376.434. Carrier liable for claims incurred during grace period, when--exceptions.
Carrier liable for claims incurred during grace period,when--exceptions.
376.434. 1. If a policy or contract subject to sections376.431 to 376.442 provides for automatic discontinuance of thepolicy or contract after a premium or subscription charge hasremained unpaid through the grace period allowed for suchpayment, the carrier shall be liable for valid claims forcovered losses incurred prior to the end of the grace period.However, in no case shall a carrier be held liable for claimsincurred during a grace period unless:
(1) Appropriate dues or premiums are received by thecarrier during such grace period; or
(2) Such liability is specifically stated in the contract.
2. If the actions of the carrier after the end of the graceperiod indicate that it considers the policy or contract ascontinuing in force beyond the end of the grace period, such asby continuing to recognize claims subsequently incurred, thecarrier shall be liable for valid claims for losses beginningprior to the effective date of written notice of discontinuanceto the policyholder or other entity responsible for makingpayments or submitting subscription charges to the carrier. Theeffective date of discontinuance shall not be prior to midnightat the end of the third scheduled work day after the date uponwhich the notice is delivered.
(L. 1985 H.B. 623)