Cancellation and Nonrenewal in Georgia

A policy can end before its expiration date (a cancellation) or at its expiration date, when the insurer declines to continue it (a nonrenewal). Georgia adds statutory rules to the cancellation and nonrenewal conditions in the policy itself: how much notice the insurer gives, how it is delivered, which reasons are allowed and how unearned premium is returned.

Georgia’s rules come in layers, so first decide which layer applies:

• Every policy the insurer may cancel follows the general rule in O.C.G.A. § 33-24-44.
• Cancellation by the insured follows O.C.G.A. § 33-24-44.1.
• Personal auto and motorcycle policies add the restrictions in O.C.G.A. § 33-24-45 and the Commissioner review in Ga. Comp. R. & Regs. r. 120-2-53.
• Residential property policies add the restrictions in O.C.G.A. § 33-24-46.
• Other property and casualty policies, in practice business policies, add the notice rules in O.C.G.A. § 33-24-47.

A policy may give the insured more notice than the law requires, never less.

Definitions

Nonrenewal

A refusal by the insurer, or an affiliate, to renew a policy at the end of its term. If the insurer has offered to renew and the insured does not pay the renewal premium, that is not a nonrenewal (O.C.G.A. § 33-24-46(b)(2)).

Renewal

Issuing a policy that replaces the old one at the end of its period, or extending the term by certificate, notice or continuation premium. A policy written for less than six months is treated as renewing every six months, and one written for longer than a year, or with no fixed expiration, as renewing every year (O.C.G.A. §§ 33-24-45(b)(3), 33-24-46(b)(5)).

Reduction in coverage

A change by the insurer that removes coverage, narrows its scope or adds an exclusion. A change the insured requests, a correction of a typographical error and a change the legislature mandates are not reductions (O.C.G.A. §§ 33-24-45(b)(2), 33-24-46(b)(4), 33-24-47(g)).

Cancellation of policies generally (O.C.G.A. § 33-24-44)

Section 33-24-44 governs any policy the insurer may cancel by its terms, unless another section says otherwise (O.C.G.A. § 33-24-44(a)). The auto, residential and commercial sections all rely on it for notice and refunds.

Written notice and how it is delivered

The insurer cancels by written notice stating when the cancellation takes effect, at least 30 days after the notice is mailed or delivered, or longer if the policy or another statute says so. The notice goes in person or by at least first-class mail to the last address of record of the insured and of any lienholder, and the insurer keeps the Postal Service receipt or other accepted evidence of mailing as its proof (O.C.G.A. § 33-24-44(b)). A defect in the lienholder’s notice does not invalidate a cancellation that is valid as to the insured.

A cancellation or nonrenewal notice may go to the insured electronically only if the insured has signed a consent reading “I AGREE TO RECEIVE ALL MAILINGS AND COMMUNICATIONS ELECTRONICALLY. SUCH ELECTRONIC MAILING OR COMMUNICATIONS MAY EVEN INCLUDE CANCELLATION OR NONRENEWAL NOTICES.” A paper consent must be a separate document in capital letters of at least 12 point type. The insured may withdraw consent, and no insurer may cancel, refuse to issue or refuse to renew because the insured declines electronic delivery (O.C.G.A. § 33-24-14(d)(2), (3), (6), (9)).

The ten-day exceptions

The notice shortens to at least 10 days in two situations (O.C.G.A. § 33-24-44(d)):

• The named insured has not paid a premium or installment when due, whether to the insurer or to the agent.
• The policy has been in effect less than 60 days, whatever the reason.

Two narrower rules complete the picture. An insured who refuses a premium audit the policy allows may be cancelled on 10 days’ notice by certified mail or statutory overnight delivery, but only after two documented warnings to the insured and the agent and no sooner than 20 days after the first warning (O.C.G.A. § 33-24-44(d.2)). And no notice at all is required when a binder or policy is void from the beginning for failure of consideration (O.C.G.A. § 33-24-44(d.1)).

Returning unearned premium

When the insurer cancels, unearned premium is refunded pro rata. If it does not accompany the notice, it is due on or before the cancellation date, paid to the named insured directly or through the agent of record (O.C.G.A. § 33-24-44(c)(1)). An agent who receives the refund passes it on by the latest of three dates: 10 working days after receiving it, 10 working days after the insurer reports the amount, or the cancellation date. An agent may first apply it to an open account balance the insured owes.

