§ 59.9. Nonapplicability of the Acts.
(a) Some insurers affect a renewal of their outstanding policies of insurance merely by sending a renewal premium notice to the insured in advance of the expiration date of his policy. The insured need only make a timely payment of the premium due in order to keep his policy in force. In such a situation the mailing by the insurer of the renewal premium notice does constitute such a manifestation of willingness by the insurer to renew as to come within the purview of section 5(c)(1) of The Unfair Insurance Practices Act (40 P. S. § 1171.5(c)(1)) if mailed not less than 30 days in advance of the expiration date of the policy. If the insurer has manifested its willingness to renew by mailing a renewal notice or issuing a renewal policy and the insured fails to pay the renewal premium when due, the policy shall terminate in accordance with its terms. No further notice to the insured by the insurer of an intention not to renew for nonpayment of premium shall be necessary.
(b) The period of 60 days referred to in section 5(a)(9) and (c)(3) of The Unfair Insurance Practices Act (40 P. S. § 1171.5(a)(9) and (c)(3)) is intended to provide to insurers a reasonable period of time, if desired, to investigate thoroughly a particular risk while extending coverage during the period of investigation. An insurer may cancel the policy provided it gives at least 30 days notice of the termination and provided it gives notice no later than the 60th day. The insurer’s decision to cancel during this 60-day period must not violate section 5(a)(7)(iii) of The Unfair Insurance Practices Act (40 P. S. § 1171.5(a)(7)(iii)).
(c) Insurers are reminded, however, that a regulation of the U.S. Department of Housing and Urban Development as set forth in 24 CFR § 1905.9. (relating to notice of cancellation or nonrenewal) further limits the right of insurers to cancel or nonrenew policies of property insurance on properties eligible for coverage under the Pennsylvania FAIR Plan.
(d) The pertinent provisions of this regulation provide that:
(a) Except in cases of owner or occupant incendiarism, material misrepresentation or nonpayment of premium, each plan shall require its participating insurers to give, and each such insurer shall give, property owners no less than 30 days prior written notice of any cancellation or nonrenewal of coverage initiated by the insurer with respect to any eligible risk, whether or not such risk is then insured under the Plan, in order to allow the affected property owner sufficient time to apply for an inspection and to obtain coverage under the Plan if necessary.
(b) For the purposes of this § 1905.9, the term cancellation or nonrenewal shall include (1) reductions in amounts of insurance and adverse modifications in coverage initiated by the insurer with respect to any owner individually, and (2) refusals by the insurer or its agents to renew any expiring coverage in any line of essential property insurance previously provided to the property owner.
This requirement, therefore, allows insurers to cancel or nonrenew such policies only if the insured is given 30 days notice of both the cancellation and of the possible availability of coverage under the Pennsylvania FAIR Plan: This applies to such policies both during and after the first 60 days of their issue.
Authority The provisions of this § 59.9 issued under the Unfair Insurance Practices Act § § 1—15 (40 P. S. § § 1171.1—1171.15).
Source The provisions of this § 59.9 amended July 3, 1980, effective July 5, 1980, 10 Pa.B. 2876. Immediately preceding text appears at serial page (24944).
Notes of Decisions Denial of Application
An insurance company could not assert that it was denying the insured’s application for fire insurance and the subsequent claim for fire damage to her house based upon a previous loss suffered because the insurance company’s agent advised the insured that the house was covered from the moment of payment and the insurance company failed to provide 30 days’ notice of termination as required for policies in force for less than 60 days. Pennsylvania National Mutual Casualty Insurance Company v. Insurance Commissioner, 551 A.2d 368 (Pa. Cmwlth. 1988); appeal denied 559 A.2d 41 (Pa. 1989).
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