2010 New York Code
BNK - Banking
Article 12-B - (554 - 578) INSURANCE PREMIUM FINANCE AGENCIES
576 - Cancellation of insurance contract upon default.

§ 576.  Cancellation  of  insurance  contract  upon default. 1. When a
  premium  finance  agreement  contains  a  power  of  attorney  or  other
  authority  enabling  the  premium finance agency to cancel any insurance
  contract or contracts listed in the agreement, the insurance contract or
  contracts shall not be cancelled unless such cancellation is effectuated
  in accordance with the following provisions:
    (a) Not less than ten days written  notice  shall  be  mailed  to  the
  insured at his last known address as shown on the records of the premium
  finance  agency,  of  the intent of the premium finance agency to cancel
  the insurance contract unless the default is cured within such  ten  day
  period  and that at least three days for mailing such notice is added to
  the ten day notice. A copy of the notice of intent to cancel shall  also
  be mailed to the insurance agent or broker.
    (b)   Service  of  the  notice  of  intent  to  cancel  or  notice  of
  cancellation by mail shall be effective provided that  the  notices  are
  mailed  to  the  insured's last known address as shown on the records of
  the premium finance agency. The records of the  premium  finance  agency
  shall be presumptive evidence as to the correctness of such address.
    (c)  If  the  insurance  contract  or  contracts provide motor vehicle
  liability insurance, every such notice of cancellation shall include  in
  type or print, of which the face shall not be smaller than twelve point,
  a  statement  that  proof  of  financial  security  is  required  to  be
  maintained continuously throughout the registration period and a  notice
  prescribed by the commissioner of motor vehicles indicating the punitive
  effects  of  failure  to maintain continuous proof of financial security
  and actions which may be taken by the insured to avoid punitive effects.
    (d) After the notice in paragraph (a) above has expired,  the  premium
  finance  agency  may thereafter, in the name of the insured, cancel such
  insurance contract by mailing to the insurer a  notice  of  cancellation
  stating when thereafter the policy shall be cancelled, and the insurance
  contract  shall  be cancelled as if such notice of cancellation had been
  submitted by the insured himself, but without requiring  the  return  of
  the  insurance contract. A copy of the notice of cancellation shall also
  be mailed to the insured.
    (e) All statutory, regulatory and contractual  restrictions  providing
  that  the insured may not cancel his insurance contract unless he or the
  insurer first satisfies such restrictions by giving a prescribed  notice
  to  a  governmental  agency, the insurance carrier or an individual or a
  person designated to receive such notice for said  governmental  agency,
  insurance  carrier  or  individual,  shall  apply  where cancellation is
  effected under the provisions of this  section.  The  insurer  shall  in
  accordance with said prescribed notice where it is required to give such
  notice  in  behalf  of  itself  or  the  insured  give  notice  to  such
  governmental agency, person or individual and  it  shall  determine  and
  calculate  the  effective  date of cancellation from the day it receives
  the copy of the notice of cancellation from the premium finance  agency;
  provided  (1)  where  the aforementioned prescribed notice requires that
  more than ten days' notice be given, the prescribed time for such notice
  shall control as to the effective date of cancellation,  and  (2)  where
  less  than ten days' notice is required by the aforementioned prescribed
  notice the effective date of cancellation shall not be prior to the date
  contained in the copy of the cancellation notice  sent  by  the  premium
  finance agency.
    Notwithstanding  that  certain provisions of section ninety-three-c of
  the vehicle and traffic law as added by chapter six  hundred  fifty-five
  of  the  laws  of  nineteen hundred fifty-six and its successor statute,
  section three hundred thirteen  of  the  vehicle  and  traffic  law,  as
  enacted  by  chapter  seven hundred seventy-five of the laws of nineteen

hundred fifty-nine are consistent with certain of the provisions of this
  article, those sections shall  not  be  applicable  to  concellation  of
  insurance  by  a  premium  finance  agency  under the provisions of this
  article.
    (f)  The  insurer  or  insurers within a reasonable time not to exceed
  sixty days after  the  effective  date  of  cancellation,  shall  return
  whatever gross unearned premiums are due under the insurance contract or
  contracts  on  a  pro  rata  basis to the premium finance agency for the
  benefit of the insured or insureds.  However, upon such cancellation the
  insurer or insurers shall be entitled to retain a minimum earned premium
  on the policy of ten percent of the  gross  premium  or  sixty  dollars,
  whichever is greater.
    (g)  Upon  the  cancellation of motor vehicle liability insurance by a
  premium finance agency, unless a notice  of  such  cancellation  is  not
  required  by  the  vehicle  and traffic law or by the regulations of the
  commissioner of motor vehicles, a notice of such cancellation under  the
  provisions  of  this  article, shall be filed by the insurer or insurers
  with the commissioner of motor  vehicles  not  later  than  thirty  days
  following the effective date of such cancellation where such a filing is
  required  pursuant  to section ninety-three-c of the vehicle and traffic
  law, as added by chapter six hundred fifty-five of the laws of  nineteen
  hundred  fifty-six  or  its  successor  statute,  section  three hundred
  thirteen of the vehicle and traffic law  as  enacted  by  chapter  seven
  hundred seventy-five of the laws of nineteen hundred fifty-nine.
    2.  The  provisions  of  subdivision one relating to cancellation by a
  premium finance agency of an insurance contract and  the  return  by  an
  insurer of unearned premiums to the premium finance agency also apply to
  the  surrender  by  a  premium  finance  agency of an insurance contract
  providing life insurance and the payment by  the  insurer  of  the  cash
  value  of  the  contract  to the premium finance agency, except that the
  insurer may require the surrender of the insurance contract.
    3. In this section, unless the context otherwise requires:
    (a) "Premium finance agency" includes (1) a lending institution making
  a loan for the purpose of financing  insurance  premiums  in  accordance
  with  the applicable provisions of other laws authorizing and regulating
  the making of loans by the lending institution, and (2)  a  bank,  or  a
  sales finance company licensed under article eleven-b of this chapter;
    (b)  "Premium  finance  agreement"  includes  (1) a promissory note or
  other written agreement or obligation evidencing or securing such a loan
  by a lending institution,  and  (2)  a  retail  instalment  contract  or
  obligation held by a bank, or a sales finance company so licensed; and
    (c)  "Insured"  includes  (1)  each borrower or other obligor under or
  upon  a  promissory  note  or  other  written  agreement  or  obligation
  evidencing  or  securing  such  a loan by a lending institution, and (2)
  each buyer under a retail instalment contract or obligation  held  by  a
  bank, or a sales finance company so licensed.