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First Regular Session

Sixty-first General Assembly

LLS NO. 97­0552.01 DHG SENATE BILL 97­106

STATE OF COLORADO

BY SENATOR Hernandez

BUSINESS AFFAIRS & LABOR

A BILL FOR AN ACT

CONCERNING STANDARDS FOR THE DENIAL OF HOMEOWNER'S INSURANCE COVERAGE.

Bill Summary

(Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments which may be subsequently adopted.)

Sunset process ­ Senate Business Affairs and Labor Committee. Requires the commissioner of insurance to adopt rules setting standards for the nonrenewal, cancellation, increase of premium, or reduction of coverage of homeowner's insurance. Prohibits such actions unless they are specifically authorized by the commissioner. Requires that the insurer notify the insured before taking such action. Specifies that failure to comply with the notice requirement is considered an automatic renewal of the policy.


Be it enacted by the General Assembly of the State of Colorado:

SECTION 1.  10­4­110.7, Colorado Revised Statutes, 1993 Repl. Vol., is amended to read:

10­4­110.7.  Basis for cancellation, nonrenewal, increase of premium, or reduction of coverage of homeowner's insurance policies. No insurer shall cancel or refuse to renew a policy of homeowner's insurance unless such insurer mails by first­class mail to the named insured, at the last address shown in the insurer's records, at least thirty days in advance a notice of its intended action which specifically states the reasons for proposing to take such action; but, where cancellation is for nonpayment of premium, at least ten days' notice of cancellation accompanied by the reasons therefor shall be given. (1)  NO INSURER SHALL CANCEL, REFUSE TO RENEW, INCREASE THE PREMIUM, REDUCE COVERAGE AT THE TIME OF RENEWAL, OR REFUSE TO WRITE A POLICY OF HOMEOWNER'S INSURANCE UNLESS SPECIFICALLY AUTHORIZED BY THE COMMISSIONER.

(2)  THE COMMISSIONER SHALL ADOPT RULES SETTING FORTH THE STANDARDS FOR CANCELLATION, NONRENEWAL, INCREASE OF PREMIUM, OR REDUCTION OF COVERAGE AT TIME OF RENEWAL AND STANDARDS FOR REFUSAL TO WRITE A POLICY OF HOMEOWNER'S INSURANCE BY AN INSURER.

(3)  NO INSURER SHALL CANCEL OR NONRENEW A POLICY OF HOMEOWNER'S INSURANCE OR INCREASE THE PREMIUM OR REDUCE THE COVERAGE AT THE TIME OF RENEWAL OF SUCH POLICY UNLESS SUCH INSURER MAILS BY FIRST­CLASS MAIL TO THE NAMED INSURED, AT THE LAST ADDRESS SHOWN IN THE INSURER'S RECORDS, AT LEAST THIRTY DAYS IN ADVANCE A NOTICE OF ITS INTENDED ACTION THAT SPECIFICALLY STATES THE REASONS FOR PROPOSING TO TAKE SUCH ACTION. WHERE CANCELLATION IS FOR NONPAYMENT OF PREMIUM, THE INSURER SHALL GIVE AT LEAST TEN DAYS' NOTICE OF CANCELLATION ACCOMPANIED BY THE REASONS FOR SUCH CANCELLATION.

(4)  AN INSURER'S FAILURE TO MAIL A NOTICE PURSUANT TO SUBSECTION (3) OF THIS SECTION SHALL BE CONSIDERED A MANIFESTATION OF THE INSURER'S WILLINGNESS TO RENEW SUCH POLICY AND THE INSURER SHALL BE DEEMED TO HAVE RENEWED THE POLICY FOR AN IDENTICAL PERIOD AT THE SAME TERMS, CONDITIONS, AND PREMIUM AS THE EXISTING POLICY.

SECTION 2.  Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.