CHAPTER 12. TERMINATION OF RESIDENTIAL POLICIES
IC 27-7-12
Chapter 12. Termination of Residential Policies
IC 27-7-12-1
Applicability of chapter; exceptions
Sec. 1. (a) This chapter applies to policies of insurance coveringrisks to property located in Indiana that take effect or are renewedafter June 30, 2001, and that insure loss of or damage to:
(1) real property consisting of not more than four (4) residentialunits, one (1) of which is the principal place of residence of thenamed insured; or
(2) personal property:
(A) in which the named insured has an insurable interest;and
(B) that is used within a residential dwelling for personal,family, or household purposes.
(b) This chapter does not apply to the following:
(1) A policy of inland marine insurance.
(2) The cancellation or nonrenewal of an automobile insurancepolicy under IC 27-7-6.
(3) The cancellation or nonrenewal of a commercial propertyand casualty insurance policy under IC 27-1-31-2.5.
As added by P.L.203-2001, SEC.10.
IC 27-7-12-2
Definitions
Sec. 2. (a) As used in this chapter, "cancellation" refers to atermination of property insurance coverage that occurs during thepolicy term.
(b) As used in this chapter, "nonpayment of premium" means thefailure of the named insured to discharge any obligation inconnection with the payment of premiums on policies of insurancesubject to this chapter, regardless of whether the payments aredirectly payable to the insurer or its agent or indirectly payable undera premium finance plan or extension of credit. The term includes thefailure to pay dues or fees where payment of the dues or fees is aprerequisite to obtaining or continuing property insurance coverage.
(c) As used in this chapter, "nonrenewal" or "nonrenewed" refersto a termination of property insurance coverage that occurs at the endof the policy term.
(d) As used in this chapter, "renewal" or "to renew" refers to:
(1) the issuance and delivery by an insurer at the end of a policyperiod of a policy superseding a policy previously issued anddelivered by the same insurer; or
(2) the issuance and delivery of a certificate or notice extendingthe term of an existing policy beyond its policy period or term.
(e) As used in this chapter, "termination" means a cancellation ornonrenewal. The term does not include:
(1) the requirement of a reasonable deductible;
(2) reasonable changes in the amount of insurance; or (3) reasonable reductions in policy limits or coverage;
if the requirements or changes are directly related to the hazardinvolved and are made on the renewal date for the policy. The termdoes not include a transfer of a policy to another insurer.
As added by P.L.203-2001, SEC.10.
IC 27-7-12-3
Notice of cancellation
Sec. 3. (a) Notice of cancellation of property insurance coverageby an insurer must:
(1) be in writing;
(2) be delivered or mailed to the named insured at the lastknown address of the named insured;
(3) state the effective date of the cancellation; and
(4) upon request of the named insured, be accompanied by awritten explanation of the specific reasons for the cancellation.
(b) An insurer shall provide written notice of cancellation to thenamed insured at least:
(1) ten (10) days before canceling a policy, if the cancellationis for nonpayment of a premium;
(2) twenty (20) days before canceling a policy, if thecancellation occurs more than sixty (60) days after the date ofissuance of the policy; and
(3) ten (10) days before canceling a policy, if the cancellationoccurs not more than sixty (60) days after the date of issuanceof the policy.
(c) If the policy was procured by an independent insuranceproducer licensed in Indiana, the insurer shall deliver or mail noticeof cancellation to the insurance producer not less than ten (10) daysbefore the insurer delivers or mails the notice to the named insured,unless the obligation to notify the insurance producer is waived inwriting by the insurance producer.
As added by P.L.203-2001, SEC.10. Amended by P.L.178-2003,SEC.55.
IC 27-7-12-4
Notice of nonrenewal
Sec. 4. (a) Notice of nonrenewal by an insurer must:
(1) be in writing;
(2) be delivered or mailed to the named insured at the lastknown address of the named insured;
(3) state the insurer's intention not to renew the policy uponexpiration of the current policy period;
(4) upon request of the named insured, be accompanied by awritten explanation of the specific reasons for the nonrenewal;and
(5) be provided to the named insured at least twenty (20) daysbefore the expiration of the current policy period.
(b) If the policy was procured by an independent insuranceproducer licensed in Indiana, the insurer shall deliver or mail notice
of nonrenewal to the insurance producer not less than ten (10) daysbefore the insurer delivers or mails the notice to the named insured,unless the obligation to notify the insurance producer is waived inwriting by the insurance producer.
