Notice Concerning Proper Notice of Cancellation; Notice -2018-01
[48 Pa.B. 578]
[Saturday, January 20, 2018]
January 09, 2018
Subject: Notice of Cancellation Requirements for Policies Covering Owner-Occupied Residential Property or Personal Property of Individuals
To: All Property and Casualty Insurance Companies doing business in the Commonwealth of Pennsylvania
From: Seth A. Mendelsohn, Executive Deputy Insurance Commissioner
It has come to the attention of the Pennsylvania Insurance Department (''Department'') that some property and casualty insurance companies in this Commonwealth have been using notices to cancel insurance policies covering owner-occupied residential property or personal property that do not comply with the requirements of Section 5 of the Act of July 22, 1974, P.L. 589, No. 205, 40 P.S. § 1171.5, (''Act 205'') or the requirements contained in the Department's regulations (31 Pa. Code §§ 59.1 et. seq.). This notice is intended to remind insurers of the necessity of complying with both Act 205 and the Department's regulations.
Section 5 of Act 205 sets forth requirements for cancellation notices for policies covering owner-occupied residential property or personal property. The notice must:
• Be approved as to form by the Insurance Commissioner prior to use.
• State the date, not less than 30 days after the date of delivery or mailing, on which such cancellation or refusal to renew shall become effective.
• State the specific reason or reasons of the insurer for cancellation or refusal to renew.
• Advise the insured of his right to request, in writing, within ten days of the receipt of the notice of cancellation or intention not to renew, that the Insurance Commissioner review the action of the insurer.
• Advise the insured of his possible eligibility for insurance under the Act of July 31, 1968 (P.L. 738, No. 233), known as ''The Pennsylvania Fair Plan Act,'' or the Pennsylvania Assigned Risk Plan.
• Advise the insured in a form commonly understandable of the provisions of subparagraphs (ii), (iii) and (iv) of this paragraph as they limit permissible time and reasons for cancellation.
• Advise the insured of the procedures to be followed in prosecuting an appeal.
40 P.S. § 1171.5(a)(9).
In addition, 31 Pa. Code § 59.6 provides requirements for the contents of a notice of cancellation. Specifically, section 59.6 provides that:
• The form shall be clearly labeled: ''Notice of Cancellation or Refusal to Renew.''
• The form shall be given to the insured in duplicate.
• The date, not less than 30 days after the date of delivery or mailing, on which such cancellation or refusal to renew is to become effective shall be clearly indicated.
• Space must be provided for the insurer to provide the specific reason or reasons for the cancellation or refusal to renew.
• The reasons given for cancellation or refusal to renew shall be clear and complete. If the reason is a material misrepresentation, fraudulent statement, omission or concealment of fact material to the acceptance of the risk, or to the hazard assumed by the company, made by the insured, the insurer shall specify what statements, omissions or concealments it relied on for its action.
• If the reason is a substantial change or increase in the hazard, the insurer shall specify the changes or increased hazards it relied on for its actions. If the reason is the failure to pay a premium, the insurer shall specify the amount due, and the date when it was due.
• The form shall include that advice that the insured has a right to request review of the insurer's action as provided in § 59.7 (relating to appeal procedure), within ten days of receipt of the notice. In so doing, the notice shall include:
o Advice that review may be requested by signing a copy of the form in a space provided and sending it to one of the regional offices of the Insurance Department.
o The addresses of the four regional offices of the Insurance Department.
• The form shall include advice to the insured that he or she may be eligible for insurance under the Pennsylvania Fair Plan Act or the Pennsylvania Auto Insurance Plan.
• Each provision of the notice shall be set forth in clear and understandable terms. To assure adequate notice, the form label shall be set at the top of the form in roman type no smaller than 14 point modern type, all capitals. The remainder of the notice shall be set in roman type no smaller than ten point modern type, two points leaded.
31 Pa. Code § 59.6.
Appendix A to Chapter 59, as referenced in 31 Pa. Code § 59.6(10), provides a recommended form of a notice that would meet the requirements of this section. The label of ''Appendix A'' is titled ''Notice of Cancellation or Non-Renewal''. Thus, an insurer may label a cancellation notice either ''Notice of Cancellation or Refusal to Renew'' or ''Notice of Cancellation or Non-Renewal''. Finally, while section 59.6 and ''Appendix A'' reference the Department's regional offices in Pittsburgh, Philadelphia and Erie, the Department reminds insurers that these offices have been closed. As such, insurers may disregard the references to the regional offices and include the following address as stated in 41 Pa.B. 4181:
Insurance Department, Bureau of Consumer Services
1209 Strawberry Square
Harrisburg, PA 17120
Toll Free: (877) 881-6388
Fax: (717) 787-8585
The address change will also be revised in the Pennsylvania Code accordingly. Any questions regarding this notice may be directed to Seth A. Mendelsohn, Executive Deputy Insurance Commissioner at 717-787-0872 or firstname.lastname@example.org.
JESSICA K. ALTMAN,
Acting Insurance Commissioner
[Pa.B. Doc. No. 18-121. Filed for public inspection January 19, 2018, 9:00 a.m.]
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