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2016 SESSION
16101793DBe it enacted by the General Assembly of Virginia:
1. That §§ 38.2-231, 38.2-2113, and 38.2-2208 of the Code of Virginia are amended and reenacted as follows:
§ 38.2-231. Notice of cancellation, refusal to renew, reduction in coverage or increase in premium of certain liability insurance policies.
A. 1. No cancellation or refusal to renew by an insurer of (i) a policy of insurance as defined in § 38.2-117 or 38.2-118 insuring a business entity; (ii) a policy of insurance that includes as a part thereof insurance as defined in § 38.2-117 or 38.2-118 insuring a business entity; (iii) a policy of motor vehicle insurance against legal liability of the insured as defined in § 38.2-124 insuring a business entity; or (iv) a policy of miscellaneous casualty insurance as defined in subsection B of § 38.2-111 insuring a business entity shall be effective unless the insurer delivers or mails to the first named insured at the address shown on the policy a written notice of cancellation or refusal to renew, or delivers such notice electronically to the address provided by the first named insured. Such notice shall:
a. Be in a type size authorized under § 38.2-311;
b. State the date, which shall not be less than 45 days after the delivery or mailing of the notice of cancellation or refusal to renew, on which such cancellation or refusal to renew shall become effective, except that such effective date may not be less than 15 days from the date of mailing or delivery when the policy is being cancelled or not renewed for failure of the insured to discharge when due any of its obligations in connection with the payment of premium for the policy;
c. State the specific reason or reasons of the insurer for cancellation or refusal to renew;
d. Advise the first named insured of its right to request in writing, within 15 days of the receipt of the notice, that the Commissioner of Insurance review the action of the insurer; and
e. In the case of a policy of motor vehicle insurance, inform the first named insured of the possible availability of other insurance which may be obtained through its agent, through another insurer, or through the Virginia Automobile Insurance Plan.
2. Nothing in this subsection shall apply to any policy of insurance if the named insured or his duly constituted attorney-in-fact has notified orally, or in writing, if the insurer requires such notification to be in writing, the insurer or its agent that he wishes the policy to be canceled or that he does not wish the policy to be renewed, or if, prior to the date of expiration, he fails to accept the offer of the insurer to renew the policy.
3. Nothing in this subsection shall apply if an affiliated insurer has manifested its willingness to provide coverage at a lower premium than would have been charged for the same exposures on the expiring policy. The affiliated insurer shall manifest its willingness to provide coverage by issuing a policy with the types and limits of coverage at least equal to those contained in the expiring policy unless the named insured has requested a change in coverage or limits. When such offer is made by an affiliated insurer, an offer of renewal shall not be required of the insurer of the expiring policy, and the policy issued by the affiliated insurer shall be deemed to be a renewal policy.
B. No insurer shall cancel or refuse to renew a policy of motor vehicle insurance against legal liability of the insured as defined in § 38.2-124 insuring a business entity solely because of lack of supporting business or lack of the potential for acquiring such business.
C. No reduction in coverage for personal injury or property damage liability initiated by an insurer and no insurer-initiated increase in the premium greater than 25 percent of (i) a policy of insurance defined in § 38.2-117 or 38.2-118 insuring a business entity; (ii) a policy of insurance that includes as a part thereof insurance defined in § 38.2-117 or 38.2-118 insuring a business entity; (iii) a policy of motor vehicle insurance against legal liability of the insured as defined in § 38.2-124 insuring a business entity; or (iv) a policy of miscellaneous casualty insurance as defined in subsection B of § 38.2-111 insuring a business entity, and which in the case of a reduction in coverage is subject to § 38.2-1912, shall be effective unless the insurer delivers or mails to the first named insured at the address shown on the policy, or delivers electronically to the address provided by the first named insured, a written notice of such reduction in coverage or premium increase not later than 45 days prior to the effective date of same. The increase in premium shall be the difference between the renewal premium and the premium charged by the insurer at the effective date of the expiring policy. Such notice shall:
1. Be in a type size authorized under § 38.2-311;
2. State the date, which shall not be less than 45 days after the delivery or mailing of the notice of reduction in coverage or increase in premium, on which such reduction in coverage or increase in premium shall become effective;
3. Advise the first named insured of the specific reason for the increase and the amount of the increase, or, if in the case of a reduction in coverage, the specific reason for the reduction and the manner in which coverage will be reduced, or that such information may be obtained from the agent or the insurer;
4. Advise the first named insured of its right to request in writing, within 15 days of receipt of the notice, that the Commissioner of Insurance review the action of the insurer.
