Sec. 38a-324. (Formerly Sec. 38-185x). Cancellation of commercial risk insurance policies. Notice requirements. Applicable to surplus lines insurers.
Sec. 38a-324. (Formerly Sec. 38-185x). Cancellation of commercial risk insurance policies. Notice requirements. Applicable to surplus lines insurers. (a) After
a policy of commercial risk insurance, other than workers' compensation insurance and
automobile insurance issued under a residual market mechanism as described in section
38a-329, has been in effect for more than sixty days, or after the effective date of a
renewal policy, no insurer may cancel any policy unless the cancellation is based on
the occurrence, after the effective date of the policy or renewal, of one or more of the
following conditions: (1) Nonpayment of premium; (2) conviction of a crime arising
out of acts increasing the hazard insured against; (3) discovery of fraud or material
misrepresentation by the insured in obtaining the policy or in perfecting any claim thereunder; (4) discovery of any wilful or reckless act or omission by the insured increasing
the hazard insured against; (5) physical changes in the property which increase the
hazard insured against; (6) a determination by the commissioner that continuation of
the policy would violate or place the insurer in violation of the law; (7) a material increase
in the hazard insured against; or (8) a substantial loss of reinsurance by the insurer
affecting this particular line of insurance. If the basis for cancellation is nonpayment of
premium, at least ten days' advance notice shall be given and the insured may continue
the coverage and avoid the effect of the cancellation by payment in full at any time prior
to the effective date of cancellation. If the basis for cancellation is conviction of a crime
arising out of acts increasing the hazard insured against, discovery of fraud or material
misrepresentation by the insured in obtaining the policy or in perfecting any claim thereunder, discovery of any wilful or reckless act or omission by the insured increasing the
hazard insured against or a determination by the commissioner that continuation of the
policy would violate or place the insurer in violation of the law, at least ten days' advance
notice shall be given. In all other cases, at least sixty days' advance notice shall be given.
Notwithstanding the provisions of this section, the advance notice period for cancellation
of any professional liability policy, as defined in section 38a-393, shall be at least ninety
days. No notice of cancellation shall be required if such policy is transferred from an
insurer to an affiliate of such insurer for another policy with no interruption of coverage
and contains the same terms, conditions and provisions, including policy limits, as the
transferred policy, except that the insurer to which the policy is transferred shall not be
prohibited from applying its rates and rating plans at the time of renewal. No notice of
cancellation shall be effective unless it is sent, by registered or certified mail or by mail
evidenced by a United States Post Office certificate of mailing, or delivered by the
insurer to the named insured by the required date.
(b) No surplus lines insurer shall be deemed to be eligible to write coverage for
risks as provided in sections 38a-741 to 38a-744, inclusive, 38a-777 and 38a-794, unless
such insurer complies with the requirements of subsection (a) of this section.
(P.A. 86-98, S. 2, 6; P.A. 87-18; 87-128; 87-175, S. 2, 4; P.A. 88-82, S. 2; P.A. 90-90, S. 1; P.A. 01-113, S. 33, 42;
P.A. 06-109, S. 3.)
History: P.A. 87-18 exempted automobile insurance issued under a residual market mechanism from the provisions of
the section; P.A. 87-128 established advance notice requirements for the various bases of cancellation and set mailing and
delivery requirements for the notice to be effective; P.A. 87-175 added Subsec. (b), making the requirements of Subsec.
(a) applicable to surplus lines insurers; P.A. 88-82 amended Subsec. (a) to require a 90-day advance notice period for
cancellation of any professional liability policy; P.A. 90-90 made technical changes in Subsec. (a); Sec. 38-185x transferred
to Sec. 38a-324 in 1991; P.A. 01-113 amended Subsec. (b) to delete reference to Sec. 38a-795, effective September 1,
2002; P.A. 06-109 amended Subsec. (a) to provide that no notice of cancellation is required if policy is transferred from
insurer to affiliate of insurer for another policy.
Cited. 239 C. 658.