Non-renewal Of Insurance Policies

Weatherford attorneys need to know the different ways insurance law applies to the non-renewal of an insurance policy.
“Non-renewal” refers to termination of coverage at the end of the policy period.
It is important for a policy holder to understand that absent a contractual entitlement to renew a policy, an insured has no legal entitlement to renew an insurance policy. The insurance company possesses virtually unlimited discretion to renew or not renew the coverage. As long as the basis of the non-renewal is not statutorily prohibited, an insurance company can non-renew for any reason or no reason. When the insurance company does not renew coverage, it is usually because it has decided to discontinue the particular type of coverage at issue or to avoid further exposure to the particular risk.
The Texas Insurance Code authorizes the Texas Department of Insurance to prescribe and enforce rules and regulations regarding the cancellation of insurance policies, including certain liability insurance coverage, certain property and casualty policies, and other policies. In adopting its rules and regulations, the Texas Department of Insurance is to consider reasonable needs of the public and the operations of insurance companies.
As discussed in earlier blogs, Chapter 551, of the Texas Insurance Code deals with how an insurance company is suppose to deal with questions regarding cancellation and non-renewal of policies. It says that upon request by the policyholder or applicant, the insurance company must give the policyholder or applicant a written statement of the reason or reasons for declination, cancellation, or non-renewal of any policy. The statement must fully explain any decision that adversely affects the policyholder by denying him or her coverage or continued coverage and must:
(1) state the precise incident, circumstance, or risk factor applicable to the policyholder that violate the guidelines;
(2) state the source of information the insurer relied on regarding the incident, circumstance, or risk factor; and
(3) specify any other information deemed relevant by the Commissioner of Insurance.
Also important to know is that the Insurance Code imposes certain rules on the insurance company when it refuses to renew coverage under the following types of liability insurance coverage:
(1) general liability;
(2) professional liability (other than medical professional liability);
(3) commercial automobile liability;
(4) commercial multi-peril; and (5) any other types or lines of liability insurance designated by the State Board of Insurance.
There are many Sections in the Texas Insurance Code dealing with the non-renewal of insurance policies. There are two important things to know:
(1) an insurance company does not have renew most insurance policies;
(2) there are laws that apply when a policy is not renewed;
Lets add a third thing to know:
(3) see an insurance attorney if you are upset about a non-renewal to see if any laws were violated.