Two refunds run on other clocks (O.C.G.A. § 33-24-44(c)(2)):

• After an audit or rate investigation, the refund is due within 30 days after it ends.
• If a premium finance company financed the premium, the unearned premium goes to the finance company within 10 working days after cancellation.

An insurer or agent who misses these deadlines owes the insured a penalty measured as a percentage of the late refund, plus interest at 18 percent a year until it is paid. A late refund does not undo a properly given cancellation notice (O.C.G.A. § 33-24-44(c)(3)).

An insurer may refund on a less favorable basis than pro rata, such as a short-rate penalty, only if all three are true: the cancellation is for nonpayment of premium or of a premium finance installment, the policy says a penalty may be charged, and the insurer has filed its method of computing the penalty with the Commissioner (O.C.G.A. § 33-24-44(g)).

Cancellation by a premium finance company

When a premium finance agreement gives the finance company a power of attorney to cancel, the company first gives the insured at least 10 days’ written notice of its intent to cancel unless the default is cured, with a copy to the agent. It may then cancel in the insured’s name by notice to the insurer, telling the insured the date and time coverage ends. The insurer notifies any mortgagee or other third party entitled to notice by the second business day after receiving the cancellation (O.C.G.A. § 33-22-13). Once the insurer has been notified of the finance agreement, it need not send its own notice to the insured (O.C.G.A. §§ 33-24-44(e), 33-24-45(m), 33-24-46(h)).

Cancellation by the insured (O.C.G.A. § 33-24-44.1)

An insured cancels by returning the policy or by asking the insurer or its agent, orally, electronically or in writing, to cancel as of a future date. The insurer confirms an oral request in writing or electronically within 10 days and may require recorded verification first (O.C.G.A. § 33-24-44.1(a)). When only the insured’s interest is affected, the policy ends on the later of the date the request is received and the date requested, although the insurer may accept an earlier date by confirming it and documenting the request.

If a mortgagee or other third party must be notified, the cancellation cannot take effect sooner than 10 days after that notice is mailed or delivered (O.C.G.A. § 33-24-44.1(a)(2)). And if the insurer mishandles the request, the policy still ends no later than the effective date of a replacement policy with the same or similar coverage (O.C.G.A. § 33-24-44.1(d)).

Cancellation and nonrenewal of personal auto and motorcycle policies (O.C.G.A. § 33-24-45)

Which policies are protected

Section 33-24-45 covers a policy issued to a natural person, or to related members of one household, insuring only a private passenger car, station wagon, jeep-type vehicle or motorcycle not used for hire or rented to others, or another four-wheel vehicle with a load capacity of 1,500 pounds or less not used in the insured’s business. It does not cover a policy issued through the Georgia Automobile Insurance Plan, a policy insuring more than four automobiles, or a garage, auto sales, repair shop, service station or parking operation policy (O.C.G.A. § 33-24-45(b)(1)). Within a covered policy, it protects the liability, personal injury protection, medical payments, physical damage and uninsured motorist coverages (O.C.G.A. § 33-24-45(a)).

A policy in effect less than 60 days that is not a renewal is outside the section and may be cancelled for any reason under § 33-24-44, on 10 days’ notice (O.C.G.A. § 33-24-45(k)).

Permitted reasons for cancelling after 60 days

After 60 days, a cancellation notice may be sent only for a listed reason (O.C.G.A. § 33-24-45(c)):

• Nonpayment of premium, an installment or the renewal premium. For an insured who pays monthly, the cancellation notice may ride with the bill if the bill is mailed at least 10 days before the due date.
• Material misrepresentation in obtaining the policy, or violation of its terms by any insured.
• Failure to disclose, when asked, the named insured’s accidents and moving violations for the preceding 36 months, or other information needed to accept or rate the risk.
• A false or fraudulent claim by the named insured, or knowingly helping another make one.
• A driver’s record or condition. For the named insured or a household or regular driver, this includes a license suspended or revoked within 36 months; epilepsy or heart attacks without a physician’s certificate of ability to drive; an accident record, conviction record or condition such that the person’s driving might endanger public safety; drug addiction within three years; conviction or forfeited bail within 36 months for offenses including a felony, driving under the influence, leaving the scene of an accident and auto theft; and three or more speeding or misdemeanor motor vehicle violations within 36 months.
• The vehicle. It is so defective it endangers public safety, carries passengers for hire (a car pool does not count), hauls flammables or explosives, is an authorized emergency vehicle, or has changed so as to increase the risk substantially.

