H-1853              _______________________________________________

                                           SUBSTITUTE HOUSE BILL NO. 281

                        _______________________________________________

State of Washington                              50th Legislature                              1987 Regular Session

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

Read first time 2/18/87 and passed to Committee on Rules.

AN ACT Relating to cancellation of insurance policies; and adding a new section to chapter 48.18 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1.  A new section is added to chapter 48.18 RCW to read as follows:

          (1) This section applies to commercial property insurance policies, commercial liability policies other than automobile, aviation and employers liability policies, and commercial multi-peril policies.  This section does not apply to surety bonds required by statute, reinsurance, or excess and surplus lines policies.

          (2) If coverage has been in effect for more than sixty days or after the effective date of a renewal policy, no insurer shall cancel a policy unless the cancellation is based on at least one of the following reasons:

          (a) Nonpayment of premium;

          (b) Fraud or material misrepresentation made by or with the knowledge of the named insured in obtaining the policy, continuing the policy, or in presenting a claim under the policy;

          (c) Activities or omissions on the part of the named insured which increase or continue any hazard insured against, including failure to comply with loss control recommendations;

          (d) Change in the risk which increases the risk of loss after insurance coverage has been issued or renewed, including but not limited to an increase in exposure due to regulation, legislation, or court decision; or

          (e) Violation or breach by the insured of any policy terms or conditions.