SENATE BILL NO. 35
AS AMENDED BY SENATE AMENDMENT NO. 1
AND HOUSE AMENDMENT NO. 3
AN ACT TO AMEND CHAPTER 39, TITLE 18 OF THE DELAWARE CODE RELATING TO CASUALTY INSURANCE CONTRACTS, RESTRICTING CERTAIN CANCELLATION AND NON-RENEWAL RIGHTS.
Be it enacted by the General Assembly of the State of Delaware:
Section 1. Amend Section 3904, Chapter 39, Title 18 of the Delaware Code, by striking said section in its entirety, and substituting in lieu thereof a new Section 3904, which shall read as follows :
§ 3904. Same; reasons for cancellation or non-renewal
(a) No notice of cancellation of a policy shall be effective and the insurer shall not refuse renewal or threaten to refuse renewal of a policy unless based on one or more of the following reasons:
(1) Nonpayment of premium; or
(0) The policy was obtained through a material misrepresentation; or
(1) Any insured violated any of the terms and conditions of the policy; or
(2) The named insured knowingly failed to disclose fully his motor vehicle accidents and moving traffic violations, or his losses covered under any automobile physical damage or comprehensive coverage, for the preceding 36 months if called for in the application; or
(3) As to renewal of the policy, if the insured at any time while the policy was in force failed to disclose fully to the insurer, upon request therefor, facts relative to accidents and losses incurred material to underwriting of the risk; or
(6) Any insured made a false or fraudulent claim or knowingly aided or abetted another in the presentation of such a claim; or
(7) The named insured or any other operator who either resides in the same household or customarily operates an automobile insured under such policy :
(i) Has, within the 36 months prior to the notice of cancellation or non-renewal, had his drivers license under suspension or revocation; or
() Has a history of and is subject to epilepsy or heart attacks, and such individual cannot produce a certificate from a physician testifying to his unqualified ability to operate a motor vehicle safely; or
(i) Has an accident record, conviction record (criminal or traffic), physical, mental, or other condition which is such that his operation of an automobile might endanger the public safety; or
(ii) Has, while the policy is in force, engaged in a competitive speed contest while operating an automobile insured under the policy; or
(iii) is addicted to or uses narcotics or other drugs; or
(iv) Uses alcoholic beverages to excess thereby impairing his ability to operate a motor vehicle; or
(v) Has 'been convicted, or forfeited bail, during the 36 months immediately preceding the notice of cancellation or non-renewal, for:
(A) Any felony; or
(B) Criminal negligence resulting in death, homicide, or assault arising out of the operation of a motor vehicle; or
(C) Operating a motor vehicle while in an intoxicated condition or while under the influence of drugs; or
(D) Leaving the scene of an accident without stopping to report; or
(E) Theft or unlawful taking of a motor vehicle; or
(F) Making false statements in an application for a drivers license ; or
(viii) Has been convicted of, or forfeited bail for 3 or more violations within the 36 months immediately preceding the notice of cancellation or non-renewal, of any law, ordinance, or regulation limiting the speed of motor vehicles, or any of the provisions of the motor vehicle laws of any state, violation of which constitutes a dangerous moving violation as set forth in 21 Delaware Code, Chapter 41, Rules of the Road, whether or not the violations were repetitions of the same offense or different offenses.
(8) The insured automobile is:
(i) So mechanically defective that its operation might endanger public safety; or
(ii) Used in carrying passengers for hire or compensation, except that the use of an automobile for a car pool shall not be considered use of an automobile for hire or compensation; or
() Used in the business of transportation of flammables or explosives; or
(i) An authorized emergency vehicle; or
() Modified or changed in condition during the policy period so as to increase the risk substantially; or
(i) Subject to an inspection law and has not been inspected or, if inspected fails to qualify ; or
(9) (i) Insureds protected by a policy covering two or more persons in a family or household shall not be subject to cancellation or non-renewal because of the wrongdoing or fault of another insured under the policy
(ii) In the event one or more of the insureds under such policy is subject to cancellation or non-renewal, such insured shall be excluded pursuant to the terms of Section 3909 of this Chapter
(iii) In the event a specifically named policyholder or spouse is subject to cancellation or non-renewal, the above provisions will not apply.
Section 2. Amend Section 3905, Chapter 39, Title 18 of the Delaware Code, by striking said Section in its entirety, and substituting in lieu thereof a new Section 3905, which shall read as follows:
§ 3905. Same; notice of cancellation of intention not to renew; notice of reasons
(a) No cancellation of a policy to which §3904 (a) of this Chapter applies shall be effective unless notice thereof is mailed or delivered by the insurer to the named insured at least 30 days prior to the effective date of cancellation and accompanied by the reason for cancellation, except that where cancellation is for nonpayment of premium at least 10 days notice of cancellation accompanied by the reason therefor shall be given.
