4.2 Notice of Cancellation or Nonrenewal (s. 626.9201)

Because Chapter 627 generally does not apply to surplus lines insurance (s. 626.913(4)), Part VIII contains its own cancellation and nonrenewal rule: s. 626.9201. It applies to an insurer issuing a policy providing property, casualty, surety, or marine coverage. Its structure is a default of 45 days with specific exceptions.

Nonrenewal: s. 626.9201(1)

The insurer must give the first named insured at least 45 days' advance written notice of nonrenewal, and the notice must state the reasons the policy is not being renewed.

The nonrenewal notice is not required when:

• the insurer has manifested its willingness to renew and has not rescinded that offer before the policy expires, for example by offering renewal at different terms that the insured does not accept; or
• a notice of cancellation for nonpayment of premium has been given under subsection (2).

Cancellation or Termination: s. 626.9201(2)

For cancellation or termination other than nonrenewal, the insurer must give the named insured written notice at least 45 days before the effective date, including the reasons, with these exceptions:

What counts as "nonpayment of premium"

The statute defines nonpayment broadly. It includes:

• failure to pay the premium or any installment when due, whether payable directly to the insurer or agent or through a premium finance plan or extension of credit;
• failure to maintain a membership that is a condition of coverage; and
• a dishonored check delivered to a licensed agent for the premium, even if the agent already forwarded the premium to the insurer.

Dishonored first-premium check: if a correctly dishonored check was the initial premium, the contract is void from inception unless the nonpayment is cured within the earlier of 5 days after actual notice by certified mail is received, or 15 days after notice is sent by certified or registered mail. If the contract is void, premium received from a third party must be refunded to that party in full.

Hurricane Emergency Protection: s. 626.9201(2)(c)

After a declaration of emergency under s. 252.36 and an order by the Commissioner of Insurance Regulation, an insurer may not cancel or nonrenew a personal residential or commercial residential property policy on a Florida dwelling or residential property damaged by the hurricane or wind loss named in the declaration until 90 days after the property has been repaired. Property is repaired when it is substantially completed and restored to the point that another insurer writing in Florida would insure it.

Before repair, the insurer or agent may cancel or nonrenew only:

• on 10 days' notice for nonpayment of premium; or
• on 45 days' notice for a material misstatement or fraud related to the claim; for the insured's unreasonable delay in repairs; when the insured fails to respond within 30 calendar days to a reasonable written inquiry about repair status sent by certified mail, return receipt requested; or when the insurer has paid policy limits.

If the insurer elects to nonrenew a damaged property, it must give at least 90 days' notice that it intends to nonrenew 90 days after the repair. After repair, it may cancel or nonrenew for any reason it could have used without these limits.

Penalty for Missing Notice: s. 626.9201(3)

If the insurer fails to give the required written notice, coverage remains in effect until 45 days after the notice is given or until the effective date of replacement coverage the named insured obtains, whichever occurs first. The premium stays the same during the extension.

Worked Examples

1. Nonpayment. A surplus lines commercial auto policy's third installment is unpaid. The insurer may cancel on 10 days' written notice stating nonpayment.
2. Early cancellation. On day 40 of a new garage liability policy, underwriting decides it dislikes the class. With no misrepresentation involved, the insurer must give 20 days' notice with the reason.
3. Midterm cancellation. In month 6, the insurer cancels a builder's risk policy for an increase in hazard. It must give 45 days' notice with reasons.
4. Late notice. An insurer mails its nonrenewal notice only 5 days before expiration. The insured obtains replacement coverage effective 12 days after receiving the notice. The original coverage continues at the same premium until the replacement takes effect, because that date comes before 45 days after the notice.
5. After a hurricane. A surplus lines homeowners policy covers a house damaged in a declared hurricane. The insurer wants to nonrenew. It must wait until 90 days after repair and give 90 days' notice of that intent, unless an exception such as claim fraud, 10-day nonpayment, or paid limits applies.

Exam Tips

• Nonrenewal notice goes to the first named insured; cancellation notice goes to the named insured.
• 45 days is the default. The exceptions are 10 days for nonpayment and 20 days within the first 90 days.
• Every notice must state its reasons.