SENATE BILL No. 710

 

 

December 4, 2013, Introduced by Senator KAHN and referred to the Committee on Insurance.

 

 

 

     A bill to amend 1956 PA 218, entitled

 

"The insurance code of 1956,"

 

by amending section 3020 (MCL 500.3020), as amended by 2006 PA 106,

 

and by adding section 3009a.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 3009a. An insurer shall not issue an automobile liability

 

or motor vehicle liability policy that has a term of less than 1

 

month.

 

     Sec. 3020. (1) A Except for a policy of casualty insurance,

 

except worker's compensation and or mortgage guaranty insurance, an

 

authorized insurer shall not issue or deliver in this state a

 

policy of casualty insurance, including all classes of motor

 

vehicle coverage, shall not be issued or delivered in this state by

 

an insurer authorized to do business in this state for which a

 


premium or advance assessment is charged, unless the policy

 

contains the following provisions:

 

     (a) That the policy may be canceled at any time after the

 

first month of the policy term at the request of the insured, in

 

which case the insurer shall will refund the excess of paid premium

 

or assessment above the pro rata rates for the expired time, except

 

as otherwise provided in subsections (2), (3), and (4).

 

     (b) Except as otherwise provided in subdivision (d), that the

 

policy may be canceled at any time by the insurer by mailing to the

 

insured at the insured's address last known to the insurer or an

 

authorized agent of the insurer, with postage fully prepaid, a not

 

less than 10 days' written notice of cancellation with or without

 

tender of the excess of paid premium or assessment above the pro

 

rata premium for the expired time.

 

     (c) That the minimum earned premium on any policy canceled

 

pursuant to under this subsection, other than automobile insurance

 

as defined in section 2102(2)(a) and (b), shall will not be less

 

than the pro rata premium for the expired time or $25.00, whichever

 

is greater.

 

     (d) That an If the policy is a malpractice insurance policy,

 

that the insurer may refuse to renew a malpractice insurance the

 

policy only by mailing to the insured at the insured's address last

 

known to the insurer or an authorized agent of the insurer, with

 

postage fully prepaid, a not less than 60 days' written notice of

 

refusal to renew. As used in this subdivision, "malpractice

 

insurance" means malpractice insurance as described in section

 

624(1)(h).

 


     (2) An insurer may file a rule with the commissioner director

 

providing for a minimum retention of premium for automobile

 

insurance as defined in section 2102(2)(a) and (b). The rule shall

 

must describe the circumstances under which the retention is

 

applied and shall set forth the amount to be retained. , which An

 

amount to be retained under this subsection is subject to the

 

approval of the commissionerdirector. The rule shall must include,

 

but need not be limited to, the following provisions:

 

     (a) That a minimum retention shall will be applied only when

 

if the amount exceeds the amount that would have been retained had

 

the policy been canceled on a pro rata basis.

 

     (b) That a minimum retention does not apply to renewal

 

policies.

 

     (c) That a minimum retention does not apply when if a policy

 

is canceled for the following reasons:

 

     (i) The insured is no longer required to maintain security

 

pursuant to under section 3101(1).

 

     (ii) The insured has replaced the automobile insurance policy

 

being canceled with an automobile insurance policy from another

 

insurer and provides proof of the replacement coverage to the

 

canceling insurer.

 

     (3) Notwithstanding subsection (1), an insurer may issue a

 

noncancelable, nonrefundable, 6-month prepaid automobile insurance

 

policy in order for an insured to meet the registration

 

requirements of section 227a of the Michigan vehicle code, 1949 PA

 

300, MCL 257.227a.

 

     (4) An insurer may provide for a short rate premium for

 


insurance on a motorcycle, watercraft, off-road vehicle, or

 

snowmobile. As used in this subsection:

 

     (a) "Motorcycle" means that term as defined in section 3101.

 

     (b) "Off-road vehicle" means an ORV as defined in section

 

81101 of the natural resources and environmental protection act,

 

1994 PA 451, MCL 324.81101.

 

     (c) "Snowmobile" means that term as defined in section 82101

 

of the natural resources and environmental protection act, 1994 PA

 

451, MCL 324.82101.

 

     (d) "Watercraft" means that term as defined in section 80301

 

of the natural resources and environmental protection act, 1994 PA

 

451, MCL 324.80301.

 

     (5) Cancellation as prescribed in this section is without

 

prejudice to any claim originating before the cancellation. The

 

mailing of notice is prima facie proof of notice. Delivery of

 

written notice is equivalent to mailing.

 

     (6) A notice of cancellation, including a cancellation notice

 

under section 3224, shall must be accompanied by a statement that

 

the insured shall may not operate or permit the operation of the

 

vehicle to which notice of cancellation is applicable, or operate

 

any other vehicle, unless the vehicle is insured as required by

 

law.

 

     (7) An insurer who wishes to provide for a short rate premium

 

under subsection (4) shall file with the commissioner pursuant to

 

director under chapter 24 or 26 a rule establishing a short rate

 

premium. The rule shall must describe the circumstances under which

 

the short rate is applied and shall set forth the amount or

 


percentage to be retained.