beyond
the agreed expiration date is made to the policyholder. The insurer shall include a
statement of the reasons for a nonrenewal with the notice.2.This section does not apply if the policyholder has insured elsewhere, has accepted
replacement coverage, or has requested or agreed to nonrenewal.26.1-30.1-07. Renewal of insurance with altered rates.1.Subject to subsection 2, if the insurer offers or purports to renew a policy at less
favorable terms as to the dollar amount of coverage or deductibles or increases the
rates in excess of fifteen percent, the new terms and new rates may take effect on
the renewal date if the insurer has sent to the policyholder notice of the new terms
and rates at least ten days prior to the expiration date. If the insurer has not so
notified the policyholder, the policyholder may elect to cancel the renewal policy
within the ten-day period after receipt of the notice. Earned premium for the period
of coverage, if any, must be calculated on a pro rata basis and the rates must be
based on the previous policy term.Page No. 32.Subsection 1 does not apply if the change relates to guide "A" rates or excess rates
also known as "consent to rate".26.1-30.1-08. Penalties.1.A violation of any of the provisions of sections 26.1-30.1-01 through 26.1-30.1-07
must be deemed an unfair trade practice in the business of insurance and subject
the violator to a penalty as determined by the commissioner not exceeding one
thousand dollars for each and every act or violation. After three violations of any of
the provisions of sections 26.1-30.1-01 through 26.1-30.1-07 within a twelve-month
period, and after a hearing upon fifteen days' notice, the commissioner may revoke
the license to transact business in this state of any insurance organization that
committed such violations.2.All notices required by this chapter must be made by first-class mail addressed to
the policyholder's last-known address as stated in the policy. Notice by first-class
mail is effective upon deposit in the United States mail. In addition to giving notice to
the policyholder, the insurer shall also give notice to the agent of record, if any, in the
manner specified for the policyholder.Page No. 4Document Outlinechapter 26.1-30.1 cancellation and nonrenewal of commercial insurance