What Type of Notice is an Insurance Company Required to Provide Prior to Cancellation, Non-Renewal, or Issuance of Substantial Changes in a Policy?

Co-authored by: Alison Gillotti and Cileena Terra

The Connecticut Insurance Commissioner has issued several regulations interpreting Conn. Gen. Stat. § 38a-323, which provides notice requirements for cancellation, non-renewal, and substantial changes of insurance policy coverages. In 2009, the Commissioner issued PC-66 which stated that the advance notice requirements contained in Conn. Gen. Stat. § 38a-323 applied to substantial changes in coverage as well as cancellation and non-renewal of policies. Recently, the Commissioner issued PC-88 which confirms that Conn. Gen. Stat. § 38a-323 was amended in 2017 to codify the interpretation described in PC-66. Additionally, PC-88 states that the insurer may provide notice electronically with the insured’s consent.

In accordance with these regulations and statutes, insurance companies in Connecticut are required to provide the insured with advance notice of non-renewal or cancellation along with a specific statement of the reasons for the action. Routine issuance of non-renewal or cancellation notices or the use of non-specific or non-existent reasons is improper and fails to provide the statutorily required notice. If the insurer intends to continue to insure a risk under terms and conditions that are less favorable than previously provided under the existing policy, the insurer must notify the insured by sending a conditional non-renewal notice. Notice shall clearly state or be accompanied by a statement clearly identifying any reduction in coverage limits or any coverage provisions added or revised that reduce coverage or increase deductibles under the renewal policy.

Any reduction of coverage, including renewal under terms less favorable to the insured, requires a conditional renewal notice. Less favorable conditions of renewal include an increase in the policy’s deductible, a decrease in the limits of the coverage, or a new exclusion or deletion of coverage. If an insurer fails to provide the insured with the required notice of non-renewal or with a conditional renewal notice, the insured is entitled to a renewal policy for a term of not less than one year on the same terms as the expiring policy, not including the premium.

Notice of the non-renewal must be given to the insured 60 days in advance of the effective non-renewal date for commercial and personal policies. Compliance with minimum notice standards is determined by counting the number of calendar days beginning with the first day after the date of mailing of the transaction up to, but not including, the date the transaction is effective. The date of mailing is evidenced by a) the postmark date on the envelope; b) a copy of the completed receipt that it was sent by registered or certified mail; or c) a certificate of mailing from the U.S. Post Office. If the transaction is delivered in person by the insurer to the insured, this should be evidenced by a signed receipt from the insured.[1]

Finally, PC-88 modified the existing regulations to allow electronic notice. Pursuant to these changes, notice of cancellation or non-renewal or renewal billing can now be sent by electronic means if the insurer and insured so agree. In such cases, insurers are expected to retain proof the insured agreed to such means of delivery as well as evidence of delivery to show compliance with the existing advance notice requirements.

[1] Property/Casualty Bulletin PC-88, 2019 WL 3291156 (CT INS BUL)

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