Industrial insurance policies: Midterm cancellation; notice to policy holder.
1. No policy of industrial insurance that has been in effect for at least 70 days or that has been renewed may be cancelled by the insurer before the expiration of the agreed term or 1 year from the effective date of the policy or renewal, whichever occurs first, except on any one of the following grounds:
(a) A failure by the policyholder to pay a premium for the policy of industrial insurance when due;
(b) A failure by the policyholder to:
(1) Report any payroll;
(2) Allow the insurer to audit any payroll in accordance with the terms of the policy or any previous policy issued by the insurer; or
(3) Pay any additional premium charged because of an audit of any payroll as required by the terms of the policy or any previous policy issued by the insurer;
(c) A material failure by the policyholder to comply with any federal or state order concerning safety or any written recommendation of the insurer’s designated representative for loss control;
(d) A material change in ownership of the policyholder or any change in the policyholder’s business or operations that:
(1) Materially increases the hazard for frequency or severity of loss;
(2) Requires additional or different classifications for the calculation of premiums; or
(3) Contemplates an activity that is excluded by any reinsurance treaty of the insurer;
(e) A material misrepresentation made by the policyholder; or
(f) A failure by the policyholder to cooperate with the insurer in conducting an investigation of a claim.
2. An insurer shall not cancel a policy of industrial insurance pursuant to paragraph (a), (b), (e) or (f) of subsection 1 except upon 10 days’ written notice submitted by the insurer to the policyholder.
3. Except as otherwise provided in this subsection, an insurer shall not cancel a policy of industrial insurance pursuant to paragraph (c) or (d) of subsection 1 except upon 30 days’ written notice by the insurer to the policyholder. An insurer is not required to provide a written notice to a policyholder pursuant to this subsection if the policyholder and the insurer consent to the cancellation of the policy of industrial insurance and to the reissuance of another policy of industrial insurance effective upon a material change in the ownership or operations of the insured. If the policyholder corrects the condition to the satisfaction of the insurer within the period specified in the policy of insurance, the insurer shall not cancel the policy.
4. Any written notice submitted to a policyholder pursuant to this section must be given by first class mail addressed to the policyholder at the address of the policyholder set forth in the policy of industrial insurance. Evidence indicating that a written notice specified in this section has been mailed is sufficient proof of notice.
5. The provisions of this section do not prohibit, during any period in which a policy of industrial insurance is in force, any change in the premium rate required or authorized by any law, regulation or order of the Commissioner, or otherwise agreed upon by the policyholder and the insurer.
6. For the purposes of this section, any policy of industrial insurance that is written for a term of more than 1 year, or any policy of industrial insurance with no fixed date of expiration, shall be deemed to be written for successive periods of 1 year.
Last modified: February 27, 2006