A. An insurer or agent may at any time cancel a policy for nonpayment of premium thereon when due, whether the premium is payable directly to the insurer or agent or indirectly under any premium financing plan or extension of credit. The insurer or agent shall give the named insured written notice of such cancellation not less than ten (10) days prior to the effective date of the cancellation.
B. An insurer may cancel its policy without cause at any time within sixty (60) days next following original issuance and effective date of the policy. The insurer shall give the named insured written notice of such cancellation not less than ten (10) days prior to the effective date of the cancellation, which effective date shall fall within such sixty (60) day period.
C. Subject to Subsection A above, after expiration of the sixty (60) day period referred to in Subsection B an insurer or agent shall not cancel except for reasonable cause such policies and for such causes, and with advance notice of cancellation for such period of time, as may from time to time be provided by rules and regulations of the superintendent. Such rules and regulations may also require that statement of the reasons for such cancellation be contained in the notice of cancellation given to specified persons.
D. Notice of cancellation may be given by personal delivery to the named insured or by mailing the notice postage-paid addressed to the named insured at his address last of record with the insurer. Notice so mailed shall be deemed given when deposited in a mail depository of the United States post office.
E. There shall be no liability on the part of and no cause of action shall arise against any insurer or other person for furnishing information as to reasons for cancellation or for any statement made or information given pursuant to this section.
F. This section shall not apply as to life insurance or annuity contracts, health insurance contracts, title insurance, inland marine insurance contracts, or to any insurance policy which by its terms is not cancellable during the term of the policy at the option of the insurer.
History: Laws 1984, ch. 127, § 358.
ANNOTATIONSReasonable cause required. — This section does not preclude an insurer from cancelling insurance after sixty days, but requires only that reasonable cause exists for cancellation. Neither does it mandate that the insurer give notice of what the reasonable cause is. Notification of reasonable cause for termination is not a statutory requirement. Corbin v. State Farm Ins. Co., 1990-NMSC-014, 109 N.M. 589, 788 P.2d 345.
Common-law duty to avoid terminating policy. — An employer owes a common-law duty of good faith and due care to employees in attending a group insurance policy secured for the benefit of the employees. This duty requires the employer perform whatever functions are reasonable and necessary in order to keep the policy in effect, and that the employer avoid terminating the insurance policy or allowing it to lapse contrary to the desires and intentions of the employees. Notice of cancellation to the employee is not required, however, when the basis for the cancellation is nonpayment by the employee. Chavez v. American Life & Cas. Ins. Co., 1994-NMSC-037, 117 N.M. 393, 872 P.2d 366.
Statutory requirement of 10-day notice of cancellation does not apply to life insurance. — It is only the phrase "to any insurance policy" that is limited by the concluding language in Subsection F. Chavez v. American Life & Cas. Ins. Co., 1994-NMSC-037, 117 N.M. 393, 872 P.2d 366.
No notice required before coverage laspes. — The failure of an insured to pay a renewal premium by the due date results in a lapse of coverage as of the last day of the policy period; under those circumstances, statutory requirement for 10-day notifications of cancellation does not apply. Guaranty Nat'l Ins. Co. v. C de Baca, 1995-NMCA-130, 120 N.M. 806, 907 P.2d 210, cert. denied, 120 N.M. 715, 905 P.2d 1119.
Provision that notice is deemed given when deposited in the mail in Subsection D did not apply to a rejection notice of uninsured and underinsured motorist coverage. Kaiser v. DeCarrera, 1996-NMSC-050, 122 N.M. 221, 923 P.2d 588.
Liability of insurer to third persons. — Where an insurer canceled a trucker's insurance policy in accordance with this section, the cancellation terminated the liability of the insurer not only with respect to the insured, but also with respect to third persons who were creditors of the insured and who brought garnishment proceedings against the insurer. Howard v. Guaranty Nat'l Ins. Co., 1999-NMCA-121, 128 N.M. 79, 989 P.2d 896, cert. denied sub nom., Howard v. Quality Xpress, Inc., 128 N.M. 148, 990 P.2d 822.
Am. Jur. 2d, A.L.R. and C.J.S. references. — Actual receipt of cancellation notice mailed by insurer as prerequisite to cancellation of insurance, 40 A.L.R.4th 867.
Validity and construction of automobile insurance provision or statute automatically terminating coverage when insured obtains another policy providing similar coverage, 61 A.L.R.4th 1130.
What constitutes waiver by insured or insured's agent of required notice of cancellation of insurance policy, 86 A.L.R.4th 886.