May 29, 2012, Introduced by Rep. LeBlanc 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.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 3020. (1) A policy of casualty insurance, except worker's
compensation and mortgage guaranty 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 at the request
of the insured, in which case the insurer shall 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), and (5).
(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 this subsection, other than automobile insurance as
that term is defined in section 2102(2)(a) and (b), shall not be
less than the pro rata premium for the expired time or $25.00,
whichever is greater.
(d) That an insurer may refuse to renew a malpractice
insurance 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 providing
for a minimum retention of premium for automobile insurance as that
term is defined in section 2102(2)(a) and (b). The rule shall
describe the circumstances under which the retention is applied and
shall set forth the amount to be retained, which is subject to the
approval of the commissioner. The rule shall include, but need not
be limited to, the following provisions:
(a) That a minimum retention shall be applied only when 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 a policy is
canceled for the following reasons:
(i) The insured is no longer required to maintain security
pursuant to 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) An insurer that retains a minimum retention under
subsection (2) shall pay to the catastrophic claims association
created under section 3104 from the amount retained an amount equal
to the average premium per car calculated under section 3104(7)(d).
If the premium paid was for less than a full year, the amount paid
to the catastrophic claims association under this subsection shall
be reduced proportionally.
(4) (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.
(5) (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 that term is 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.
(6) (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.
(7) (6)
A notice of cancellation, including
a cancellation
notice under section 3224, shall be accompanied by a statement that
the insured shall 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.
(8) (7)
An insurer who wishes to provide
for a short rate
premium
under subsection (4) (5) shall file with the commissioner
pursuant to chapter 24 or 26 a rule establishing a short rate
premium. The rule shall describe the circumstances under which the
short rate is applied and shall set forth the amount or percentage
to be retained.