Most states have similar statutes regulating insurance companies’ power to cancel or “non-renew” insurance policies. Under the New York State Insurance Law, for most types of insurance policies, insurance companies may cancel a policy for underwriting reasons within the first 60 days. Underwriting guidelines are not required to be filed with the state insurance department. Cancellation of a policy that has been effective for more than 60 days is called mid-term cancellation.
At the time of this writing, in New York, insurers can only cancel a policy midterm for certain specific reasons:
- the insured has been convicted of a crime which results in the increase of the hazard insured against;
- the insured committed fraud, or materially misrepresented information in the insurance application or during a claim process;
- non-payment of premium.
- in an automobile policy, the insured’s license being suspended or revoke.
Insurers must notify the policyholders by mailing a cancellation notice to at least 30 days prior to the cancellation date. For a personal auto policy, the notice must be mailed at least 45 days, but no more than 60 days, ahead of the cancellation date. This is to ensure the insured has ample time to secure other insurance, or contact other agents, brokers or insurers writing direct business.
The above restrictions apply to most types of polices, including commercial and personal policies, liability for bodily injury and property damage, automobile insurance, and malpractice insurance. However, policies written through the state’s “assigned risk” plan, NYAIP (New York Automobile Insurance Plan), Workers Compensation coverage, and excess insurance are exempted from these restrictions.
Since a consumer’s loss history is almost always an underwriting criterion, to aid in the search for a replacement policy, the name-insured has the right to request for his loss history from the prior insurer when his policy is canceled. The request has to be made by written request. The insurance company must furnish the loss data within 20 days.