6-1415. Cancellation of insurance contract upon default

A. If a premium finance agreement contains a power of attorney enabling the licensee to cancel any insurance contract or contracts listed in the agreement, the insurance contract or contracts shall not be cancelled by the licensee unless the cancellation is in accordance with this section.

B. The licensee shall mail written notice to the insured at his last known address as shown on the records of the licensee not less than ten days in advance to notify the insured of its intent to cancel the insurance contract unless the default is cured within the ten day period.

C. After expiration of the ten day period, the licensee may cancel the insurance contract or contracts by mailing a notice of cancellation to the insurer. The insurance contract shall be cancelled as if the notice of cancellation had been submitted by the insured himself but without requiring the return of the insurance contract. The licensee shall also mail a notice of cancellation to the insured at his last known address as shown on the records of the licensee. If the provisions of subsection D do not apply to the cancellation of coverage, the effective date of cancellation under this subsection is the date on which the licensee mails a notice of cancellation to the insurer and the insured. The licensee shall maintain a log or any other record that documents compliance with this section.

D. If statutory, regulatory and contractual restrictions provide that the insurance contract may not be cancelled unless notice is given to a governmental agency, mortgagee or other third party, the insurer shall give the prescribed notice on behalf of itself or the insured to any governmental agency, mortgagee or other third party on or before the fifth business day after the day it receives the notice of cancellation from the licensee. The effective date of cancellation under this subsection shall be as stated in the insurance policy. The insurer shall maintain a log or any other record that documents its receipt of any notice from a licensee as provided by this section.