HOUSE BILL No. 5692 March 17, 1998, Introduced by Rep. Thomas and referred to the Committee on Commerce. A bill to amend 1956 PA 218, entitled "The insurance code of 1956," by amending section 3020 (MCL 500.3020), as amended by 1996 PA 77. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 3020. (1) A policy of casualty insurance, except 2 worker's compensation AND MORTGAGE GUARANTY INSURANCE, including 3 all classes of motor vehicle coverage, shall not be issued or 4 delivered in this state by an insurer authorized to do business 5 in this state for which a premium or advance assessment is 6 charged, unless the policy contains the following provisions: 7 (a) That the policy may be canceled at any time at the 8 request of the insured, in which case the insurer shall refund 9 the excess of paid premium or assessment above the pro rata rates 03923'97 * DKH 2 1 for the expired time, except as otherwise provided in subsections 2 (2), (3), and (4). 3 (b) That the policy may be canceled at any time by the 4 insurer by mailing to the insured at the insured's address last 5 known to the insurer or an authorized agent of the insurer, with 6 postage fully prepaid, a not less than 10 days' written notice of 7 cancellation with or without tender of the excess of paid premium 8 or assessment above the pro rata premium for the expired time. 9 THE EXCESS, IF NOT TENDERED, SHALL BE REFUNDED ON DEMAND AND THE 10 NOTICE OF CANCELLATION SHALL STATE THAT THE EXCESS PREMIUM, IF 11 NOT TENDERED, WILL BE REFUNDED ON DEMAND. 12 (c) That the minimum earned premium on any policy canceled 13 pursuant to this subsection, other than automobile insurance as 14 defined in section 2102(2)(a) and (b), shall not be less than the 15 pro rata premium for the expired time or $25.00, whichever is 16 greater. 17 (2) An insurer may file a rule with the commissioner provid- 18 ing for a minimum retention of premium for automobile insurance 19 as defined in section 2102(2)(a) and (b). The rule shall 20 describe the circumstances under which the retentionshall be21 IS applied and shall set forth the amount to be retained, which 22shall beIS subject to the approval of the commissioner. The 23 rule shall include, but need not be limited to, the following 24 provisions: 25 (a) That a minimum retention shall be applied only when the 26 amount exceeds the amountwhichTHAT would have been retained 27 had the policy been canceled on a pro rata basis. 03923'97 * 3 1 (b) That a minimum retentionshallDOES not apply to 2 renewal policies. 3 (c) That a minimum retentionshallDOES not apply when a 4 policy is canceled for the following reasons: 5 (i) The insured is no longer required to maintain security 6 pursuant to section 3101(1). 7 (ii) The insured has replaced the automobile insurance 8 policy being canceled with an automobile insurance policy from 9 another insurer and provides proof of the replacement coverage to 10 the canceling insurer. 11 (3) Notwithstanding subsection (1), an insurer may issue a 12 noncancelable, nonrefundable, 6-month prepaid automobile insur- 13 ance policy in order for an insured to meet the registration 14 requirements of section 227a of the Michigan vehicle code,Act15No. 300 of the Public Acts of 1949, being section 257.227a of the16Michigan Compiled Laws1949 PA 300, MCL 257.227A. 17 (4) An insurer may provide for a short rate premium for 18 insurance on a motorcycle, watercraft, off-road vehicle, or 19 snowmobile. As used in this subsection: 20 (a) "Motorcycle" means that term as defined in section 21 3101. 22 (b) "Off-road vehicle" means an ORV as defined in section 23 81101 ofpart 811 (off-road recreation vehicles) ofthe natural 24 resources and environmental protection act,Act No. 451 of the25Public Acts of 1994, being section 324.81101 of the Michigan26Compiled Laws1994 PA 451, MCL 324.81101. 03923'97 * 4 1 (c) "Snowmobile" means that term as defined in section 82101 2 ofpart 821 (snowmobiles) of Act No. 451 of the Public Acts of31994, being section 324.82101 of the Michigan Compiled LawsTHE 4 NATURAL RESOURCES AND ENVIRONMENTAL PROTECTION ACT, 1994 PA 451, 5 MCL 324.82101. 6 (d) "Watercraft" means that term as defined in section 80301 7 ofpart 803 (watercraft transfer and certificate of title) of8Act No. 451 of the Public Acts of 1994, being section 324.803019of the Michigan Compiled LawsTHE NATURAL RESOURCES AND ENVIRON- 10 MENTAL PROTECTION ACT, 1994 PA 451, MCL 324.80301. 11 (5) Cancellation as prescribed in this sectionshall beIS 12 without prejudice to any claim originating before the 13 cancellation. The mailing of noticeshall beIS prima facie 14 proof of notice. Delivery of written noticeshall beIS equiv- 15 alent to mailing. 16 (6) A notice of cancellation, including a cancellation 17 notice under section 3224, shall be accompanied by a statement 18 that the insured shall not operate or permit the operation of the 19 vehicle to which notice of cancellation is applicable, or operate 20 any other vehicle, unless the vehicle is insured as required by 21 law. 22 (7) An insurer who wishes to provide for a short rate pre- 23 mium under subsection (4) shall file with the commissioner pursu- 24 ant to chapter 24 or 26 a rule establishing a short rate 25 premium. The rule shall describe the circumstances under which 26 the short rateshall beIS applied and shall set forth the 27 amount or percentage to be retained. 03923'97 * 5 1 (8) A MORTGAGE GUARANTY INSURANCE POLICY SHALL CONTAIN A 2 PROVISION THAT THE INSURED SHALL ANNUALLY INFORM IN WRITING THE 3 INDIVIDUAL WHOSE INTEREST IN A SINGLE FAMILY RESIDENCE IS THE 4 SUBJECT OF A MORTGAGE ON WHICH THE MORTGAGE GUARANTY INSURANCE IS 5 PLACED OF THE CONDITIONS USED TO DETERMINE WHETHER OR NOT THE 6 INSURANCE MAY BE TERMINATED, AND, IF THE INSURANCE MAY BE TERMI- 7 NATED, THE CONDITIONS AND PROCEDURES FOR TERMINATION. 03923'97 * Final page. DKH