The Office of General Counsel issued the following opinion on November 4, 2003 representing the position of the New York State Insurance Department.
1. During the 60 day "free look" period that a policy subject to N.Y. Ins. Law § 3426 (McKinney 2000) is in effect, if the insurer cancels, what is the last day on which the insurer may do so?
2. If the insurer lawfully cancels during the 60 day "free look" period, when may such cancellation become effective?
1. The insurer may cancel up to and including the 60th day, as long as a notice is sent that complies with section N.Y. Ins. Law § 3426(b) (McKinney 2000) for a commercial lines property/casualty insurance policy that is subject to N.Y. Ins. Law § 3426 (McKinney 2000).
2. At a minimum, the cancellation shall take effect 20 days from the date of mailing or delivery to the insured, unless the reason for cancellation falls into one of the exceptions referred to by N.Y. Ins. Law § 3426(b) (McKinney 2000), or as otherwise provided by the law.
An authorized insurer issued a new insurance policy for an apartment building that became effective on July 31, 2003. Consequently, the insurer then cancelled the policy because of an "unacceptable physical inspection report" that said the building needed repairs. The notice of cancellation was mailed on September 18, 2003, and was to become effective on October 21, 2003. The inquirer wanted to know if the cancellation and notification thereof complied with the law.
N.Y. Ins. Law § 3426(b) (McKinney 2000) states in relevant part:
During the first sixty days a covered policy is initially in effect, . . . no cancellation shall become effective until twenty days after written notice is mailed or delivered . . .
Pursuant to the above provision, the insurer has until the 60th day to mail the notice of cancellation, and, at a minimum, the written cancellation notice shall not become effective until 20 days after such notice is mailed or delivered, unless the reason for cancellation falls into one of the exceptions referred to by N.Y. Ins. Law § 3426(b) (McKinney 2000), or as otherwise required. The effective date of cancellation need not take place within the 60 day "free look" period. Therefore, the insurer could cancel on the 60th day provided that the notice of cancellation to the insured is postmarked no later than the 60th day, even though the cancellation of the policy will take place, at a minimum, 20 days after it is mailed.
Assuming the cancellation notice in question complied with the substantive requirements for such notices, the notice would have been timely issued.
For further information one may contact Senior Attorney Susan A. Dess at the New York City Office.