How Many Days Notice Is Required for the Conditional Renewal of a Commercial Umbrella Policy?
Question: “Would you happen to know the number of days a carrier must give if they conditionally renew a commercial umbrella policy? An admitted carrier issued one for an insured of ours and only gave 35 days. Per the underwriter, they said it was reduced to 35 days and is legal.”
Answer: The law (see below) requires an insurer to provide 30 to 120 days notice of non-renewal or conditional renewal for commercial umbrella or excess policies or for policies issued to “jumbo risks” (for-profit business entities that generate gross revenues exceeding $100 million annually and that develop an annual liability premium for the policy of at least $500,000). This has been the law since at least 1998, which is as far back as the software I use can check. The carrier’s umbrella policy should contain ISO endorsement CU 02 14 06 20, New York Changes – Cancellation and Nonrenewal, or one similar to it. The endorsement states the “30 to 120 days” requirement.
New York
INSURANCE LAW — CHAPTER 28 OF THE CONSOLIDATED LAWS Article 34 — INSURANCE CONTRACTS — PROPERTY/CASUALTY
Ins. Law s 3426 Commercial lines insurance; cancellation and renewal provisions
(a) Definitions. As used in this section:
(1) ” Covered policy ” means, for purposes of this section, a policy of commercial risk insurance, professional liability insurance or public entity insurance, and shall include any contract, certificate or other evidence of such insurance. …
(6) “Excess liability policy” means a policy of commercial risk, public entity, or professional liability insurance, including a commercial umbrella policy, when written over one or more underlying liability policies that provide with respect to the same risk coverage of at least five hundred thousand dollars in the aggregate. …
(e)(1) A covered policy shall remain in full force and effect pursuant to the same terms, conditions and rates unless written notice is mailed or delivered by the insurer to the first-named insured, at the address shown on the policy, and to such insured’s authorized agent or broker, indicating the insurer’s intention:
(A) not to renew such policy; or
(B) to condition its renewal upon change of limits, change in type of coverage, reduction of coverage, increased deductible or addition of exclusion, or upon increased premiums in excess of ten percent (exclusive of any premium increase generated as a result of increased exposure units, pursuant to subsection (d) of this section, or as a result of experience rating, loss rating, retrospective rating or audit), except that with respect to an excess liability policy, the insurer may also, consistent with regulations promulgated by the superintendent, condition its renewal upon requirements relating to the underlying coverage, in which event the conditional renewal notice shall be treated as an effective notice of nonrenewal if such requirements are not satisfied as of the later of the expiration date of the policy or sixty days after mailing or delivery of such notice; …
(2) A nonrenewal notice as specified in subparagraph (A), a conditional renewal notice as specified in subparagraph (B), and the second notice described in subparagraph (C) of paragraph one of this subsection shall contain the specific reason or reasons for nonrenewal or conditional renewal, set forth the amount of any premium increase (or, where such amount cannot reasonably be determined as of the time the notice is provided, a reasonable estimate of the premium increase based upon the information available to the insurer at that time), and describe in plain and concise terms the nature of any other proposed changes specified in paragraph one of this subsection. …
(3) The notice required by paragraph one of this subsection shall be mailed or delivered at least sixty, but not more than one hundred twenty, days in advance of the expiration date of the policy, except that for an excess liability policy or a policy issued to a jumbo risk, the notice shall be mailed or delivered at least thirty, but not more than one hundred twenty, days in advance of the expiration date of the policy.
History L. 1986, c. 220, § 31; L. 1989, c. 235, § 10; L. 1996, c. 529, § 1; L. 1996, c. 549, § 1; L. 1998, c. 65, § 7; L. 2003, c. 28 (SB 2870), § 2; L. 2003, c. 675 (SB 4633), § 2; L. 2006, (AB 1973), § 1, eff. 8-25-2006; 2021, AB 5379, s 1, eff. 1-20-2022; 2022, AB 8698, ss 1, 2, eff. 1-20-2022.
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