D. If an insurer does not provide notice in the manner required in subsection C, coverage shall remain in effect until 45 days after written notice of reduction in coverage or increase in premium is mailed or delivered to the first named insured at the address shown on the policy, or delivered electronically to the address provided by the first named insured, unless the named insured obtains replacement coverage or elects to cancel sooner in either of which cases coverage under the prior policy shall cease on the effective date of the replacement coverage or the elected date of cancellation as the case may be. If the named insured fails to accept or rejects the changed policy, coverage for any period that extends beyond the expiration date will be under the prior policy's rates, terms and conditions as applied against the renewal policy's limits, rating exposures, and additional coverages. If the named insured accepts the changed policy, the reduction in coverage or increase in premium shall take effect upon the expiration of the prior policy.
E. Notice of reduction in coverage or increase in premium shall not be required if:
1. The insurer, after written demand, has not received, within 45 days after such demand has been mailed or delivered to the first named insured at the address shown on the policy, or delivered electronically to the address provided by the first named insured, sufficient information from the named insured to provide the required notice;
2. Such notice is waived in writing by the named insured;
3. The insurer delivers or mails to the first named insured a renewal policy or a renewal offer not less than 45 days prior to the effective date of the policy or, in the case of a medical malpractice insurance policy, not less than 90 days prior to the effective date of the policy;
4. The policy is issued to a large commercial risk as defined in subsection C of § 38.2-1903.1 but excluding policies of medical malpractice insurance; or
5. The policy is retrospectively rated, where the premium is adjusted at the end of the policy period to reflect the risk's actual loss experience.
F. No written notice of cancellation, refusal to renew, reduction in coverage, or increase in premium that is mailed or delivered electronically by an insurer to a first named insured in accordance with this section shall be effective unless the insurer complies with the applicable provisions of subdivisions 1 through 4:
1. If the notice is mailed, proof of mailing a notice of cancellation, refusal to renew, reduction in coverage, or increase in premium shall be obtained using one of the following methods that demonstrates the date that the notice was sent to the first named insured at the address stated in the policy or to such insured's last known address:
a. It The notice is sent by registered or certified:
(1) Registered mail;
(2) Certified mail; or any
(3) Any
other similar first-class mail tracking method that is
used or approved by the United States Postal Service, including
Intelligent Mail barcode Tracing (IMb Tracing);
or
b. The notice is sent by another method of mailing for which a certificate of mailing is obtained from the United States Postal Service at the time the notice is accepted for mailing. A certificate of mailing from the United States Postal Service does not include a certificate of bulk mailing.
2. If the notice is delivered
electronically, the insurer retains evidence of electronic transmittal or
receipt of the notification for at least one year from the date of the
transmittal; and.
2. The 3. If the notice
is mailed, the insurer retains a copy of the
notice of cancellation, refusal to renew, reduction in coverage, or increase in premium for at least one year from the date such action
was effective. If the
notice is mailed, proof of mailing from the United
States Postal Service consistent with the mailing method utilized by the
insurer shall be maintained for one year from the date the cancellation,
refusal to renew, reduction in coverage, or
increase in premium is effective.
3. 4. a. If
the terms of a policy of motor vehicle insurance insuring a business entity
require the notice of cancellation, refusal to renew, reduction in coverage, or increase in premium to be
given to any lienholder, then the insurer shall mail such notice and retain a
copy of the notice in the manner required by this subsection. If the notices
sent to the first named insured and the lienholder are part of the same form,
the insurer may retain a single copy of the notice. The
registered, certified or regular mail postal receipt and the copy of the
notices required by this subsection shall be retained by the insurer for at
least one year from the date of termination Proof of mailing from the United States Postal
Service consistent with the mailing method utilized by the insurer shall be
maintained for one year from the date the cancellation, refusal to renew,
reduction in coverage, or increase in premium is
effective.
b. Notwithstanding the provisions of subdivision 3 4
a, if the terms of the policy require the notice of cancellation, refusal to
renew, reduction in coverage, or
increase in premium to be given to any lienholder, the insurer and lienholder
may agree by separate agreement that such notices may be transmitted
electronically, provided that the insurer and
lienholder agree upon the specifics for transmittal and
acknowledgement acknowledgment
of notification. Evidence of transmittal or receipt of the notification
required by this subsection shall be retained by the insurer for at least one
year from the date of termination.
4. "Copy,"
as used in this subsection, shall include includes photographs,
microphotographs, photostats, microfilm, microcard, printouts, or other reproductions of
electronically stored data, or
copies from optical disks, electronically transmitted facsimiles, or any other
reproduction of an original from a process which that forms a durable medium
for its recording, storing, and reproducing.
G. Nothing in this section shall prohibit any insurer or agent from including in a notice of cancellation, refusal to renew, reduction in coverage, or premium increase any additional disclosure statements required by state or federal laws.