(c) If an insurer mails or delivers to an insured a renewal notice,bill, certificate, or policy indicating the insurer's willingness to renewa policy and the insured does not respond, the insurer is not requiredto provide to the insured notice of intention not to renew.
As added by P.L.203-2001, SEC.10. Amended by P.L.178-2003,SEC.56.
IC 27-7-12-5
Sufficiency of explanations; coverage considered renewed wherenotice not given
Sec. 5. (a) A written explanation provided under section 3 or 4 ofthis chapter must be of sufficient clarity and specificity to enable areasonable lay person to identify the basis for the insurer's decisionwithout further inquiry.
(b) If notice is not provided under section 4 of this chapter,coverage is considered to be renewed only for the ensuing policyperiod upon payment of the appropriate premiums under the sameterms and conditions, and subject to section 6 of this chapter, unlessthe named insured has accepted replacement coverage with anotherinsurer or unless the named insured has agreed to the nonrenewal.
As added by P.L.203-2001, SEC.10.
IC 27-7-12-6
Grounds for cancellation of policies in effect for more than 60 days
Sec. 6. After coverage has been in effect for more than sixty (60)days or after the effective date of a renewal policy, a notice ofcancellation shall not be issued unless cancellation is based on atleast one (1) of the following:
(1) Nonpayment of a premium.
(2) Discovery of fraud or material misrepresentation made byor with the knowledge of the named insured in obtaining thepolicy, continuing the policy, or in presenting a claim under thepolicy.
(3) Discovery of willful or reckless acts or omissions on the partof the named insured that increase a hazard insured against.
(4) The occurrence of a change in the risk that substantiallyincreases a hazard insured against after insurance coverage hasbeen issued or renewed.
(5) A violation of any local fire, health, safety, building, orconstruction regulation or ordinance with respect to an insuredproperty or the occupancy of the property that substantiallyincreases any hazard insured against.
(6) A determination by the insurance commissioner that thecontinuation of the policy would place the insurer in violationof the insurance laws of Indiana.
(7) Real property taxes owing on the insured property have been
delinquent for two (2) or more years and continue to bedelinquent at the time notice of cancellation is issued.
As added by P.L.203-2001, SEC.10.
IC 27-7-12-7
Prohibited grounds for termination
Sec. 7. Termination of property insurance coverage by an insureris prohibited if the termination is based on any of the following:
(1) Upon the race, religion, nationality, ethnic group, age, sex,or marital status of the applicant or named insured.
(2) Solely upon the lawful occupation or profession of theapplicant or named insured. However, this subdivision does notapply to an insurer that limits its market to one (1) lawfuloccupation or profession or to several related lawfuloccupations or professions.
(3) Upon the age or location of the residence of the applicant ornamed insured, unless that decision is for a business purposethat is not a mere pretext for a decision based on factorsprohibited in this chapter or any other provision of this title.
(4) Upon the fact that another insurer previously declined toinsure the applicant or terminated an existing policy in whichthe applicant was the named insured.
(5) Upon the fact that the applicant or named insured previouslyobtained insurance coverage through a residual marketinsurance mechanism.
As added by P.L.203-2001, SEC.10.
IC 27-7-12-8
Notice of transfer of policies
Sec. 8. The named insured must be given notice of a transfer of apolicy, including a transfer between insurers within the sameinsurance group. The notice must:
(1) be in writing;
(2) be delivered or mailed to the named insured at the lastknown address of the named insured;
(3) be provided to the named insured at least twenty (20) daysbefore the transfer; and
(4) identify the insurer to which the policy will be transferred.
As added by P.L.203-2001, SEC.10.
IC 27-7-12-9
Immunity from civil liability
Sec. 9. (a) The following persons are immune from civil liabilityfor any communication giving notice of or specifying the reasons fora termination or for any statement made in connection with anattempt to discover or verify the existence of conditions that wouldbe a reason for a termination under this chapter:
(1) Employees of the department of insurance.
(2) An insurer or its authorized representative, agent, oremployee. (3) A licensed insurance producer.
(4) A person furnishing information to an insurer as to reasonsfor a termination.
(b) This section does not apply to statements made in bad faithwith malice in fact.
As added by P.L.203-2001, SEC.10. Amended by P.L.178-2003,SEC.57.