                                 CODE OF VIRGINIA

NOTICE OF CANCELLATION, REFUSAL TO RENEW, REDUCTION IN COVERAGE OR INCREASE IN
PREMIUM OF CERTAIN LIABILITY INSURANCE POLICIES (§ 38.2-231)

A. 1. No cancellation or refusal to renew by an insurer of (i) a policy of
insurance as defined in § 38.2-117 or 38.2-118 insuring a business entity; (ii)
a policy of insurance that includes as a part thereof insurance as defined in §
38.2-117 or 38.2-118 insuring a business entity; (iii) a policy of motor vehicle
insurance against legal liability of the insured as defined in § 38.2-124
insuring a business entity; or (iv) a policy of miscellaneous casualty insurance
as defined in subsection B of § 38.2-111 insuring a business entity shall be
effective unless the insurer delivers or mails to the first named insured at the
address shown on the policy a written notice of cancellation or refusal to
renew, or delivers such notice electronically to the address provided by the
first named insured. Such notice shall:
			a. Be in a type size authorized under § 38.2-311;
			b. State the date, which shall not be less than 45 days after the delivery or
mailing of the notice of cancellation or refusal to renew, on which such
cancellation or refusal to renew shall become effective, except that such
effective date may not be less than 15 days from the date of mailing or delivery
when the policy is being cancelled or not renewed for failure of the insured to
discharge when due any of its obligations in connection with the payment of
premium for the policy;
			c. State the specific reason or reasons of the insurer for cancellation or
refusal to renew;
			d. Advise the first named insured of its right to request in writing, within
15 days of the receipt of the notice, that the Commissioner of Insurance review
the action of the insurer; and
			e. In the case of a policy of motor vehicle insurance, inform the first named
insured of the possible availability of other insurance which may be obtained
through its agent, through another insurer, or through the Virginia Automobile
Insurance Plan.

   2. Nothing in this subsection shall apply to any policy of insurance if the
   named insured or his duly constituted attorney-in-fact has notified orally, or
   in writing, if the insurer requires such notification to be in writing, the
   insurer or its agent that he wishes the policy to be canceled or that he does
   not wish the policy to be renewed, or if, prior to the date of expiration, he
   fails to accept the offer of the insurer to renew the policy.

   3. Nothing in this subsection shall apply if an affiliated insurer has
   manifested its willingness to provide coverage at a lower premium than would
   have been charged for the same exposures on the expiring policy. The
   affiliated insurer shall manifest its willingness to provide coverage by
   issuing a policy with the types and limits of coverage at least equal to those
   contained in the expiring policy unless the named insured has requested a
   change in coverage or limits. When such offer is made by an affiliated
   insurer, an offer of renewal shall not be required of the insurer of the
   expiring policy, and the policy issued by the affiliated insurer shall be
   deemed to be a renewal policy.

B. No insurer shall cancel or refuse to renew a policy of motor vehicle
insurance against legal liability of the insured as defined in &#xA7; 38.2-124
insuring a business entity solely because of lack of supporting business or lack
of the potential for acquiring such business.

C. No reduction in coverage for personal injury or property damage liability
initiated by an insurer and no insurer-initiated increase in the premium greater
than 25 percent of (i) a policy of insurance defined in § 38.2-117 or 38.2-118
insuring a business entity; (ii) a policy of insurance that includes as a part
thereof insurance defined in § 38.2-117 or 38.2-118 insuring a business entity;
(iii) a policy of motor vehicle insurance against legal liability of the insured
as defined in § 38.2-124 insuring a business entity; or (iv) a policy of
miscellaneous casualty insurance as defined in subsection B of § 38.2-111
insuring a business entity, and which in the case of a reduction in coverage is
subject to § 38.2-1912, shall be effective unless the insurer delivers or mails
to the first named insured at the address shown on the policy, or delivers
electronically to the address provided by the first named insured, a written
notice of such reduction in coverage or premium increase not later than 45 days
prior to the effective date of same. The increase in premium shall be the
difference between the renewal premium and the premium charged by the insurer at
the effective date of the expiring policy. Such notice shall:

   1. Be in a type size authorized under &#xA7; 38.2-311;

   2. State the date, which shall not be less than 45 days after the delivery or
   mailing of the notice of reduction in coverage or increase in premium, on
   which such reduction in coverage or increase in premium shall become
   effective;

   3. Advise the first named insured of the specific reason for the increase and
   the amount of the increase, or, if in the case of a reduction in coverage, the
   specific reason for the reduction and the manner in which coverage will be
   reduced, or that such information may be obtained from the agent or the
   insurer;

   4. Advise the first named insured of its right to request in writing, within
   15 days of receipt of the notice, that the Commissioner of Insurance review
   the action of the insurer.

