The Office of General Counsel issued the following informal opinion on May 11, 2005 representing the position of the New York State Insurance Department.
Re: Workers' Compensation
In lieu of formal notice of cancellation for nonpayment, may an insurer state on a policy renewal notice for a workers' compensation insurance policy, other than a comprehensive personal liability insurance policy, that if the insured fails to pay the renewal premium by the due date, the insurer will consider the policy nonrenewed?
The nonrenewal, cancellation or termination of workers' compensation insurance policies, other than comprehensive personal liability insurance policies, is governed by N.Y. WCL § 54 (McKinney 2005), not the Insurance Law. Therefore, the appropriate body to answer this question is the Workers' Compensation Board.
An insurer uses a particular form for renewals of workers' compensation insurance. The form is entitled "Renewal Policy Notice" and is sent to the agent or broker. The form states that if the premium is not paid by the date due, the insurer will consider the policy nonrenewed. The matter under discussion is whether the insurer is required to send a notice of non-payment to the insured. Similar language may appear on the insured's renewal notice.
The relevant text on the form states as follows:
The above renewal policy is being sent to you under separate cover.
*** To avoid additional charges it is important that you read the below instructions. ***
The bill for this policy will be sent directly to the Insured. Please advise your insured that the renewal premium must be paid as indicated on the bill. If no payment is received by the invoice due date it will be interpreted as a non-acceptance of our renewal policy offer.
Should the insured not require this renewal policy, please return the original policy for flat cancellation prior to the effective date along with this letter providing the following:
* * *
N.Y. Ins. Law § 3426 (McKinney Supp. 2005) generally establishes cancellation and nonrenewal provisions for commercial risk insurance, professional liability insurance or public entity insurance policies. Workers' compensation and employer's liability coverage are specifically excluded from such requirements pursuant to N.Y. Ins. Law § 3426(l)(2) (McKinney Supp. 2005).
Cancellation, termination and nonrenewal of workers' compensation policies are governed by N.Y. WCL § 54 (McKinney 2005), with the exception of policies of comprehensive personal liability insurance on one, two, three or four family owner-occupied dwellings. See N.Y. WCL § 54(5) (McKinney 2005) and N.Y. Ins. Law § 3420(j). Cancellation and nonrenewal of comprehensive personal liability insurance on one, two, three or four family owner-occupied dwellings are governed by N.Y. Ins. Law § 3425 (McKinney Supp. 2005).
Since this inquiry does not concern workers' compensation coverage provided through comprehensive personal liability insurance, § 54 of the Workers' Compensation Law, which is not part of Insurance Law, is applicable to the question. Therefore, the appropriate body to answer the question is the Workers' Compensation Board.
For further information you may contact Assistant Counsel Brenda M. Gibbs at the Albany Office.