Cancellation of insurance contract upon default

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  • When a premium finance agreement contains a power of attorney or other authority enabling the premium finance company to cancel any insurance contract listed in the agreement, the insurance contract shall not be cancelled unless cancellation is in accordance with the following provisions:
    • (1) Not less than 15 days written notice shall be mailed to each insured shown on the premium finance agreement of the intent of the premium finance company to cancel the insurance contract unless the defaulted installment payment is received within 15 days.

    • (2) After expiration of such period, the premium finance company shall mail to the insurer a request for cancellation and the unpaid premium balance due under the premium finance agreement or contract, and shall mail a copy to the insured at his last known address as shown on the premium finance agreement.

    • (3) Upon a receipt of a copy of the cancellation notice by the insurer or insurers, the insurance contract shall be cancelled with the same force and effect as if the notice of cancellation has been submitted by the insured himself, without requiring any further notice to the insured or the return of the insurance contract.

    • (4) All statutory, regulatory, and contractual restrictions providing that the insured may not cancel his insurance contract unless he or the insurer first satisfies such restrictions by giving a prescribed notice to a governmental agency, the insurance carrier, a mortgagee, an individual, or a person designated to receive such notice for such governmental agency, insurance carrier, or individual shall apply when cancellation is effected under the provisions of this section. The insurer, in accordance with such prescribed notice when it is required to give such notice on behalf of itself or the insured, shall give notice to such governmental agency, person, mortgagee, or individual; and it shall determine and calculate the effective date of cancellation from the premium finance company.

    • (5) Whenever an insurance contract is cancelled in accordance with this section, the insurer shall promptly return the unpaid balance due under the finance contract, up to the gross amount available upon the cancellation of the policy, to the premium finance company and any remaining unearned premium to the agent or the insured, or both, for the benefit of the insured or insureds.


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