Claire-ification

Are you a member with a question? Contact IA&B Vice President - Advocacy Claire Pantaloni, CIC, CISR at 717-918-9202 or ClaireP@IABforME.com.

QUESTION:

One of our carriers wants to extend the expiration date of the policy. Is that permissible? They are also asking us to look for coverage elsewhere.

ANSWER:

When this change in expiration date happens (most often on a commercial line account), it is generally followed by a nonrenewal notice. In our three states of Pennsylvania, Maryland, and Delaware, the answer to the question would be no, it is not permissible: a carrier cannot unilaterally extend the policy renewal date to meet the advance non-renewal notice requirement.

WHAT OPTIONS DOES THE CUSTOMER HAVE?

When faced with this situation, the customer can file a complaint with the regulator (most insurance departments have an online platform to submit a complaint).

WHY IS IT NOT PERMISSIBLE?

Most agents are familiar with the statute that governs policy non-renewals and cancellations. The statutes vary by state, but generally provide a timeframe for insurers to non-renew a policy. To do so, the insurer is required to send a non-renewal notice a certain number of days in advance of the policy’s expiration date. In this case, it is likely that the carrier failed to send the notice within the timeframe allotted. However, artificially extending the renewal date to circumvent the issue is not proper. If the insurer missed the window for a nonrenewal notice, the insurer should carry the risk for another year.

Following a recent complaint, IA&B took the matter to the Pennsylvania Insurance Department. The Department confirmed that they believed the regulation does not allow carriers to modify the expiration date of the policy when the carrier misses the 60-day advance notice of nonrenewal. The bottom line is that “policyholders need certainty that their coverage program is secured for 12 months and not at the mercy of inappropriate renewals.”

The Maryland Insurance Administration and the Delaware Department of Insurance confirmed their interpretation was the same. As the market hardens, it is important for members to be aware of this restriction so they can better assist their commercial customers.

Naturally, this applies to a regular non-renewal, not one where there are issues of misrepresentation, fraud, or any scenario that would be cause for a mid-term cancellation.

For additional information on policy non-renewals and cancellations, check our online resources at IABforME.com/carrier-resources.

This document is not a legal opinion and should not be relied upon as such. The intent of this document is to provide a general background regarding the topic or topics discussed, not to provide legal advice. Producers and agencies should consult an attorney regarding specific situations and specific questions with respect to the topic or topics covered in this document. Neither the Insurance Agents & Brokers nor any of its employees shall be responsible for any errors or omissions regarding any statements made in this document, nor any errors or omissions regarding any statutes, regulations, court rules, and/or any other government documents cited in this document.