Policy Cancellation Limitations

Dallas insurance lawyers need to know the limitations related to canceling insurance policies.
Here is some guidance:
As described below, the Insurance Code limits the insurer’s right to cancel 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 Texas Department of Insurance.
This guidance is found in Sections 551.051 to 551.055.
For purposes of the statutory limitations on cancellation of certain liability insurance, “insurer” refers to each insurance company or other entity admitted to do business and authorized to write liability insurance in Texas, including county mutual insurance companies, Lloyd’s plan companies, and reciprocal or inter-insurance exchanges, but excluding farm mutual insurance companies and county mutual fire insurance companies writing exclusively industrial fire insurance as defined by Texas Insurance Code, Section 912.310.
A liability insurer described above may not cancel:
(1) a policy of liability insurance that is a renewal or continuation policy; or (2) a policy of liability insurance that is in its initial policy period after the 60th day following the date that the policy was issued.
This can be found in Section 551.052.
The insurance company may, however, cancel the policy at any time during the term of the policy for the following reasons:
(1) fraud in obtaining coverage;
(2) failure to pay premiums when due;
(3) an increase in hazard within the control of the insured that would produce an increase in rate;
(4) loss of the insurer’s reinsurance covering all or part of the risk covered by the policy; or (5) an insurer being placed in supervision, conservatorship, or receivership, if cancellation or non-renewal is approved or directed by the supervisor, conservator, or receiver.
This can be found in Section551.052(c).
This is not terribly confusing to someone use to dealing with these situations. But to most is worth looking to an insurance attorney for assistance.

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