(b) No insurer shall fail to renew a policy except to which §3903 (b) of this Chapter applies, unless it shall mail or deliver to the named insured, at his address last of record with the insurer, at least 30 days advance notice of its intention to non-renew accompanied by the reason or reasons therefor. This subsection shall not apply in case of nonpayment of premium, or if the insurer has manifested its willingness to renew. Notwithstanding the failure of an insurer to comply with this subsection, the policy shall terminate on the effective date of any other policy procured by the insured, with respect to any automobile designated in both policies. Renewal of a policy shall not constitute a waiver or estoppel with respect to grounds for cancellation or non-renewal which existed before the effective date of the renewal.
(c) The mailing of notice of cancellation, or of intention not to renew to the named insured at his address last of record with the insurer, shall be by certified mail.
(d) When a policy is cancelled or non-renewed, other than for non-payment of premium, the insurer shall notify the named insured of any possible eligibility for insurance through an automobile assigned risk plan. Such notice shall accompany or be included in the notice of cancellation or the notice of intent not to renew, and shall state that such notice of availability of the automobile assigned risk plan is given pursuant to this section.
(e) Each notice of cancellation, except as provided in Section 3903 (3) (b), or non-renewal of a policy shall contain or be accompanied by a notice of the named insured's right to apply to the Commissioner for a hearing thereon.
Section 3. Amend Section 3906, Chapter 39, Title 18 of the Delaware Code, by striking said Section in its entirety, and substituting in lieu thereof a new Section 3906, which shall read as follows:
§ 3906. Same; hearing before the Commissioner; filing fee; order
(a) A named insured who wishes to contest the reason or reasons for a cancellation or non-renewal to which section 3904 of this Chapter is applicable, shall not less than 15 days prior to the effective date of cancellation or non-renewal mail or deliver to the Commissioner a request for a hearing, which shall state clearly the basis for the appeal and be accompanied by a filing fee of $10. This subsection shall not apply to cancellation for non-payment of premium. A cancellation or non-renewal which is subject to the provisions of section 3904 of this Chapter shall be deemed effective unless the Commissioner determines otherwise in accordance with the provisions of such section.
(b) Within three working days after receipt of a timely request for a hearing, the Commissioner shall set a hearing date to be held not less than ten days prior to the effective date of the cancellation or non-renewal. The Commissioner may where he finds that an unfairness will result to the insured, because of delays or other circumstances beyond his control, extend the effective date of cancellation or non-renewal for a period not to exceed 4 days from the date the notice of cancellation or non-renewal was received by the insured. Each insurer authorized to transact automobile insurance in this State shall maintain a file with the Commissioner of the names and address of the person authorized to receive notices pursuant to this section on behalf of the insurer.
() The Commissioner at the conclusion of any hearing provided for under subsection (b) above, or not later than 2 days thereafter, shall issue his written findings to the parties and, if he finds for the named insured, he shall assess the insurer $10 to defray the cost of the hearing and shall refund the $10 filing fee to the named insured, and he shall either order the insurer to rescind its notice of cancellation or non-renewal, or, if the date cancellation or non-renewal is to be effective has lapsed, order the policy reinstated. Such order shall operate retroactively only to cover a period not to exceed 15 days from the date cancellation or non-renewal otherwise would have been effective, and prospectively from the date on which the order was issued, except that no policy shall be reinstated while the named insured is in arrears in payment of premium on the policy. If the Commissioner finds for the insurer, his written order shall so state and he shall assess the named insured $10 and apply the named insured's $10 filing fee against the assessment to defray the cost of hearing. Reinstatement of a policy under this subsection shall not operate in any way to extend the expiration, termination, or anniversary date provided in the policy.
(d) The Commissioner shall promptly deposit all filing fees provided for in this section with the State Treasurer to the credit of the general fund of this State.
Section 4. Amend Chapter 39, Title 18 of the Delaware Code, by adding thereto a new Section, designated as §3911, which shall read as follows:
§ 3911. Other policy renewals or extensions
Any legislation enacted subsequent to the enactment date of §3904, §3905, and §3906 of this Title, or subsequent legislation affecting Chapter 21 of Title 21 shall not effect the renewal of policies as described in paragraph (2) , subchapter (a) of Section 3903 of this Title, unless the legislation itself so specifies.
Section 5. Amend §3903, Chapter 39, Title 18, Delaware Code, by adding thereto a new subsection (c) as follows:
(c) Where an insurer either fails to renew a policy or cancels a policy based solely upon the reason of nonpayment of premium, the insurer shall renew the policy if the insured tenders to the insurer or its agent the full amount due within thirty (30) days after the end of the policy period. The renewed policy shall contain the same conditions at the same rates or premiums had he paid his premium on the due date. The effective date of such renewed policy shall be the date of actual receipt by the insurer or its agent of the full premium payment due. The renewed policy shall not cover, and the insurer shall not be liable for any losses occurring or claims which were sustained during the period from the end of the policy period until the date the full premium payment was actually received by the insurer or its agent, regardless of whether or not such a loss or claim would otherwise fit within the coverage of such a policy.
Approved July 9, 1973.