The Office of General Counsel issued the following informal opinion on March 18, 2002, representing the position of the New York State Insurance Department.
RE: Notice Requirements for Voluntary Market Noncommercial Private Passenger Automobile Policy Cancellation by Insurer or Premium Finance Agency
1. What is the minimum notice an insurer is required to give its insured prior to the cancellation of a noncommercial private passenger automobile policy?
2. Does the same law bind premium finance agencies?
3. May a premium finance agency cancel a noncommercial private passenger automobile policy with thirteen (13) days notice?
1. New York State law requires a minimum of fifteen (15) days to elapse after the mailing by the insurer to the insured of a notice of cancellation for nonpayment of the premium prior to the cancellation of a noncommercial private passenger automobile policy. N.Y. Veh. & Traf. Law § 313(1)(a) (McKinney Supp. 2001-2002). New York State law requires a minimum of twenty (20) days to elapse after the mailing by the insurer to the insured of a notice of cancellation based on other grounds prior to the cancellation of a noncommercial private passenger automobile policy. Id.
2. No, they are bound by N.Y. Banking Law § 576 (McKinney Supp. 2001).
3. The law concerning cancellation by a premium finance agency is described in the Analysis portion of this letter.
No additional facts were provided.
It is assumed that the private passenger automobile policy is a noncommercial policy subject to New York State statutory requirements.
Cancellation of a noncommercial private passenger automobile insurance policy by an insurer does not become effective until fifteen (15) days after mailing of the notice of cancellation in the case of nonpayment of premium and twenty (20) days after mailing for all other grounds for cancellation. N.Y. Veh. & Traf. Law § 313(1)(a).
N.Y. Banking Law § 576 is the statutory authority for cancellation of a policy of insurance by a premium finance agency. The New York State Legislature has prescribed differing procedures for insurers and premium finance agencies for the cancellation of a noncommercial private passenger automobile policy. Ward v. Gresham, 59 N.Y.2d 878 (1983).
A premium finance agency may cancel a noncommercial private passenger automobile policy if it satisfies the following three provisions. The premium finance agencys premium finance agreement must contain a power of attorney or other authority enabling the premium finance agency to cancel any insurance contract or contracts listed in the agreement. N.Y. Banking Law § 576(1). The premium finance agency must provide no less than ten days written notice by mail to the insureds last known address, as shown in the agencys records:
of the intent of the premium finance agency to cancel the insurance contract unless the default is cured within such ten day period and that at least three days for mailing such notice is added to the ten day notice. A copy of the notice of intent to cancel shall also be mailed to the insurance agent or broker.
Id. § 576(1)(a). Finally, after the aforementioned notice has expired, the premium finance agency may:
in the name of the insured, cancel such insurance contract by mailing to the insurer a notice of cancellation stating when thereafter the policy shall be cancelled, and the insurance contract shall be cancelled as if such notice of cancellation had been submitted by the insured himself, but without requiring the return of the insurance contract. A copy of the notice of cancellation shall also be mailed to the insured.
Id. § 576(1)(d).
The Department refers Mr. A to the texts of N.Y. Veh. & Traf. Law § 313 and N.Y. Banking Law § 576 for a complete understanding of the law.
For further information you may contact Attorney Kristian Earl Lynch at the New York City Office.