No insurer may cancel or surcharge an auto policy because the insured was in a multivehicle accident in which the insured was not at fault (O.C.G.A. § 33-9-40). Every cancellation still needs notice under § 33-24-44 and a statement of reasons as Chapter 39 of Title 33, Georgia’s insurance privacy law, requires (O.C.G.A. § 33-24-45(d)).

Nonrenewal: notice and prohibited reasons

An auto insurer that will not renew must send written notice at least 30 days before the nonrenewal takes effect, to the named insured and any lienholder, and state its reasons in writing (O.C.G.A. § 33-24-45(e)(1)–(2)). It may not nonrenew because of (O.C.G.A. § 33-24-45(e)(3)):

• The insured’s lack of other (“supporting”) business with the insurer
• A change in eligibility or underwriting rules, unless it applies uniformly to a class or territory and the Commissioner has approved it
• Two or fewer, in the preceding 36 months, of these: multivehicle accidents in which the insured driver was not at fault, uninsured or underinsured motorist claims, comprehensive claims, and towing or road service claims
• Age, sex, location of residence in the state, race, creed, national origin, ancestry or marital status
• Lawful occupation, if the car is not used in it; military service, if the named insured has not moved legal residence out of Georgia; or years of driving experience
• Accidents or violations more than 36 months old, or claims in the past 36 months totaling no more than $750
• One at-fault claim, if coverage has been continuous for at least 36 months, or two, if continuous for at least 72 months
• Any factor unrelated to the claims record, driving record or driving ability of the named insured or a household or regular driver

Any reason that justifies cancellation also justifies nonrenewal, and if the insurer shows the Commissioner that renewal would be unlawful or hazardous, the limits on rule changes and unrelated factors fall away (O.C.G.A. § 33-24-45(e)(4)).

The nonrenewal rules do not apply when the insured fails to pay the expiring or renewal premium, or when the insurer has delivered or offered a renewal (O.C.G.A. § 33-24-45(f)(1)–(3)). Nor do they apply to a reduction in coverage at renewal if the insurer gives at least 30 days’ written notice in a separate document headed “NOTICE OF REDUCTION IN COVERAGE” in capital letters of at least 12 point type (O.C.G.A. § 33-24-45(f)(4)).

When an insurer ends its contract with an agent, it may nonrenew that agent’s policies, but an insured who applies through another of the insurer’s agents before the nonrenewal date must be treated as a renewal, and the notice must say so (O.C.G.A. § 33-24-45(e)(6)). Any cancellation other than for nonpayment, and any nonrenewal, must tell the insured that coverage may be available through the Georgia Automobile Insurance Plan (O.C.G.A. § 33-24-45(i)).

Challenging a cancellation or nonrenewal

Every auto nonrenewal notice must tell the insured, in the statute’s form, that the insurer will give its reasons on request and that an insured who believes the nonrenewal is unlawful must file a written notice with the insurer, before the nonrenewal takes effect, saying why. Without that notice the insured cannot later sue over the nonrenewal, and a later suit is limited to the grounds the notice stated (O.C.G.A. § 33-24-45(e)(5)).

The insured may also ask the Commissioner to review a cancellation or nonrenewal believed to violate § 33-24-45 (O.C.G.A. § 33-24-45(o); Ga. Comp. R. & Regs. r. 120-2-53):

1. The notice must tell the insured of this right and of the premium tender. Notices for nonpayment and for policies in their first 60 days need not (r. 120-2-53-.03(1)).
2. The insured delivers or mails a written request, stating the reasons, within 15 days after receiving the notice. With a post office receipt of mailing, the notice is conclusively treated as received on the fourth calendar day after mailing (r. 120-2-53-.03(2)).
3. The insured tenders, and the insurer must accept, a 30-day pro rata portion of the premium, with proof of the tender included in the request (r. 120-2-53-.04).
4. The policy stays in force during the review, and the Commissioner decides within 30 days of the request (O.C.G.A. § 33-24-45(o)).
5. If the insurer acted lawfully, interim coverage ends no sooner than 5 days after the decision, and the insurer keeps the premium for the interim period and refunds the rest within 10 working days (r. 120-2-53-.05(1)–(2)).
6. If it did not, the insurer must reinstate or renew the policy and may be penalized (r. 120-2-53-.05(3)).

