HOUSE BILL REPORT

HB 64

BYRepresentatives Lux, Chandler and P. King 

Exempting certain surety bonds from requirements for cancellation or nonrenewal of insurance policies.

House Committe on Financial Institutions & Insurance

Majority Report:     Do pass.  (10)

     Signed by Representatives Lux, Chair; Zellinsky, Vice Chair; Anderson, Betrozoff, Crane, Dellwo, Dorn, Ferguson, Nutley and Silver.

House Staff:John Conniff (786-7119)

AS PASSED HOUSE JANUARY 22, 1987

BACKGROUND:

In 1986, the legislature extended the time periods that are required for notice to an insured before a property/casualty insurance policy may be cancelled or nonrenewed. The changes require the insurance company to notify the insured at least 45 days in advance of a cancellation; if such notice is not given the cancellation is ineffective. In addition, the insurer must notify the insured at least 45 days in advance of a decision by the insurer not to renew the policy. Surety bonds are also subject to these requirements.

Surety bonds are sometimes required by state and federal government agencies to ensure performance of a contract or to protect the consumer against the costs of a regulated business's nonperformance. Such bonds are often a condition of obtaining a license to conduct business. These statutorily required bonds are subject to separate cancellation notice requirements that conflict with the insurance code.

SUMMARY:

Surety bonds that are governed and required under other statutes are exempt from the cancellation and nonrenewal notice provisions of the insurance code.

Fiscal Note:    Not Requested.

House Committee ‑ Testified For:     None Presented.

House Committee - Testified Against: None Presented.

House Committee - Testimony For:     None Presented.

House Committee - Testimony Against: None Presented.