PRINTER'S NO. 3478
No. 2486 Session of 1986
INTRODUCED BY FOX, TRUMAN, NAHILL, RAYMOND, KENNEY, J. TAYLOR,
O'BRIEN, BUNT, WOGAN, VEON, LEVDANSKY, PUNT, E. Z. TAYLOR,
HERSHEY AND PERZEL, MAY 7, 1986
REFERRED TO COMMITTEE ON INSURANCE, MAY 7, 1986
AN ACT
1 Amending the act of July 22, 1974 (P.L.589, No.205), entitled
2 "An act relating to unfair insurance practices; prohibiting
3 unfair methods of competition and unfair or deceptive acts
4 and practices; and prescribing remedies and penalties,"
5 prohibiting the cancellation of any insurance policy during
6 its term except for specified reason.
7 The General Assembly of the Commonwealth of Pennsylvania
8 hereby enacts as follows:
9 Section 1. Section 5(a)(9) of the act of July 22, 1974
10 (P.L.589, No.205), known as the Unfair Insurance Practices Act,
11 is amended to read:
12 Section 5. Unfair Methods of Competition and Unfair or
13 Deceptive Acts or Practices Defined.--(a) "Unfair methods of
14 competition" and "unfair or deceptive acts or practices" in the
15 business of insurance means:
16 * * *
17 (9) Cancelling any policy of insurance covering owner-
18 occupied private residential properties or personal property of
19 individuals that has been in force for sixty days or more or
1 refusing to renew any such policy, or cancelling any other
2 policy of insurance that has been in force for sixty days or
3 more during the term for which it was written, unless the policy
4 was obtained through material misrepresentation, fraudulent
5 statements, omissions or concealment of fact material to the
6 acceptance of the risk or to the hazard assumed by the company;
7 or there has been a substantial change or increase in hazard in
8 the risk assumed by the company subsequent to the date the
9 policy was issued; or there is a substantial increase in hazards
10 insured against by reason of wilful or negligent acts or
11 omissions by the insured; or the insured has failed to pay any
12 premium when due whether such premium is payable directly to the
13 company or its agent or indirectly under any premium finance
14 plan or extension of credit; or for any other reasons approved
15 by the commissioner pursuant to rules and regulations
16 promulgated by the commissioner. No cancellation or refusal to
17 renew by any person shall be effective unless a written notice
18 of the cancellation or refusal to renew is received by the
19 insured either at the address shown in the policy or at a
20 forwarding address. Such notice shall:
21 (i) Be approved as to form by the Insurance Commissioner
22 prior to use.
23 (ii) State the date, not less than thirty days after the
24 date of delivery or mailing on which such cancellation or
25 refusal to renew shall become effective.
26 (iii) State the specific reason or reasons of the insurer
27 for cancellation or refusal to renew.
28 (iv) Advise the insured of his right to request, in writing,
29 within ten days of the receipt of the notice of cancellation or
30 intention not to renew that the Insurance Commissioner review
19860H2486B3478 - 2 -
1 the action of the insurer.
2 (v) Advise the insured of his possible eligibility for
3 insurance under the act of July 31, 1968 (P.L.738, No.233),
4 known as "The Pennsylvania Fair Plan Act," or the Pennsylvania
5 Assigned Risk Plan.
6 (vi) Advise the insured in a form commonly understandable of
7 the provisions of subparagraphs (ii), (iii) and (iv) of this
8 paragraph as they limit permissible time and reasons for
9 cancellation.
10 (vii) Advise the insured of the procedures to be followed in
11 prosecuting an appeal.
12 * * *
13 Section 2. This act shall take effect in 60 days.
J16L40CHF/19860H2486B3478 - 3 -