RS 22:1267

§1267. Commercial insurance; cancellation and renewal A. This Section shall apply to commercial property insurance policies, commercial automobile insurance policies, commercial multi-peril insurance policies, workers' compensation insurance, professional errors and omissions policies, and commercial liability insurance policies, other than aviation and employers' liability insurance policies. It shall not apply to reinsurance, excess and surplus lines insurance, residual market risks, multistate location risks, policies subject to retrospective rating plans, excess or umbrella policies, and such other policies that are exempted by the commissioner of insurance. B. For the purposes of this Section, the following terms shall mean: (1) "Cancellation" means termination of a policy at a date other than its expiration date. (2) "Expiration date" means the date upon which coverage under a policy ends. It also means, for a policy written for a term longer than one year or with no fixed expiration date, each annual anniversary date of such policy. (3) "Nonpayment of premium" means the failure or inability of the named insured to discharge any obligation in connection with the payment of premiums on a policy of insurance subject to this regulation, whether such payments are payable directly to the insurer or its producer or indirectly payable under a premium finance plan or extension of credit. (4) "Nonrenewal" means termination of a policy at its expiration date. (5) "Renewal" or "to renew" means the issuance of or the offer to issue by the insurer a policy succeeding a policy previously issued and delivered by the same insurer or an insurer within the same group of insurers, or the issuance of a certificate or notice extending the term of an existing policy for a specified period beyond its expiration date. C.(1) If coverage has not been in effect for sixty days and the policy is not a renewal, cancellation shall be effected by mailing or delivering a written notice to the first-named insured at the mailing address shown on the policy at least sixty days before the cancellation effective date, except in cases where cancellation is based on nonpayment of premium. Notice of cancellation based on nonpayment of premium shall be mailed or delivered at least ten days prior to the effective date of cancellation. After 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 change or increase any hazard insured against, including a 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 an increase in exposure due to regulation, legislation, or court decision. (e) Determination by the commissioner of insurance that the continuation of the policy would jeopardize a company's solvency or would place the insurer in violation of the insurance laws of this state or any other state. (f) Violation or breach by the insured of any policy terms or conditions. (g) Other reasons that are approved by the commissioner of insurance. NOTE: Subparagraph (C)(2)(a) eff. until July 1, 2026. See Acts 2025, No. 182. (2)(a) A notice of cancellation of insurance coverage by an insurer shall be in writing and shall be mailed or delivered to the first-named insured at the mailing address as shown on the policy. Notices of cancellation based on R.S. 22:1267(C)(1)(b) through (g) shall be mailed or delivered at least thirty days prior to the effective date of the cancellation; notices of cancellations based upon R.S. 22:1267(C)(1)(a) shall be mailed or delivered at least ten days prior to the effective date of cancellation. The notice shall state the effective date of the cancellation. NOTE: Subparagraph (C)(2)(a) eff. July 1, 2026. See Acts 2025, No. 182. (2)(a) A notice of cancellation of insurance coverage by an insurer shall be in writing and shall be mailed or delivered to the first-named insured at the mailing address as shown on the policy. Notices of cancellation based on Subparagraphs (1)(b) through (g) of this Subsection shall be mailed or delivered at least sixty days prior to the effective date of the cancellation. Notices of cancellations based upon Subparagraph (1)(a) of this Subsection shall be mailed or delivered at least ten days prior to the effective date of cancellation. The notice shall state the effective date of the cancellation. (b) The insurer shall provide the first-named insured with a written statement setting forth the reason for the cancellation where the insured requests such a statement in writing and the named insured agrees in writing to hold the insurer harmless from liability for any communication giving notice of or specifying the reasons for a cancellation or for any statement made in connection with an attempt to discover or verify the existence of conditions which would be a reason for cancellation under this regulation. (3) An insurer shall provide a notice of cancellation or a statement of reasons for cancellation where cancellation for nonpayment of premium is effected by a premium finance company or other entity pursuant to a power of attorney or other agreement executed by or on behalf of the insured. D.