26.1-40 Automobile Insurance and Warranties

Statutes > North Dakota Statutes > Chapter 26.1 Insurance > 26.1-40 Automobile Insurance and Warranties

Loading PDF...

CHAPTER 26.1-40AUTOMOBILE INSURANCE AND WARRANTIES26.1-40-01.Definitions - Limitations.As used in sections 26.1-40-02 through26.1-40-12:1."Declination" means the refusal of an insurer to issue a policy upon receipt of a written nonbinding application or written request for coverage from its insurance producer or an applicant. The offering of insurance coverage with a company within an insurance group which is different from the company requested on the nonbinding application or written request for coverage, or the offering of policy coverage or rates substantially less favorable than requested in the nonbinding application or written request for coverage, is a declination.2."Nonpayment of premium" means failure of the insured to discharge when due any of the insured's obligations in connection with the payment of premium on a policy, or any installment of the premium, whether the premium is payable directly to the insurer or its insurance producer or indirectly under any premium finance plan or extension of credit.3."Policy" means any automobile policy which includes automobile liability coverage, uninsured motorist coverage, underinsured motorist coverage, automobile medical payments coverage, basic or optional excess no-fault benefits, or automobile physical damage coverage, delivered or issued for delivery in this state, insuring as the named insured an individual residing in this state, and under which the insured vehicles designated in the policy are of the following types only:a.A motor vehicle of the private passenger or station wagon type that is not used as a public or livery conveyance, nor rented to others.b.Any four-wheel motor vehicle with a load capacity of one thousand five hundred pounds [680.39 kilograms] or less which is not used in the occupation, profession, or business of the insured, nor used as a public or livery conveyance, nor rented to others.c.Any motorcycle as that term is defined in section 39-01-01 that is not used as a public or livery conveyance, nor rented to others."Policy" does not include any policy that has been in effect less than sixty days at the time notice of cancellation is mailed or delivered by the insurer unless it is a renewal policy; any policy issued under the North Dakota assigned risk plan; any policy insuring more than six motor vehicles; any policy covering the operation of a garage, automobile sales agency, repair shop, service station, or public parking place; any policy providing insurance only on an excess basis; or any other contract providing insurance to a named insured even though the contract may incidentally provide insurance with respect to such motor vehicles.4."Renewal" or "to renew" means:a.The issuance and delivery by an insurer of a policy replacing, at the end of the previous policy period, a policy previously issued and delivered by the same insurer;b.The issuance and delivery of a certificate or notice extending the term of a policy beyond its policy period or term; orc.The extension of the term of a policy beyond its policy period or term pursuant to a provision for extending the policy by payment of a continuation premium.Page No. 1Any policy with a policy period or term of less than six months must be considered as if written for a policy period or term of six months except in case of termination under any of the circumstances specified in subsection 2 of section 26.1-40-05. Any policy written for a term longer than one year or any policy with no fixed expiration date must be considered as if written for successive policy periods or terms of one year and any termination by an insurer effective on an anniversary date of the policy is deemed a failure to renew.5."Termination" means either a cancellation or nonrenewal of automobile insurance coverage in whole or in part.A cancellation occurs during the policy term.Anonrenewal occurs at the end of the policy term.An insurer's substitution ofinsurance upon renewal which results in substantially equivalent coverage is not a termination. The transfer of a policy between companies within the same insurance holding company system is not a termination.26.1-40-02. Cancellation of policy - Exclusive reasons.1.No insurer may cancel a policy except for the following reasons:a.Nonpayment of premium.b.Because the motor vehicle operator's license or motor vehicle registration of either the named insured or any other operator who resides in the same household as the named insured or who customarily operates a motor vehicle insured under the policy has been suspended, rescinded, canceled, or revoked during the policy period, or, if the policy is a renewal, during its policy period or for one hundred eighty days immediately preceding its effective date.Thissubdivision does not apply and the insurer may not cancel a policy when the operator whose license is suspended or revoked is excluded from coverage under the policy. The insurer shall notify the named insured of the possibility of excluding an operator whose license has been suspended or revoked prior to cancellation of the policy. When an operator whose license is suspended or revoked is excluded from coverage under the policy covering a secured motor vehicle, the owner of the motor vehicle who gives expressed or implied consent to the operator to use the motor