WEST virginia legislature

2019 regular session

Enrolled

Committee Substitute

for

Senate Bill 485

Senator Azinger, original sponsor

[Passed March 7, 2019; in effect 90 days from passageJanuary 14, 2016]

AN ACT to amend and reenact §33-17A-3 and §33-17A-4 of the Code of West Virginia, 1931, as amended, all relating to clarifying notification requirements for property insurance purposes.

Be it enacted by the Legislature of West Virginia:

ARTICLE 17A. PROPERTY INSURANCE DECLINATION, TERMINATION, AND DISCLOSURE.

§33-17A-3. Definitions.

(a) “Declination” is the refusal of an insurer to issue a property insurance policy on a written application or written request for coverage. For the purposes of this article, the offering of insurance coverage with a company within an insurance group which is different from the company requested on the application or written request for coverage, or the offering of insurance upon different terms than requested in the application or written request for coverage, is not considered a declination if such offering of such insurance is based upon any valid underwriting reason which involves a substantial increase in the risk. Each company or groups of companies instituting such transfer shall give notice in the manner provided in §33-17A-4(c) of this code to the insured as to the reasons for such transfer.

(b) “Nonpayment of premium” means the failure of the named insured to discharge any obligation in connection with the payment of premiums on policies of property insurance, subject to this article, whether the payments are directly payable to the insurer or its agent or indirectly payable to the insurer or its agent or indirectly payable under a premium finance plan or extension of credit. “Nonpayment of premium” includes the failure to pay dues or fees where payment of dues or fees is a prerequisite to obtaining or continuing property insurance coverage.

(c) “Renewal” or “to renew” means the issuance and delivery by an insurer at the end of a policy period of a policy superseding a policy previously issued and delivered by the same insurer, or the issuance and delivery of a certificate or notice extending the term of an existing policy beyond its policy period or term. For the purpose of this article, any policy period or term of less than six months is considered a policy period or term of six months, and any policy period or term of more than one year or any policy with no fixed expiration date is considered a policy period or term of one year.

(d) “Termination” means either a cancellation or nonrenewal of property insurance coverage in whole or in part. A cancellation occurs during the policy term. A nonrenewal occurs at the end of the policy term as set forth in §33-17A-3(c) of this code.

(1) For purposes of this article, the transfer of a policyholder between companies within the same insurance group is not considered a termination, if such transfer is based upon any valid underwriting reason which involves a substantial increase in the risk.

(2) Requiring a reasonable deductible, reasonable changes in the amount of insurance, or reasonable reductions in policy limits or coverage is not considered a termination if the requirements are directly related to the hazard involved and are made on the renewal date of the policy.

§33-17A-4. Notification and reasons for a transfer, declination, termination, or renewal with reduction in coverage.

(a) Upon declining to insure any real or personal property, subject to this article, the insurer making a declination shall provide the insurance applicant with a written explanation of the specific reason or reasons for the declination at the time of the declination. The provision of such insurance application form by an insurer shall create no right to coverage on behalf of the insured to which the insured is not otherwise entitled.

(b) A notice of cancellation of property insurance coverage by an insurer shall be in writing, shall be delivered to the named insured or sent by first class mail to the named insured at the last known address of the named insured, shall state the effective date of the cancellation, and shall be accompanied by a written explanation of the specific reason or reasons for the cancellation.

(c) At least 30 days before the end of a policy period, as described in §33-17A-3(c) of this code, an insurer shall deliver or send by first class mail to the named insured at the last known address of the named insured, notice of its intention regarding the renewal of the property insurance policy.

(1) Notice of an intention not to renew a property insurance policy shall be accompanied by an explanation of the specific reasons for the nonrenewal: Provided, That no insurer shall fail to renew an outstanding property insurance policy which has been in existence for four years or longer except for the reasons as set forth in §33-17A-5 of this code, or for other valid underwriting reasons which involve a substantial increase in the risk: Provided, however, That notwithstanding any other provision of this article, no property insurance coverage policy in force for at least four years, may be denied renewal or canceled solely as a result of:

(A) A single first party property damage claim within the previous 36 months and that arose from wind, hail, lightning, wildfire, snow, or ice, unless the insurer has evidence that the insured unreasonably failed to maintain the property and that failure to maintain the property contributed to the loss; or

(B) Two first party property damage claims within the previous 12 months, both of which arose from claims solely due to an event for which a state of emergency is declared for the county in which the insured property is located, unless the insurer has evidence that the insured unreasonably failed to maintain the property and that failure to maintain the property contributed to the loss. “State of emergency” means the situation existing after the occurrence of a disaster in which a state of emergency has been declared by the Governor or by the Legislature pursuant to the provisions of §15-5-6 of this code or in which a major disaster declaration or emergency declaration has been issued by the President of the United States pursuant to the provisions of 42 U. S. C. §5122.

(2) Notice of an intention to transfer a policyholder between companies within the same insurance group as provided in §33-17A-3(d)(1) of this code shall be given by each company or group of companies instituting such transfer and shall be accompanied by an explanation of the reasons for such transfer.

(3) Notice of an intention to renew a property insurance policy with a new policy that includes changes made by the insurer, which result in a removal of coverage, diminution in the scope or reduction in coverage, change in deductible, or addition of an exclusion, shall be accompanied by an explanation of the changes made by the insurer. This subdivision does not apply to any change, reduction, or elimination of coverage made at the request of the insured, any correction of typographical or scrivener’s errors, or the application of mandated legislative changes.