House Bill 2053
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Florida House of Representatives - 1999 HB 2053
By Representative Cosgrove
1 A bill to be entitled
2 An act relating to motor vehicle insurance
3 cancellations; amending s. 627.7282, F.S.;
4 revising procedures for notice to policyholders
5 of additional premium due under certain
6 circumstances; revising criteria for
7 cancellation of a policy for failure to timely
8 respond to such notice; specifying application;
9 amending s. 627.7283, F.S.; clarifying
10 provisions relating to return of unearned
11 premium under circumstances of policy
12 cancellation; amending s. 627.7295, F.S.;
13 clarifying time periods relating to
14 noncancellation of a policy or binder and
15 required premium for issuance of a policy or
16 binder; amending s. 627.848, F.S.; clarifying
17 provisions relating to notice to and by a
18 premium finance company upon cancellation of an
19 insurance contract; providing an effective
20 date.
21
22 Be It Enacted by the Legislature of the State of Florida:
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24 Section 1. Subsection (1) of section 627.7282, Florida
25 Statutes, is amended to read:
26 627.7282 Notice of additional premium; cancellation
27 upon nonpayment.--
28 (1) Upon a determination by an insurer that, in
29 accordance with its rate filings and the applicable laws of
30 this state relating to private passenger motor vehicle
31 insurance, a policyholder has been charged a premium that is
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Florida House of Representatives - 1999 HB 2053
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1 incorrect for the coverage set forth in the insurance
2 application, the insurer shall immediately provide notice to
3 the policyholder of the amount of additional premium due to
4 the insurer and of that the policyholder has the following
5 options:
6 (a) The policyholder has a period of 10 days, or a
7 longer period if specified by the insurer, from receipt of the
8 notice within which to pay the additional amount of premium
9 due and thereby maintain the policy in full force under its
10 original terms.
11 (b) The policyholder has a period of 10 days, or a
12 longer period if specified by the insurer, from receipt of the
13 notice within which to cancel the policy and demand a refund
14 of any unearned premiums.
15 (c) If the policyholder fails to timely respond to the
16 notice, the insurer shall:
17 1. Issue a notice of cancellation for nonpayment of
18 premium pursuant to s. 627.728 cancel the policy and return
19 any unearned premium in accordance with s. 627.7283, in which
20 case the cancellation date may, at the insurer's option, be
21 the date on which the charged premium is exhausted; or
22 2. Advance the expiration date of the policy to be the
23 date on which the charged premium is exhausted to the insured.
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25 The insurer shall state in the notice which action the insurer
26 will take if the insured fails to timely respond to the
27 notice. If the insurer elects to cancel the policy on, or
28 advance the expiration of the policy to, the date on which the
29 charged premium is exhausted, the notice shall state that the
30 policy will remain in effect until such date unless otherwise
31 cancelled or terminated in accordance with the policy and
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Florida House of Representatives - 1999 HB 2053
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1 applicable provisions of the insurance code. The date on which
2 the policy will be canceled shall be stated in the notice and
3 shall in no case be less than 14 days after the date of the
4 notice.
5 Section 2. Subsection (1) of section 627.7283, Florida
6 Statutes, is amended to read:
7 627.7283 Cancellation; return of premium.--
8 (1) If the insured or insurer cancels a policy of
9 motor vehicle insurance, the insurer must return the unearned
10 portion of any premium paid within 30 days after the later of
11 the issuance or receipt by the insurer of notice of
12 cancellation or the effective date of cancellation. If the
13 unearned premium is not returned within the 30-day period, the
14 insurer must pay 8 percent interest on the amount due. If the
15 unearned premium is not returned within 45 days after the
16 later of the issuance or receipt of the notice or the
17 effective date of cancellation, the insured may bring an
18 action against the insurer pursuant to s. 624.155.
19 Section 3. Effective July 1, 2000, subsections (3) and
20 (7) of section 627.7295, Florida Statutes, 1998 Supplement,
21 are amended to read:
22 627.7295 Motor vehicle insurance contracts.--
23 (3) Except as provided in s. 627.7282, an insured may
24 not cancel a policy or binder during the first 60 days two
25 months immediately following the effective date of the policy
26 except:
27 (a) Upon total destruction of the insured motor
28 vehicle;
29 (b) Upon transfer of ownership of the insured motor
30 vehicle; or
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1 (c) After purchase of another policy or binder
2 covering the motor vehicle that was covered under the policy
3 being canceled.
4 (7) A policy of private passenger motor vehicle
5 insurance or a binder for such a policy may be initially
6 issued in this state only if the insurer or agent has
7 collected from the insured an amount equal to 60 days' 2
8 months' premium. An insurer, agent, or premium finance
9 company may not directly or indirectly take any action
10 resulting in the insured having paid from the insured's own
11 funds an amount less than the 60 days' 2 months' premium
12 required by this subsection. This subsection applies without
13 regard to whether the premium is financed by a premium finance
14 company or is paid pursuant to a periodic payment plan of an
15 insurer or an insurance agent. This subsection does not apply
16 if an insured or member of the insured's family is renewing or
17 replacing a policy or a binder for such policy written by the
18 same insurer or a member of the same insurer group. This
19 subsection does not apply to an insurer that issues private
20 passenger motor vehicle coverage primarily to active duty or
21 former military personnel or their dependents. This subsection
22 does not apply if the policy is paid pursuant to a payroll
23 deduction plan or an automatic electronic funds transfer
24 payment plan. This subsection and subsection (4) do not apply
25 if an insured has had a policy in effect for at least 6
26 months, the insured's agent is terminated by the insurer that
27 issued the policy, and the insured obtains coverage on the
28 policy's renewal date with a new company through the
29 terminated agent.
30 Section 4. Paragraph (e) of subsection (1) of section
31 627.848, Florida Statutes, is amended to read:
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1 627.848 Cancellation of insurance contract upon
2 default.--
3 (1) When a premium finance agreement contains a power
4 of attorney or other authority enabling the premium finance
5 company to cancel any insurance contract listed in the
6 agreement, the insurance contract shall not be canceled unless
7 cancellation is in accordance with the following provisions:
8 (e) Whenever an insurance contract is canceled in
9 accordance with this section, the insurer shall promptly
10 return the unpaid balance due under the finance contract, up
11 to the gross amount available upon the cancellation of the
12 policy, to the premium finance company and any remaining
13 unearned premium to the agent or the insured, or both, for the
14 benefit of the insured or insureds. The insurer shall notify
15 the insured, the premium finance company, and the agent of the
16 amount of unearned premium returned to the premium finance
17 company and the amount of unearned commission held by the
18 agent. The premium finance company, within 15 days after
19 receipt of the notification and any unearned premium, shall
20 notify the insured and the agent of the amount, if any, in
21 excess of the loan balance and shall remit or credit such
22 amount to the agent or remit such amount to the insured, or
23 both, for the benefit of the insured or insureds of unearned
24 premium. Within 15 days after of receipt of notification and
25 any loan balance from the premium finance company and any
26 unearned premium from the insurer, the agent shall return such
27 amounts, together with amount including any unearned
28 commission, to the insured or with the written approval of the
29 insured apply such amounts amount to the purchase of other
30 insurance products regulated by the department. The department
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1 may adopt rules necessary to implement the provisions of this
2 subsection.
3 Section 5. This act shall take effect October 1, 1999.
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6 HOUSE SUMMARY
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Revises motor vehicle insurance cancellation provisions
8 to remedy applications of such provisions which
contribute to premature cancellations of motor vehicle
9 insurance policies and to clarify and provide consistency
among other cancellation provisions. See bill for
10 details.
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