vehicle is not relieved of liability under subsection 5 of section 26.1-41-02.c.Fraud or material misrepresentation made by or with the knowledge of any insured in obtaining the policy, continuing the policy, or in presenting a claim under the policy.d.The insured motor vehicle is:(1)So mechanically defective that its operation might endanger public safety;(2)Used in carrying passengers for hire or compensation; provided, however, that the use of an automobile for a car pool is not use of an automobile for hire or compensation;(3)Used in the transportation of flammables or explosives or for an illegal purpose;(4)An authorized emergency vehicle; or(5)Altered by an insured during the policy period so as to substantially increase the risk.Page No. 2e.The named insured moves to a state where the insurer is not licensed to do business.f.Failure to pay dues or fees when payment of the dues or fees is a prerequisite to obtaining or continuing automobile insurance coverage.g.A determination by the commissioner that the continuation of the policy would place the insurer in violation of the law or would be hazardous to the interests of policyholders, creditors, or the public.2.During the policy period no modification of automobile physical damage coverage, except coverage for loss caused by collision, by which provision is made for the application of a deductible amount not exceeding one hundred dollars is deemed a cancellation of the coverage or of the policy.3.Renewal of a policy does not constitute a waiver or estoppel with respect to grounds for cancellation which existed before the effective date of the renewal.26.1-40-02.1. Cancellation of minor's driving privileges - Effect. An insurer may notuse or rely on the cancellation of a minor's driving privileges under section 39-06-01.1 as the sole reason to cancel, deny, or not renew the automobile insurance policy of the minor or a parent of the minor unless the points or offenses on the minor's public driving record, separate from a cancellation under section 39-06-01.1, would be a reason to cancel, deny, or not renew the policy.26.1-40-03. Notice of cancellation. No insurer may exercise its right to cancel a policyunless a written notice of cancellation is mailed or delivered to the named insured, at the address shown in the policy, at least twenty days prior to the effective date of cancellation.Whencancellation is for nonpayment of premium, the notice must be mailed or delivered to the named insured at the address shown in the policy at least ten days prior to the effective date of cancellation.26.1-40-04.Statement of reason for cancellation.A notice of cancellation fornonpayment of premium must include or be accompanied by a statement of the reason for cancellation.Any other notice of cancellation must state or be accompanied by either astatement of the reason for cancellation, or a statement that upon written request of the named insured, the insurer will specify in writing the reason for cancellation. The written request must be mailed or delivered to the insurer at least ten days prior to the effective date of cancellation. The insurer shall mail or deliver the reason to the named insured within ten days after receipt of the written request.Failure to comply with the notice of cancellation provisions of section26.1-40-03 or failure to furnish reasons for cancellation when required or requested is sufficient cause for the commissioner to cancel, revoke, or refuse to renew that company's certificate of authority to do business in this state.26.1-40-05. Nonrenewal - Notice - Statement of reasons - Nonrenewal not to bebased on certain facts.1.No insurer may fail to renew a policy unless a written notice of nonrenewal is mailed or delivered to the named insured, at the address shown in the policy, at least thirty days prior to the expiration date of the policy or anniversary date of a policy written for a term longer than one year or with no fixed expiration date. The insurer shall include a statement of the reasons for nonrenewal with the notice or shall furnish it upon the written request of the insured mailed or delivered to the insurer at least ten days prior to the expiration date of the policy. The insurer shall comply with such a request within ten days after receipt thereof.2.Subsection 1 does not apply:a.If the insurer has manifested in any way its willingness to renew;Page No. 3b.In case of nonpayment of premium for the expiring policy; orc.If the insured fails to pay the premium as required by the insurer for renewal.26.1-40-06.Notification of possible eligibility for assigned risk policy.When apolicy is canceled, other than for nonpayment of premium, or in the event of failure to renew a policy to which subsection 1 of section 26.1-40-05 applies, the insurer shall notify the named insured of the insured's possible eligibility for automobile insurance through the automobile assigned risk plan or automobile insurance plan.The notification must accompany or beincluded in the notice of cancellation or nonrenewal required by sections 26.1-40-03 and 26.1-40-05.26.1-40-07. Proof of notice of termination. A postal service certificate of mailing to thenamed insured at the address shown in the policy is sufficient proof of notice. Proof of mailing a notice of cancellation or a notice of an intention not to renew, or business records of the notice of the insured's willingness to renew, must be retained for a period of one year by the insurer or