D. If an insurer does not provide notice in the manner required in subsection C,
coverage shall remain in effect until 45 days after written notice of reduction
in coverage or increase in premium is mailed or delivered to the first named
insured at the address shown on the policy, or delivered electronically to the
address provided by the first named insured, unless the named insured obtains
replacement coverage or elects to cancel sooner in either of which cases
coverage under the prior policy shall cease on the effective date of the
replacement coverage or the elected date of cancellation as the case may be. If
the named insured fails to accept or rejects the changed policy, coverage for
any period that extends beyond the expiration date will be under the prior
policy&#8217;s rates, terms and conditions as applied against the renewal
policy&#8217;s limits, rating exposures, and additional coverages. If the named
insured accepts the changed policy, the reduction in coverage or increase in
premium shall take effect upon the expiration of the prior policy.

E. Notice of reduction in coverage or increase in premium shall not be required
if:

   1. The insurer, after written demand, has not received, within 45 days after
   such demand has been mailed or delivered to the first named insured at the
   address shown on the policy, or delivered electronically to the address
   provided by the first named insured, sufficient information from the named
   insured to provide the required notice;

   2. Such notice is waived in writing by the named insured;

   3. The insurer delivers or mails to the first named insured a renewal policy
   or a renewal offer not less than 45 days prior to the effective date of the
   policy or, in the case of a medical malpractice insurance policy, not less
   than 90 days prior to the effective date of the policy;

   4. The policy is issued to a large commercial risk as defined in subsection C
   of &#xA7; 38.2-1903.1 but excluding policies of medical malpractice insurance;
   or

   5. The policy is retrospectively rated, where the premium is adjusted at the
   end of the policy period to reflect the risk&#8217;s actual loss experience.

F. No written notice of cancellation, refusal to renew, reduction in coverage,
or increase in premium that is mailed or delivered electronically by an insurer
to a first named insured in accordance with this section shall be effective
unless the insurer complies with the applicable provisions of subdivisions 1
through 4:

   1. If the notice is mailed, proof of mailing a notice of cancellation, refusal
   to renew, reduction in coverage, or increase in premium shall be obtained
   using one of the following methods that demonstrates the date that the notice
   was sent to the first named insured at the address stated in the policy or to
   such insured&#8217;s last known address:
   				a. The notice is sent by:

      1. Registered mail;

      2. Certified mail; or

      3. Any other similar first-class mail tracking method used or approved by
      the United States Postal Service, including Intelligent Mail barcode Tracing
      (IMb Tracing); or
      					b. The notice is sent by another method of mailing for which a
      certificate of mailing is obtained from the United States Postal Service at
      the time the notice is accepted for mailing. A certificate of mailing from
      the United States Postal Service does not include a certificate of bulk
      mailing.

   2. If the notice is delivered electronically, the insurer retains evidence of
   electronic transmittal or receipt of the notification for at least one year
   from the date of the transmittal.

   3. If the notice is mailed, the insurer retains a copy of the notice of
   cancellation, refusal to renew, reduction in coverage, or increase in premium
   for at least one year from the date such action was effective. If the notice
   is mailed, proof of mailing from the United States Postal Service consistent
   with the mailing method utilized by the insurer shall be maintained for one
   year from the date the cancellation, refusal to renew, reduction in coverage,
   or increase in premium is effective.

   4. a. If the terms of a policy of motor vehicle insurance insuring a business
   entity require the notice of cancellation, refusal to renew, reduction in
   coverage, or increase in premium to be given to any lienholder, then the
   insurer shall mail such notice and retain a copy of the notice in the manner
   required by this subsection. If the notices sent to the first named insured
   and the lienholder are part of the same form, the insurer may retain a single
   copy of the notice. Proof of mailing from the United States Postal Service
   consistent with the mailing method utilized by the insurer shall be maintained
   for one year from the date the cancellation, refusal to renew, reduction in
   coverage, or increase in premium is effective.
   				b. Notwithstanding the provisions of subdivision 4 a, if the terms of the
   policy require the notice of cancellation, refusal to renew, reduction in
   coverage, or increase in premium to be given to any lienholder, the insurer
   and lienholder may agree by separate agreement that such notices may be
   transmitted electronically, provided that the insurer and lienholder agree
   upon the specifics for transmittal and acknowledgment of notification.
   Evidence of transmittal or receipt of the notification required by this
   subsection shall be retained by the insurer for at least one year from the
   date of termination.
   				&#8220;Copy,&#8221; as used in this subsection, includes photographs,
   microphotographs, photostats, microfilm, microcard, printouts, or other
   reproductions of electronically stored data or copies from optical disks,
   electronically transmitted facsimiles, or any other reproduction of an
   original from a process that forms a durable medium for its recording,
   storing, and reproducing.