H. For the purpose of this section, the terms (i) "business entity" shall mean an entity as defined by subsection A of § 13.1-543, § 13.1-603 or 13.1-803 and shall include an individual, a partnership, an unincorporated association, the Commonwealth, a county, city, town, or an authority, board, commission, sanitation, soil and water, planning or other district, public service corporation owned, operated or controlled by the Commonwealth, a locality or other local governmental authority; (ii) "policy of motor vehicle insurance" shall mean a policy or contract for bodily injury or property damage liability insuring a business entity issued or delivered in this Commonwealth covering liability arising from the ownership, maintenance, or use of any motor vehicle, but does not include (a) any policy issued through the Virginia Automobile Insurance Plan, (b) any policy providing insurance only on an excess basis, or (c) any other contract providing insurance to the named insured even though the contract may incidentally provide insurance on motor vehicles; and (iii) "reduction in coverage" shall mean, but not be limited to, any diminution in scope of coverage, decrease in limits of liability, addition of exclusions, increase in deductibles, or reduction in the policy term or duration except a reduction in coverage filed with and approved by the Commission and applicable to an entire line, classification or subclassification of insurance.
I. Within 15 days of receipt of the notice of cancellation, refusal to renew, reduction in coverage, or increase in premium, the named insured shall be entitled to request in writing to the Commissioner that he review the action of the insurer. Upon receipt of the request, the Commissioner shall promptly begin a review to determine whether the insurer's notice of cancellation, refusal to renew, reduction in coverage, or premium increase complies with the requirements of this section. Where the Commissioner finds from the review that the notice of cancellation, refusal to renew, reduction in coverage, or premium increase does not comply with the requirements of this section, he shall immediately notify the insurer, the named insured and any other person to whom such notice was required to be given by the terms of the policy that such notice is not effective. Nothing in this section authorizes the Commissioner to substitute his judgment as to underwriting for that of the insurer. Pending review by the Commission, this section shall not operate to relieve an insured from the obligation to pay any premium when due; however, if the Commission finds that the notice required by this section was not proper, the Commission may order the insurer to pay to the insured any overpayment of premium made by the insured.
J. Every insurer shall maintain for at least one year records
of cancellation, refusals to renew, reductions in coverage,
and premium increases to which this section applies and copies of every notice
or statement required by subsections A, C, F,
and L of this section that it sends
to any of its insureds.
K. There shall be no liability on the part of and no cause of action of any nature shall arise against (i) the Commissioner of Insurance or his subordinates; (ii) any insurer, its authorized representative, its agents, or its employees; or (iii) any firm, person, or corporation furnishing to the insurer information as to reasons for cancellation, refusal to renew, reduction in coverage, or premium increase, for any statement made by any of them in complying with this section or for providing information pertaining thereto.
L. Notwithstanding anything in this section to the contrary,
if an insurer cancels or refuses to renew a policy of medical malpractice
insurance as defined in § 38.2-2800, or if, as a result of an insurer-initiated
increase in premium, the premium increases for a medical malpractice insurance
policy by more than 25 percent of the previous policy's premium, the insurer
shall provide no fewer than 90 days days' notice prior to the
renewal effective date, or, if such policy is being cancelled or non-renewed for
failure of the insured to discharge when due any of its obligations in
connection with the payment of premium for the policy, the effective date of
cancellation or refusal to renew shall not be less than 15 days from the date
of mailing or delivery of the notice. The increase in the premium shall be the
difference between the renewal premium and the premium charged by the insurer
at the effective date of the expiring policy.
M. As used in this section, an "insurer-initiated increase in premium" means an increase in premium other than one resulting from changes in (i) coverage requested by the insured, (ii) policy limits requested by the insured, (iii) the insured's operation or location that result in a change in the classification of the risk, or (iv) the rating exposures including, but not limited to, increases in payroll, receipts, square footage, number of automobiles insured, or number of employees.
§ 38.2-2113. Mailing or electronic delivery of notice of cancellation or refusal to renew.
A. No written notice of cancellation of or refusal to renew a policy written to insure owner-occupied dwellings shall be effective when mailed or delivered electronically by an insurer unless the insurer complies with the applicable provisions of subdivisions 1, 2, and 3:
1. If the notice is mailed, proof of mailing a notice of cancellation or refusal to renew shall be obtained using one of the following methods that demonstrates the date that the notice was sent to the named insured at the address stated in the policy or to the named insured's last known address:
a. It The notice is
sent by registered or certified:
(1) Registered mail;
(2) Certified mail;
or any
(3) Any
other similar first-class mail tracking method that is
used or approved by the United States Postal Service, including
Intelligent Mail barcode Tracing (IMb Tracing); or
b. The notice is sent by another method of mailing for which a certificate of mailing is obtained from the United States Postal Service at the time the notice is accepted for mailing. A certificate of mailing from the United States Postal Service does not include a certificate of bulk mailing.
2. If the notice is delivered
electronically, the insurer retains evidence of electronic transmittal or
receipt of the notification for at least one year from the date of the
transmittal; and.
