CHAPTER 20:06:29
CANCELLATIONS AND REPLACEMENTS
Section
20:06:29:00 Lending institution coverage.
20:06:29:01 Cancellation by insurer or policyholder.
20:06:29:02 Replacement of policy.
20:06:29:03 Cancellation refunds.
20:06:29:04 Format for notice of transfer of insurance.
20:06:29:05 Definitions.
20:06:29:00. Lending institution coverage. For purposes of this chapter the terms policyholder and insured include borrowers whose property is covered through coverage purchased by the lending institution covering that lending institution's interest in the property.
Source: 24 SDR 86, effective December 31, 1997.
General Authority: SDCL 58-11-63(1).
Law Implemented: SDCL 58-11-63(1).
20:06:29:01. Cancellation by insurer or policyholder. An insurer canceling a policy must return to the policyholder unearned premiums on at least a pro rata basis. An insurer may use a short rate calculation of unearned premiums if the cancellation is at the request of the policyholder. A cancellation is not considered to be at the request of the policyholder if the premium increases at policy renewal or at inception in excess of the quoted rate and the insurer fails to provide notice of the premium increase before the renewal or inception date. If it is specified in the policy, an insurer may either calculate all cancellations short rate or consider the premium fully earned at policy inception for short term or seasonal policies. The requirements of this section do not apply to surety insurance which requires the payment of a minimum premium or a premium that is fully earned pursuant to rules or rates filed and approved by the division. Nothing in this section prohibits an insurer from having a minimum premium of not more than $25 on property and casualty coverage provided that the minimum premium is filed as part of a rating plan pursuant to SDCL chapter 58-24. This section does not apply to life insurance.
Source: 22 SDR 52, effective October 25, 1995; 24 SDR 86, effective December 31, 1997; 25 SDR 76, effective November 26, 1998; 31 SDR 214, effective July 6, 2005; 36 SDR 112, effective January 11, 2010.
General Authority: SDCL 58-11-63(7)(9).
Law Implemented: SDCL 58-11-63(7)(9), 58-33-83, 58-33-84.
20:06:29:02. Replacement of policy. This section applies to the cancellation date of any replaced policy, other than a life or health policy. If the replacing policy is already effective on the date an insured or an insured's representative makes a request for cancellation of the replaced policy, the cancellation date of the replaced policy shall coincide with the effective date of the replacing policy if the insured or an insured's representative provides to the replaced insurer one of the following:
(1) A copy of the declaration of the replacing policy or a binder issued under the authority of the replacing insurer; or
(2) The replaced policy or a properly completed lost policy release form.
However, if a document in subdivision (1) or (2) is not provided to the replaced insurer, the cancellation date of the replaced policy shall coincide with the date of request for cancellation of the replaced policy.
A personal policy is considered to be a replacing policy for coverage purchased by a lending institution for its interest in the property of the borrower.
The insurer who is honoring a request for cancellation made pursuant to this section is not liable for coverage under the policy after the effective date of the cancellation regardless of the date the cancellation was requested.
A replaced insurer who, pursuant to the policy, made one or more Public Utilities Commission form filings, a similar filing in another state, or an Interstate Commerce Commission filing is not required to comply with this section unless the replacing insurer provides a hold harmless agreement for the period of time during which the filing requires the replaced carrier to continue with the risk.
Source: 22 SDR 52, effective October 25, 1995; 24 SDR 86, effective December 31, 1997; 25 SDR 76, effective November 26, 1998.
General Authority: SDCL 58-11-63(1)(4)(7).
Law Implemented: SDCL 58-11-63(1)(4)(7), 58-33-35, 58-33-83.
20:06:29:03. Cancellation refunds. An insurer shall issue and mail any refund due the insured within 20 days after the insurer receives a request for cancellation or, if the insurer cancels the policy, within 20 days after the effective date of the cancellation.
Source: 22 SDR 52, effective October 25, 1995.
General Authority: SDCL 58-11-63
Law Implemented: SDCL 58-11-63.
20:06:29:04. Format for notice of transfer of insurance. An insurer that transfers a policyholder to another insurer within the same group of insurers may issue, in lieu of a nonrenewal notice, a notice that contains the following information:
(1) The name of the new insurer;
(2) The date that the new insurer assumes liability under the policy; and
(3) A general statement as to the reason for the change in insurers.
This section applies to all personal automobile insurance, homeowner insurance, property and casualty insurance as defined in SDCL 58-9-5 to 58-9-33, inclusive.
Source: 27 SDR 9, effective August 10, 2000; 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-1-14, 58-1-15, 58-11-51, 58-11-63(7).
20:06:29:05. Definitions. Terms used in this chapter mean:
(1) "Pro rata method," the pro rata unearned gross premium method produces the minimum refund amount to be used for insurance under which premiums are collected from the insured on a basis other than a minimum premium or fully earned basis as allowed pursuant to § 20:06:29:01, where the refund amount is to be determined by multiplying the original gross single premium times the quotient arrived at by dividing the number of remaining days by the number of days in the term;
(2) "Short rate method," the pro rata method of unearned premium reduced by an administrative expense factor not to exceed 10%;
(3) "Earned premium," the premium that has been used during the policy term. It is the premium that is payable to the insurer for the time period for which insurance was provided;
(4) "Unearned premium," that portion of the written premium applicable to the unexpired or unused part of the period for which the premium has been calculated.
Source: 27 SDR 118, effective May 17, 2001.
General Authority: SDCL 58-11-63(1).
Law Implemented: SDCL 58-11-63(1).
