All but four states and the District of Columbia address the insurance carrier’s duty to notify an insured of its renewal plans. This is known in insurance circles as the “conditional renewal” notification requirements.
Conditional renewal statutes and administrative rules are called “conditional” because the majority of these statutes apply only when there is a change in a provision or condition that adversely affects the insured. These adverse condition changes may include, but are not limited to, an increase in premium/rate (not the result of an exposure change); a reduction in coverage, a change in policy terms; or an increase in the deductible. When such changes occur, the intent of the statutes is to give the insured enough warning to take some action; either find other coverage, apply other risk management options, or garner the additional premium required.
The adverse conditions that trigger these statutes vary greatly from state to state. A 10 percent rate increase may trigger the statute in one state, but a 25 percent increase is required in another. Likewise, the notification periods vary widely from a low of 10 days in North Dakota to 120 days in Alabama (just as two examples). In some states, the notification period varies based on the line of business or even the reason for the notice.
Beyond the conditions that trigger the statute and the notification period differences, states also differ on the lines of business to which these conditional renewal statutes apply. Some states apply them to all property and casualty lines of business, while some apply them to only commercial lines, or only homeowners, or only auto.
Hawaii, Massachusetts, Michigan and South Dakota are the only states, along with the District of Columbia, that don’t have conditional renewal statutes or administrative rules. The remaining 46 apply a wide array of conditional renewal rules.
Follow this link to review the various statutes found across the country and download the free report, Conditional Renewal Notification Requirements by State.
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