SENATE BILL REPORT
SB 5447
BYSenators Halsan, Metcalf, Bottiger and Vognild
Changing provisions relating to insurance policy cancellation.
Senate Committee on Financial Institutions
Senate Hearing Date(s):February 13, 1897; March 3, 1987
Majority Report: That Substitute Senate Bill No. 5447 be substituted therefor, and the substitute bill do pass.
Signed by Senators Moore, Chairman; Bender, Vice Chairman; Bottiger, Fleming, McDermott, Metcalf.
Senate Staff:Stephanie Yates (786-7416)
March 4, 1987
AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS, MARCH 3, 1987
BACKGROUND:
Washington state law authorizes an insurer to retain a percentage of unearned premiums if a policyholder cancels a policy for homeowners', dwelling fire, or private passenger auto prior to the expiration of that policy. No reciprocal statutory provision exists requiring insurers to pay an amount in addition to any unearned premiums if the insurer cancels prior to the expiration of the policy.
SUMMARY:
Any insurer who cancels a policy for homeowners', dwelling fire, or private passenger auto insurance prior to the expiration of that policy, shall pay to the policyholder an amount, based on the unearned premiums, as follows: 10 percent of any unearned portion not exceeding $100, or 5 percent of any unearned portion over $100 but not exceeding $500, or 3 percent of any unearned portion exceeding $500.
The additional amount shall not be paid if cancellation is due to nonpayment of premiums, fraud, misrepresentation, or a material change in the condition affecting the risk.
EFFECT OF PROPOSED SUBSTITUTE:
The provision setting monetary penalties for early cancellation is deleted. Unless cancellation is due to arson, nonpayment of premiums, fraud, misrepresentation, a material change in the condition affecting the risk, an insurer shall not cancel a policy after it has been in effect for more than 60 days.
Notice of cancellation must be delivered no later than 20 days prior to the date of cancellation.
Fiscal Note: none requested
Senate Committee - Testified: Senator Halsan, sponsor; Harold Fosse, State Farm Insurance Company; Dan Wolfe, Safeco