PREFILED DEC 20 2019
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REFERENCE TITLE: insurance policies; transfers; affiliated insurers |
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State of Arizona Senate Fifty-fourth Legislature Second Regular Session 2020
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SB 1038 |
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Introduced by Senator Livingston
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AN ACT
amending sections 20-1652 and 20-1654, Arizona Revised Statutes; relating to insurance policies.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 20-1652, Arizona Revised Statutes, is amended to read:
20-1652. Grounds for valid notice of cancellation; inquiries; definitions
A. After a policy has been in effect for sixty days or, if the policy is a renewal, effective immediately, no a notice of cancellation may be is not effective unless it is based on the occurrence, after the effective date of the policy, of one or more of the following:
1. Nonpayment of premium.
2. Conviction of the named insured of a crime arising out of acts increasing the hazard insured against.
3. Acts or omissions by the insured or the insured's representative constituting fraud or material misrepresentation in obtaining the policy, continuing the policy or presenting a claim under the policy.
4. Discovery of grossly negligent acts or omissions by the insured substantially increasing any of the hazards insured against.
5. Substantial change in the risk assumed by the insurer, since the policy was issued, except to the extent that the insurer should reasonably have forseen foreseen the change or contemplated the risk in writing the contract.
6. A determination by the director of insurance that the continuation of the policy would place the insurer in violation of the insurance laws of this state.
7. Failure of the insured to take reasonable steps to eliminate or reduce any conditions in or on the insured premises that contributed to a loss in the past or will increase the probability of future losses.
B. In the event of If nonrenewal is based on the condition of the premises, the insured shall be given thirty days' notice to remedy the identified conditions. In the event that If the identified conditions are remedied, coverage shall be renewed. In the event that If the identified conditions are not satisfactorily remedied, the insured shall be given an additional thirty days, upon on payment of premium, to cure the defective condition. Any insured who believes nonrenewal under this subsection is arbitrary or capricious may utilize use the appeal procedures set forth in section 20‑1633.
C. If an insurer uses for underwriting purposes information from a report provided by, or database maintained by, an insurance support organization or consumer reporting agency related to the premises that is the subject of the application or to the person applying for insurance, the insurer shall obtain that information as soon as practicable on application by a person for insurance coverage and before the issuance of a binder of insurance coverage. Failure of the insurer to timely obtain the information required by this subsection precludes the insurer from declining insurance coverage or terminating a binder of insurance coverage based on the information. This subsection does not apply to a policy renewal.
D. This section does not affect the provisions of section 20‑1120.
E. After thirty days from the application by an insured for insurance coverage, no declination of insurance coverage or termination of a binder shall be based on information from a consumer report, including a consumer report provided by, or database maintained by, an insurance support organization or consumer reporting agency related to the premises that is the subject of the application or to the person applying for insurance. Notwithstanding any other law, an insurer may decline or terminate insurance coverage based on the condition of the premises as determined through a physical inspection of the premises.
F. An insurer shall not consider as a claim any inquiry by an insured into whether a policy will cover a loss or about the type or level of coverage. An insurer shall not use such an inquiry, regardless of the source of the information that an inquiry was made, as a basis for declining, nonrenewing or canceling insurance coverage or a binder of insurance coverage. An insurer shall not submit to any insurance support organization or consumer reporting agency that a mere inquiry was made to the insurer as to the terms or coverage of a policy of insurance. An inquiry into coverage on a property insurance policy is not a claim activity unless an actual claim is filed by the insured that results in an investigation of the claim by the insurer.
G. For the purposes of this section, nonrenewal does not include the issuance and delivery of a new policy within the same insurer or an insurer under the same ownership or management as the original insurer as provided in this subsection. An insurer may transfer any of its policies to an affiliated insurer. An insurer may not transfer a policyholder because of the policyholder's location of residence, age, race, color, religion, sex, national origin or ancestry. A transfer by an insurer pursuant to this subsection does not allow the insurer to apply a new unrestricted sixty-day period for cancellation or nonrenewal.
G. H. For the purposes of this section:
1. "Consumer reporting agency" has the same meaning prescribed in section 20‑2102.
2. "Insurance support organization" has the same meaning prescribed in section 20‑2102.
Sec. 2. Section 20-1654, Arizona Revised Statutes, is amended to read:
20-1654. Mailing or delivery of notice of intention not to renew to insured; time; term of policy
A. Unless the insurer, at least thirty days in advance of before the end of the policy period, mails or delivers to the named insured at the address shown in the policy, notice of its intention not to renew the policy or to condition its renewal upon on reduction of limits or elimination of coverages, the insurer shall not fail to renew the policy upon on payment of the premium due on the effective date of the renewal, in accordance with the then existing rating manual of the insurer.
B. For the purposes of this section: ,
1. Any policy written for a term of less than one year may be renewed for a term of one year if the notice is not given as required by this subsection A of this section. For the purposes of this subsection A of this section, a policy with no fixed expiration date shall be is deemed written for successive policy periods of one year.
2. Nonrenewal does not include the issuance and delivery of a new policy within the same insurer or an insurer under the same ownership or management as the original insurer as provided in this paragraph. An insurer may transfer any of its policies to an affiliated insurer. An insurer may not transfer a policyholder because of the policyholder's location of residence, age, race, color, religion, sex, national origin or ancestry. A transfer by an insurer pursuant to this paragraph does not allow the insurer to apply a new unrestricted sixty-day period for cancellation or nonrenewal.
B. C. This section shall does not apply if the insured has accepted replacement coverage or has agreed to nonrenewal.