SENATE BILL REPORT

SHB 281

BYHouse Committee on Financial Institutions & Insurance (originally sponsored by Representatives Ballard, Lux and Miller)

Restricting insurance cancellations and nonrenewals.

House Committe on Financial Institutions & Insurance

Senate Committee on Financial Institutions

Senate Hearing Date(s):March 27, 1987

Senate Staff:Walt Corneille (786-7452)

AS OF MARCH 25, 1987

BACKGROUND:

Last year the Legislature amended provisions governing the time periods for notice before the insurer can cancel or nonrenew policies.  Among these changes was a requirement that when insurers cancel a policy they give written notice of the actual reason for the cancellation.

SUMMARY:

Insurers are prohibited from cancelling certain commercial liability policies after the policy has been in effect more than 60 days except for certain enumerated reasons.  A policy affected by this section may only be cancelled after 60 days for:  nonpayment of premium; fraud or misrepresentation in obtaining the policy or presenting a claim; an increase in the hazard insured against by an act or omission of the insured; an increase in the risk of loss; or a violation by the insured of a policy term.

Surety bonds required by statute, reinsurance or excess and surplus lines policies are not affected.

Fiscal Note:      none requested