(a) This section applies only to policies of workers’ compensation insurance.
(b) After a policy is in effect, no notice of cancellation shall be effective unless it complies with the notice requirements of this section and is based upon the occurrence, after the effective date of the policy, of one or more of the following:
(1) The policyholder’s failure to make any workers’ compensation insurance premium payment when due.
(2) The policyholder’s failure to report payroll, to permit the insurer to audit payroll as required by the terms of the policy or of a previous policy issued by the insurer, or to pay any additional premium as a result of a audit of payroll as required by the terms of the policy or of a previous policy.
(3) The policyholder’s material failure to comply with federal or state safety orders or written recommendations of the insurer’s designated loss control representative.
(4) A material change in ownership or any change in the policyholder’s business or operations that materially increases the hazard for frequency or severity of loss, requires additional or different classifications for premium calculations, or contemplates an activity excluded by the insurer’s reinsurance treaties.
(5) Material misrepresentation by the policyholder or its agent.
(6) Failure to cooperate with the insurer in the insurer’s investigation of a claim.
(c) A policy shall not be canceled for the conditions specified in paragraph (1), (2), (5), or (6) of subdivision (b) except upon 10 days’ written notice to the policyholder by the insurer. A policy shall not be canceled for the conditions specified in paragraph (3) or (4) of subdivision (b) except upon 30 days’ written notice to the policyholder by the insurer, provided that no notice is required if an insured and insurer consent to the cancellation and reissuance of a policy effective upon a material change in ownership or operations of the insured. If the policyholder remedies the condition to the insurer’s satisfaction within the specified time period, the policy shall not be canceled by the insurer.
(d) Nothing in this section shall preclude, while policies are in force, changes in the premium rate required or authorized by law, regulation, or order of the commissioner, or otherwise agreed to between the policyholder and insurer.
(e) Any policy written for a term longer than one year, or any policy with no fixed expiration date, shall be considered as if written for successive policy periods of one year.
(Amended by Stats. 1993, Ch. 1242, Sec. 1. Effective January 1, 1994.)
Last modified: October 25, 2018