OGC Opinion No. 03-01-28: Notices of Cancellation, Nonrenewal, and Conditional Renewal Applicable to For-Hire (Livery) Vehicles with Commercial Insurance Individually Underwritten in the Voluntary Market

OGC Op. No. 03-01-28

The Office of General Counsel issued the following opinion on January 14, 2003, representing the position of the New York State Insurance Department.

Re: Notices of Cancellation, Nonrenewal, and Conditional Renewal Applicable to For-Hire (Livery) Vehicles with Commercial Insurance Individually Underwritten in the Voluntary Market

Question Presented:

Would a notice of cancellation under N.Y. Ins. Law § 3426 (McKinney 2000) supersede a notice of nonrenewal or conditional renewal that contains the proposed wording?

Conclusion:

The proposed wording on the notices of nonrenewal and conditional renewal may confuse or mislead the insured. An ambiguity on the notices of nonrenewal and conditional renewal could be construed against the insurer by a court.

Facts:

Under certain circumstances an insurer that has issued a notice of nonrenewal or conditional renewal also issues a cancellation notice with an earlier termination date. Wording was proposed for the notices of nonrenewal and conditional renewal (which would be applicable to for-hire vehicles with commercial insurance individually written in the voluntary market) to make it clear which notice should apply.

For the purpose of this opinion, it is assumed that the entire wording on the notices of cancellation, nonrenewal, and conditional renewal that would be sent to the insureds do not conflict with N.Y. Ins. Law § 3426(i) (McKinney 2000) which states: "No cancellation, conditional renewal or nonrenewal notice that fails to include a provision required by this section shall be an effective notice for purposes of this section." This opinion is limited to the narrow question that has been posed and does not constitute an approval of the insurer's notices.

The proposed wording on the notices of nonrenewal and conditional renewal state in pertinent part:

If a Notice of Cancellation has been sent, or is subsequently sent, and its effective date is prior to the date of the renewal date of this policy, then the cancellation remains effective, and its terms, conditions, and date of cancellation supersede this Notice of Nonrenewal which is then null and void. (Emphasis added)

If a Notice of Cancellation has been sent, or is subsequently sent, and its effective date is prior to the date of the renewal date of this policy, then the cancellation remains effective, and its terms, conditions and date of cancellation supersede this Conditional Renewal Notice which is then null and void. (Emphasis added)

Analysis:

The text of N.Y. Ins. Law § 3426 (McKinney 2000), which is applicable to notices of cancellation, nonrenewal, and conditional renewal in the context of individually underwritten commercial property/casualty insurance in the voluntary market does not address this inquiry. However, if the insurer were to issue multiple notices with different termination dates, a court may invalidate the earlier notice because the insurer would then have created an ambiguity that may be construed against it, in the same manner that ambiguity in an insurance policy would be construed against the insurer.

The proposed wording on the notices of nonrenewal or conditional renewal provide that if a notice of cancellation is subsequently sent, then the cancellation remains effective. We believe that this language may confuse or mislead the insured; if a notice of cancellation were sent after a notice of nonrenewal or conditional renewal, the notice of cancellation cannot remain effective. (Emphasis added) We also suggest that the notice of cancellation refer to the notices of nonrenewal or conditional renewal to make clear which notice should apply when multiple notices are issued. Ultimately, the issue is one for a court of competent jurisdiction.