(1) An insurer may decide not to renew a policy if it delivers or mails to the first-named insured at the address shown on the policy written notice it will not renew the policy. Such notice of nonrenewal shall be mailed or delivered at least sixty days before the expiration date. Such notice to the insured shall include the insured's loss run information for the period the policy has been in force within, but not to exceed, the last three years of coverage. If the notice is mailed less than sixty days before expiration, coverage shall remain in effect under the same terms and conditions until sixty days after notice is mailed or delivered. Earned premium for any period of coverage that extends beyond the expiration date shall be considered pro rata based upon the previous year's rate. For purposes of this Section, the transfer of a policyholder between companies within the same insurance group shall not be a refusal to renew. In addition, changes in the deductible, changes in rate, changes in the amount of insurance, or reductions in policy limits or coverage shall not be refusals to renew. (2) Notice of nonrenewal shall not be required if the insurer or a company within the same insurance group has offered to issue a renewal policy, or where the named insured has obtained replacement coverage or has agreed in writing to obtain replacement coverage. (3) If an insurer provides the notice described in Paragraph (1) of this Subsection and thereafter the insurer extends the policy for ninety days or less, an additional notice of nonrenewal is not required with respect to the extension. NOTE: Paragraph (E)(1) eff. until July 1, 2026. See Acts 2025, No. 182. E.(1) An insurer shall mail or deliver to the named insured at the mailing address shown on the policy written notice of any rate increase, change in deductible, or reduction in limits or coverage at least thirty days prior to the expiration date of the policy. If the insurer fails to provide such thirty-day notice, the coverage provided to the named insured at the expiring policy's rate, terms, and conditions shall remain in effect until notice is given or until the effective date of replacement coverage obtained by the named insured, whichever first occurs. For the purposes of this Subsection, notice is considered given thirty days following date of mailing or delivery of the notice. If the insured elects not to renew, any earned premium for the period of extension of the terminated policy shall be calculated pro rata at the lower of the current or previous year's rate. If the insured accepts the renewal, the premium increase, if any, and other changes shall be effective the day following the prior policy's expiration or anniversary date. NOTE: Paragraph (E)(1) eff. July 1, 2026. See Acts 2025, No. 182. E.(1) An insurer shall mail or deliver to the named insured at the mailing address shown on the policy written notice of any rate increase, change in deductible, or reduction in limits or coverage at least sixty days prior to the expiration date of the policy. If the insurer fails to provide such notice, the coverage provided to the named insured at the expiring policy's rate, terms, and conditions shall remain in effect until notice is given or until the effective date of replacement coverage obtained by the named insured, whichever first occurs. For the purposes of this Subsection, notice is considered given sixty days following date of mailing or delivery of the notice. If the insured elects not to renew, any earned premium for the period of extension of the terminated policy shall be calculated pro rata at the lower of the current or previous year's rate. If the insured accepts the renewal, the premium increase, if any, and other changes shall be effective the day following the prior policy's expiration or anniversary date. (2) This Subsection shall not apply to the following: (a) Changes in a rate or plan filed with the commissioner of insurance and applicable to an entire class of business. (b) Changes based upon the altered nature or extent of the risk insured. (c) Changes in policy forms filed and approved with the commissioner and applicable to an entire class of business. (d) Changes requested by the insured. F. Proof of mailing of notice of cancellation, or of nonrenewal or of premium or coverage changes, to the named insured at the address shown in the policy, shall be sufficient proof of notice. G.(1) An insurance premium finance company that finances any part of an insurance policy governed by this Section shall cooperate with the department in any investigation regarding such insurance policy. (2) Upon request by the department, the insurance premium finance company shall make available to the department all documents, correspondence, and cancellation notices related to the insurance policy that have been received or sent by the insurance premium finance company. (3) An insurance premium finance company that violates any provision of this Section shall be subject to the monetary penalties provided for in R.S. 22:13(A). Acts 1987, No. 776, §1; Acts 1988, No. 677, §1; Acts 1991, No. 608, §1; Acts 1991, No. 798, §1; Acts 1993, No. 563, §1; Acts 2001, No. 1052, §1; Acts 2007, No. 459, §4, eff. Jan. 1, 2008; Redesignated from R.S. 22:636.4 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009; Acts 2010, No. 106, §1; Acts 2010, No. 703, §1, eff. Jan. 1, 2011; Acts 2015, No. 37, §1; Acts 2025, No. 182, §1, eff. July 1, 2026. NOTE: Former R.S. 22:1267 redesignated as R.S. 22:441 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009.