G. Nothing in this section shall prohibit any insurer or agent from including in
a notice of cancellation, refusal to renew, reduction in coverage, or premium
increase any additional disclosure statements required by state or federal laws.

H. For the purpose of this section, the terms (i) &#8220;business entity&#8221;
shall mean an entity as defined by subsection A of &#xA7; 13.1-543, &#xA7;
13.1-603 or 13.1-803 and shall include an individual, a partnership, an
unincorporated association, the Commonwealth, a county, city, town, or an
authority, board, commission, sanitation, soil and water, planning or other
district, public service corporation owned, operated or controlled by the
Commonwealth, a locality or other local governmental authority; (ii)
&#8220;policy of motor vehicle insurance&#8221; shall mean a policy or contract
for bodily injury or property damage liability insuring a business entity issued
or delivered in this Commonwealth covering liability arising from the ownership,
maintenance, or use of any motor vehicle, but does not include (a) any policy
issued through the Virginia Automobile Insurance Plan, (b) any policy providing
insurance only on an excess basis, or (c) any other contract providing insurance
to the named insured even though the contract may incidentally provide insurance
on motor vehicles; and (iii) &#8220;reduction in coverage&#8221; shall mean, but
not be limited to, any diminution in scope of coverage, decrease in limits of
liability, addition of exclusions, increase in deductibles, or reduction in the
policy term or duration except a reduction in coverage filed with and approved
by the Commission and applicable to an entire line, classification or
subclassification of insurance.

I. Within 15 days of receipt of the notice of cancellation, refusal to renew,
reduction in coverage, or increase in premium, the named insured shall be
entitled to request in writing to the Commissioner that he review the action of
the insurer. Upon receipt of the request, the Commissioner shall promptly begin
a review to determine whether the insurer&#8217;s notice of cancellation,
refusal to renew, reduction in coverage, or premium increase complies with the
requirements of this section. Where the Commissioner finds from the review that
the notice of cancellation, refusal to renew, reduction in coverage, or premium
increase does not comply with the requirements of this section, he shall
immediately notify the insurer, the named insured and any other person to whom
such notice was required to be given by the terms of the policy that such notice
is not effective. Nothing in this section authorizes the Commissioner to
substitute his judgment as to underwriting for that of the insurer. Pending
review by the Commission, this section shall not operate to relieve an insured
from the obligation to pay any premium when due; however, if the Commission
finds that the notice required by this section was not proper, the Commission
may order the insurer to pay to the insured any overpayment of premium made by
the insured.

J. Every insurer shall maintain for at least one year records of cancellation,
refusals to renew, reductions in coverage, and premium increases to which this
section applies and copies of every notice or statement required by subsections
A, C, F, and L that it sends to any of its insureds.

K. There shall be no liability on the part of and no cause of action of any
nature shall arise against (i) the Commissioner of Insurance or his
subordinates; (ii) any insurer, its authorized representative, its agents, or
its employees; or (iii) any firm, person, or corporation furnishing to the
insurer information as to reasons for cancellation, refusal to renew, reduction
in coverage, or premium increase, for any statement made by any of them in
complying with this section or for providing information pertaining thereto.

L. Notwithstanding anything in this section to the contrary, if an insurer
cancels or refuses to renew a policy of medical malpractice insurance as defined
in &#xA7; 38.2-2800, or if, as a result of an insurer-initiated increase in
premium, the premium increases for a medical malpractice insurance policy by
more than 25 percent of the previous policy&#8217;s premium, the insurer shall
provide no fewer than 90 days&#8217; notice prior to the renewal effective date,
or, if such policy is being cancelled or non-renewed for failure of the insured
to discharge when due any of its obligations in connection with the payment of
premium for the policy, the effective date of cancellation or refusal to renew
shall not be less than 15 days from the date of mailing or delivery of the
notice. The increase in the premium shall be the difference between the renewal
premium and the premium charged by the insurer at the effective date of the
expiring policy.

M. As used in this section, an &#8220;insurer-initiated increase in
premium&#8221; means an increase in premium other than one resulting from
changes in (i) coverage requested by the insured, (ii) policy limits requested
by the insured, (iii) the insured&#8217;s operation or location that result in a
change in the classification of the risk, or (iv) the rating exposures
including, but not limited to, increases in payroll, receipts, square footage,
number of automobiles insured, or number of employees.

HISTORY: 1986, c. 376, § 38.1-43.01; 1987, c. 697; 1988, c. 189; 1989, c. 728;
1992, c. 160; 1996, c. 237; 1998, c. 142; 2000, c. 529; 2003, cc. 387, 678;
2005, cc. 290, 635; 2006, c. 554; 2008, cc. 58, 221; 2009, c. 215; 2013, cc. 13,
257; 2015, cc. 9, 443; 2016, cc. 4, 71.