2. The 3. If the
notice is mailed, the insurer retains a copy of the
notice of cancellation or refusal to renew for at
least one year from the date such action was effective. If the notice is mailed, proof of mailing from the United
States Postal Service consistent with the mailing method utilized by the
insurer shall be maintained for one year from the date the cancellation or
nonrenewal notice is effective.
3. [Repealed.]
B. This section shall not apply to policies written through the Virginia Property Insurance Association or any other residual market facility established pursuant to Chapter 27 (§ 38.2-2700 et seq.) of this title.
C. 1. If the terms of the policy require the notice of cancellation
or refusal to renew to be given to any lienholder, then the insurer shall mail
such notice and retain a copy of the notice in the manner required by
subsection A of this section. If the
notices sent to the insured and the lienholder are part of the same form, the
insurer may retain a single copy of the notice. The
registered, certified or regular mail postal receipt and copy of the notices
required by this section shall be retained by the insurer for at least one year
from the date of termination Proof of
mailing from the United States Postal Service consistent with the mailing
method utilized by the insurer shall be maintained for one year from the date
the cancellation or nonrenewal notice is effective.
2. Notwithstanding the provisions of subdivision C 1, if the terms of the
policy require the notice of cancellation or refusal to renew to be given to
any lienholder, the insurer and lienholder may agree by separate agreement that
such notices may be transmitted electronically,
provided that the insurer and lienholder agree upon the specifics for
transmittal and acknowledgement acknowledgment of
notification. Evidence of transmittal or receipt of the notification required
by this subsection shall be retained by the insurer for at least one year from
the date of termination.
D. "Copy," as used in this section, shall include includes photographs,
microphotographs, photostats, microfilm, microcard, printouts, or other reproductions of electronically
stored data or copies from optical disks, electronically transmitted
facsimiles, or any other reproduction of an original from a process which that
forms a durable medium for its recording, storing, and reproducing.
§ 38.2-2208. Notices of cancellation of or refusal to renew motor vehicle insurance policies.
A. No written notice of cancellation or refusal to renew that is mailed or delivered electronically by an insurer to an insured in accordance with the provisions of a motor vehicle insurance policy shall be effective unless the insurer complies with the applicable provisions of subdivisions 1, 2, and 3:
1. If the notice is mailed, proof of mailing a notice of cancellation or refusal to renew shall be obtained using one of the following methods that demonstrates the date that the notice was sent to the named insured at the address stated in the policy or to the named insured's last known address:
a. It The notice is sent by registered or certified:
(1) Registered mail;
(2) Certified mail;
or any
(3) Any
other similar first-class mail tracking method that is
used or approved by the United States Postal Service, including
Intelligent Mail barcode Tracing (IMb Tracing); or
b. The notice is sent by another method of mailing for which a certificate of mailing is obtained from the United States Postal Service at the time the notice is accepted for mailing. A certificate of mailing from the United States Postal Service does not include a certificate of bulk mailing.
2. If
such notice is delivered electronically, the insurer retains evidence of
electronic transmittal or receipt of the notification for at least one year
from the date of the transmittal; and.
2. The 3. If the
notice is mailed, the insurer retains a copy of the notice
of cancellation or refusal to renew for at least one year from
the date such action was effective. If the notice is mailed, proof of mailing
from the United States Postal Service consistent with the mailing method
utilized by the insurer shall be maintained for one year from the date the
cancellation or nonrenewal notice is effective.
3. [Repealed.]
B. 1. If the terms of the policy require the notice of
cancellation or refusal to renew to be given to any lienholder, then the
insurer shall mail such notice and retain a copy of the notice in the manner
required by subsection A of this section.
If the notices sent to the insured and the lienholder are part of the same
form, the insurer may retain a single copy of the notice. The
registered, certified or regular mail postal receipt and the copy of the
notices required by this section shall be retained by the insurer for at least
one year from the date of termination Proof of
mailing from the United States Postal Service consistent with the mailing
method utilized by the insurer shall be maintained for one year from the date
the cancellation or nonrenewal notice is effective.
2. Notwithstanding the provisions of subdivision B 1, if the
terms of the policy require the notice of cancellation or refusal to renew to
be given to any lienholder, the insurer and lienholder may agree by separate
agreement that such notices may be transmitted electronically, provided that the insurer and
lienholder agree upon the specifics for transmittal and
acknowledgement acknowledgment
of notification. Evidence of transmittal or receipt of the notification
required by this subsection shall be retained by the insurer for at least one
year from the date of termination.
C. "Copy," as used in this section, shall include includes photographs,
microphotographs, photostats, microfilm, microcard, printouts or other
reproductions of electronically stored data,
or copies from optical disks, electronically transmitted facsimiles, or any
other reproduction of an original from a process which that forms a durable medium
for its recording, storing, and reproducing.
2. That an emergency exists and this act is in force from its passage.