Afterward the insured may still demand a hearing before the Commissioner (O.C.G.A. §§ 33-24-45(o), 33-2-17).

Sidenote

Commissioner review is an auto remedy

The 15-day request for review by the Commissioner comes from O.C.G.A. § 33-24-45(o) and r. 120-2-53, and both apply only to the personal auto and motorcycle policies § 33-24-45 covers. The residential property statute, § 33-24-46, has no review procedure of its own.

Cancellation and nonrenewal of residential property policies (O.C.G.A. § 33-24-46)

Section 33-24-46 covers policies insuring a natural person against direct loss to residential real property and its contents, as defined and limited in standard fire policies (O.C.G.A. § 33-24-46(a)). The Commissioner’s rule describes that property as an owner-occupied one- or two-family dwelling, and names condominium, manufactured housing, standard fire, homeowners, farmowners and contents policies (Ga. Comp. R. & Regs. r. 120-2-15-.01(a)).

Permitted reasons for cancelling after 60 days

Once coverage has been in effect more than 60 days, or a renewal policy has taken effect, the insurer may cancel only for (O.C.G.A. § 33-24-46(c)(2)):

1. Nonpayment of premium
2. Fraud, concealment of a material fact or material misrepresentation by or with the knowledge of the insured, in obtaining or continuing the policy or in presenting a claim
3. A change in the risk that substantially increases a hazard the policy insures against
4. The insured’s violation of a material term or condition

The notice follows § 33-24-44 (30 days, or 10 for nonpayment), with reasons as Chapter 39 requires (O.C.G.A. § 33-24-46(c)(1)).

Nonrenewal: notice and prohibited reasons

A residential insurer that will not renew must send written notice at least 60 days before the nonrenewal takes effect, to the named insured and any lienholder, with its reasons (O.C.G.A. § 33-24-46(d)(1)).

The insurer may not nonrenew because of (O.C.G.A. § 33-24-46(j)–(k)):

• Lack of supporting business
• A change in eligibility or underwriting rules, unless it applies uniformly to a class or territory and the Commissioner has approved it, or the insurer shows the Commissioner that renewal would be unlawful or hazardous
• Two or fewer claims in the preceding 36 months that are not attributable to the negligent or intentional acts of the insured or of people living at the insured premises

That last rule turns on Georgia’s definition of a claim against a policy: a contact by the insured or an affected third party for the express purpose of seeking payment under the policy. A report of loss or a question about coverage is not, by itself, a claim (O.C.G.A. § 33-24-46(b)(1)).

Example: Within three years, a storm drops a tree on Dana’s roof, a pipe under her sink bursts, and she calls her agent to ask whether her policy would cover a guest’s fall. The call is not a claim, and neither claim arose from her negligence, so her insurer cannot nonrenew her because of them.

A reduction in coverage needs a separate written notice at least 30 days before it takes effect, headed “NOTICE OF REDUCTION IN COVERAGE” in capital letters of at least 12 point type (O.C.G.A. § 33-24-46(d)(2)).

The FAIR Plan notice, challenges and reporting

Any cancellation other than for nonpayment, and any nonrenewal, must tell the named insured of possible eligibility through the Georgia Fair Access to Insurance Requirements (FAIR) Plan and give its contact address (O.C.G.A. § 33-24-46(e); r. 120-2-15-.04(e)).

As with auto, the nonrenewal notice explains that the insurer will give its reasons on request and that an insured who believes the nonrenewal is unlawful must file a written notice with the insurer before it takes effect or lose the right to sue over it (O.C.G.A. § 33-24-46(l)). An agency termination is a valid reason to nonrenew, and an insured who applies through another of the insurer’s agents in time is treated as a renewal (O.C.G.A. § 33-24-46(m)).

Insurers report the residential policies they cancelled or nonrenewed each quarter, with reasons, on or before the first day of February, May, August and November; cancellations for nonpayment are not reported. Every notice must state its reasons clearly enough that a person of average intelligence can identify the basis for the decision without further inquiry (Ga. Comp. R. & Regs. r. 120-2-15-.02, .04).