insurance producer giving the notice.26.1-40-08. Reason for cancellation or nonrenewal - Nonliability of parties. Thespecific reason for cancellation or nonrenewal which is furnished to the insured does not constitute grounds for any claim for relief against the insurer or the insured's authorized representative, or its agents or employees, or any person who in good faith furnishes to the insurer the information upon which the reasons for cancellation or nonrenewal are based.26.1-40-09. Termination of coverage when another policy in force. Notwithstandingthe failure of an insurer to comply with sections 26.1-40-01 through 26.1-40-12, termination of any coverage under the policy either by cancellation or nonrenewal is effective on the effective date of any other policy providing similar coverage on the same motor vehicle or any replacement of the motor vehicle.26.1-40-10. Notification and reasons for a declination.1.Upon declining an application or written request for a policy, the insurer making the declination shall either provide the insurance applicant with the specific reasons in writing for the declination at the time of the declination or advise the applicant in writing that specific written reasons for the declination will be provided within twenty-one days of the timely receipt by the insurer making the declination of the applicant's written request for the reasons. An applicant's written request is timely under this subsection if received within ninety days of the date of the notice to the applicant.2.No insurer not represented by an insurance producer may refuse to provide an insurance application form or other means of making a written request for insurance to a prospective applicant who requests insurance coverage from the insurer.3.No insurance producer, for any reason set out in section 26.1-40-11, may refuse to provide an insurance application form or other means of making a written request for insurance to a prospective applicant who requests insurance coverage from the insurance producer or insurer.26.1-40-11. Terminations - Declinations - Prohibited reasons. The declination of anapplication for, or the termination of, a policy by an insurer or insurance producer is prohibited if the declination or termination is:1.Based upon the race, religion, nationality, or ethnic group of the applicant or named insured.2.Based solely upon the lawful occupation or profession of the applicant or named insured, except that this provision does not apply to any insurer or insurancePage No. 4producer which limits its market to one lawful occupation or profession or to several related lawful occupations or professions.3.Based upon the principal location of the insured motor vehicle unless such decision is for a business purpose which is not mere pretext for unfair discrimination.4.Based solely upon the age, sex, or marital status of an applicant or an insured, except that this subsection does not prohibit rating differentials based upon age, sex, or marital status.5.Based upon the fact that the applicant or named insured previously obtained insurance coverage through a residual market insurance mechanism or an insurance company that insures substandard risks.6.Based upon the fact that another insurer previously declined to insure the applicant or terminated an existing policy in which the applicant was the named insured.26.1-40-11.1.Juvenile's suspension of driving privileges - Nontraffic delinquentconduct.Insurers are prohibited from using or relying on a nontraffic delinquent juvenile'ssuspension of driving privileges under section 27-20-31.1 as a reason for canceling, denying, or nonrenewing the automobile insurance policy of the nontraffic delinquent juvenile offender or the parents of the nontraffic delinquent juvenile offender.26.1-40-12. Sanctions. If the commissioner after hearing determines that an insurer hasviolated section 26.1-40-02, 26.1-40-10, or 26.1-40-11, the commissioner may require the insurer to accept the application or written request for insurance coverage at a rate and on the same terms and conditions as are available to its other risks with similar characteristics, or reinstate insurance coverage to the end of the policy period; or continue insurance coverage at a rate and on the same terms and conditions as are available to its other risks with similar characteristics. If the commissioner has determined, after hearing, that any person has violated sections 26.1-40-02 through 26.1-40-12, the commissioner may issue a cease and desist order to restrain the person from engaging in practices which violate these sections, or assess a penalty against the person of up to five hundred dollars for each violation, or assess a penalty against the person of up to five thousand dollars for each willful and knowing violation, or cancel, revoke, or refuse to renew a company's certificate of authority to do business in this state.26.1-40-13.Definitions applicable to sections 26.1-40-13 through 26.1-40-15.Repealed by S.L. 1989, ch. 375, </DIV></DIV></DIV> </DIV>  <DIV></DIV> <DIV></DIV> <DIV></DIV> <DIV></DIV>  <DIV id=footer> <DIV class=container> Copyright © 2012-2022 Laws9.Com All rights reserved.  <A href="/contactus.html">Contact Us</A> | <A href="/aboutus.html">About Us</A> | <A href="/terms.html">Terms</A> | <A href="/privacy.html">Privacy</A> </DIV> </DIV> </BODY></HTML>

Find Legal Information

North Dakota Codes and Statutes

26.1-40 Automobile Insurance and Warranties