HB-5256, As Passed House, November 29, 2005

SUBSTITUTE FOR

HOUSE BILL NO. 5256

     A bill to amend 1956 PA 218, entitled

"The insurance code of 1956,"

by amending section 3020 (MCL 500.3020), as amended by 1998 PA 410.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 3020. (1) A policy of casualty insurance, except worker's

compensation and mortgage guaranty insurance, including all classes

of motor vehicle coverage, shall not be issued or delivered in this

state by an insurer authorized to do business in this state for

which a premium or advance assessment is charged, unless the policy

contains the following provisions:

     (a) That the policy may be canceled at any time at the request

of the insured, in which case the insurer shall refund the excess

of paid premium or assessment above the pro rata rates for the

expired time, except as otherwise provided in subsections (2), (3),

and (4).

     (b)  That  Except as otherwise provided in subdivision (d),

that the policy may be canceled at any time by the insurer by

mailing to the insured at the insured's address last known to the

insurer or an authorized agent of the insurer, with postage fully

prepaid, a not less than 10 days' written notice of cancellation

with or without tender of the excess of paid premium or assessment

above the pro rata premium for the expired time.

     (c) That the minimum earned premium on any policy canceled

pursuant to this subsection, other than automobile insurance as

defined in section 2102(2)(a) and (b), shall not be less than the

pro rata premium for the expired time or $25.00, whichever is

greater.

     (d) That an insurer may refuse to renew a malpractice

insurance policy only by mailing to the insured at the insured's

address last known to the insurer or an authorized agent of the

insurer, with postage fully prepaid, a not less than 60 days'

written notice of refusal to renew. As used in this subdivision,

"malpractice insurance" means malpractice insurance as described in

section 624(1)(h).

     (2) An insurer may file a rule with the commissioner providing

for a minimum retention of premium for automobile insurance as

defined in section 2102(2)(a) and (b). The rule shall describe the

circumstances under which the retention is applied and shall set

forth the amount to be retained, which is subject to the approval

of the commissioner. The rule shall include, but need not be

limited to, the following provisions:

     (a) That a minimum retention shall be applied only when the

amount exceeds the amount that would have been retained had the

policy been canceled on a pro rata basis.

     (b) That a minimum retention does not apply to renewal

policies.

     (c) That a minimum retention does not apply when a policy is

canceled for the following reasons:

     (i) The insured is no longer required to maintain security

pursuant to section 3101(1).

     (ii) The insured has replaced the automobile insurance policy

being canceled with an automobile insurance policy from another

insurer and provides proof of the replacement coverage to the

canceling insurer.

     (3) Notwithstanding subsection (1), an insurer may issue a

noncancelable, nonrefundable, 6-month prepaid automobile insurance

policy in order for an insured to meet the registration

requirements of section 227a of the Michigan vehicle code, 1949 PA

300, MCL 257.227a.

     (4) An insurer may provide for a short rate premium for

insurance on a motorcycle, watercraft, off-road vehicle, or

snowmobile. As used in this subsection:

     (a) "Motorcycle" means that term as defined in section 3101.

     (b) "Off-road vehicle" means an ORV as defined in section

81101 of the natural resources and environmental protection act,

1994 PA 451, MCL 324.81101.

     (c) "Snowmobile" means that term as defined in section 82101

of the natural resources and environmental protection act, 1994 PA

451, MCL 324.82101.

     (d) "Watercraft" means that term as defined in section 80301

of the natural resources and environmental protection act, 1994 PA

451, MCL 324.80301.

     (5) Cancellation as prescribed in this section is without

prejudice to any claim originating before the cancellation. The

mailing of notice is prima facie proof of notice. Delivery of

written notice is equivalent to mailing.

     (6) A notice of cancellation, including a cancellation notice

under section 3224, shall be accompanied by a statement that the

insured shall not operate or permit the operation of the vehicle to

which notice of cancellation is applicable, or operate any other

vehicle, unless the vehicle is insured as required by law.

     (7) An insurer who wishes to provide for a short rate premium

under subsection (4) shall file with the commissioner pursuant to

chapter 24 or 26 a rule establishing a short rate premium. The rule

shall describe the circumstances under which the short rate is

applied and shall set forth the amount or percentage to be

retained.

     Enacting section 1. This amendatory act applies to malpractice

insurance policies in effect on, or issued on or after, the date

this amendatory act is enacted.