Cancellation and nonrenewal of commercial policies (O.C.G.A. § 33-24-47)

Section 33-24-47 applies to property and casualty policies other than personal auto and personal property and casualty policies (O.C.G.A. § 33-24-47(a)), such as a businessowners or commercial package policy.

Cancellation for nonpayment, or of a policy in effect less than 60 days, follows § 33-24-44 and its 10-day notice. Otherwise, notice of a cancellation, a nonrenewal or a premium increase of more than 15 percent of the current premium must be delivered at least 45 days before the policy’s termination date. An increase caused by a change in risk or exposure, a change in the experience modification or an audit does not count, and the notice of an increase must state its dollar amount (O.C.G.A. § 33-24-47(a)–(b)).

Workers’ compensation cancellation or nonrenewal requires at least 75 days’ notice, sent by certified mail or statutory overnight delivery, return receipt requested, or electronically with consent (O.C.G.A. § 33-24-47(f)). A reduction in coverage requires at least 45 days’ notice in the same separate “NOTICE OF REDUCTION IN COVERAGE” format (O.C.G.A. § 33-24-47(g)).

If the insurer’s notice is missing or late, the policyholder may buy an additional 30 days of coverage beyond the termination date, at the same premium and terms, by tendering the pro rata premium on or before the termination date. Other penalties follow only if the Commissioner finds, after a hearing, that the failures amount to a general business practice (O.C.G.A. § 33-24-47(c)). The section does not apply to cancellations by a premium finance company (O.C.G.A. § 33-24-47(d)).

Georgia’s notice periods side by side

Situation	Personal auto and motorcycle	Residential property	Commercial
Cancellation for nonpayment	10 days	10 days	10 days
Any cancellation in the first 60 days	10 days	10 days	10 days
Cancellation after 60 days (listed reasons only for auto and residential)	30 days	30 days	45 days
Nonrenewal	30 days	60 days	45 days (workers’ compensation 75 days)
Reduction in coverage	30 days	30 days	45 days
Premium increase over 15 percent	no special rule	no special rule	45 days

(O.C.G.A. §§ 33-24-44(b), (d), 33-24-45(e)(1), (f)(4), 33-24-46(d), 33-24-47(b), (f), (g))

Each period runs from the date the notice is mailed or delivered, not from the day the insured reads it, which is why the statutes insist on proof of mailing. Insurers, agents and their sources also cannot be sued over the statements of reasons they make in these notices or at a hearing about them (O.C.G.A. §§ 33-24-45(j), 33-24-46(f), 33-24-47(c)).

Lesson summary

• O.C.G.A. § 33-24-44 requires written notice at least 30 days before cancellation, shortened to 10 days for nonpayment or for a policy in effect less than 60 days, delivered in person, by first-class mail with proof of mailing, or electronically with the insured’s signed consent.
• Unearned premium is refunded pro rata on or before the cancellation date; an agent passes it on within 10 working days, and a late refund carries a penalty plus 18 percent annual interest.
• An insured may cancel orally, electronically or in writing, effective on the later of the date received and the date requested (O.C.G.A. § 33-24-44.1).
• After 60 days a personal auto or motorcycle policy may be cancelled only for listed reasons. Nonrenewal needs 30 days’ notice and may not rest on prohibited grounds, such as two or fewer not-at-fault accidents or comprehensive claims in 36 months (O.C.G.A. § 33-24-45).
• An auto insured may ask the Commissioner to review a cancellation or nonrenewal within 15 days of receiving the notice, and coverage continues during the review (O.C.G.A. § 33-24-45(o); r. 120-2-53).
• After 60 days a residential policy may be cancelled only for nonpayment, fraud or misrepresentation, a substantially increased hazard or violation of a material condition. Nonrenewal needs 60 days’ notice and cannot rest on two or fewer claims in 36 months not caused by the insured’s negligence (O.C.G.A. § 33-24-46).
• Commercial policies need 45 days’ notice of cancellation, nonrenewal or a premium increase over 15 percent, and workers’ compensation needs 75 days; a missing notice lets the insured buy 30 more days of coverage (O.C.G.A. § 33-24-47).
• Notices of cancellation (other than for nonpayment) and nonrenewal point the insured to the residual market: the Georgia Automobile Insurance Plan for auto, the FAIR Plan for residential property.