N.Y. Insurance Law § 3428: Cancellation of insurance contracts; return premiums; financed insurance premiums

§ 3428. Cancellation of insurance contracts; return premiums; financed

insurance premiums. (a) Except as provided in subsection (e) of this

section, whenever an insurance contract made or issued in this state is

cancelled or otherwise terminated by the insured before the expiration

thereof in accordance with the terms of such contract, the earned

premium to be retained by the insurer shall be determined by the

applicable rate filing, if any, otherwise in accordance with the

provisions of such contract.

(b) No authorized insurer or its agent may knowingly accept payment of

premiums, for an insurance contract made or issued in this state,

advanced under a premium finance agreement as defined in section five

hundred fifty-four of the banking law by or for any person, firm,

corporation or association who is not authorized either to engage in the

business of a premium finance agency or to make loans for the purpose of

financing insurance premiums in accordance with the banking law, or to

include an amount for insurance in a retail instalment contract or

obligation in accordance with the personal property law.

(c) No authorized insurer shall honor a power of attorney or other

authority to cancel an insurance contract executed by an insured in

connection with insurance premium financing, except in accordance with

section five hundred seventy-six of the banking law. Voluntary

advancement of a premium to the insurer by an agent or broker, where no

additional charge over and above the premium has been imposed upon the

insured and the insured has not signed a note or other obligation to pay

the premium shall not be construed to be within the meaning of insurance

premium finance agreement as defined in article twelve-b of the banking

law.

(d) Whenever an insurance contract the premiums for which are advanced

under a premium finance agreement as defined in section five hundred

fifty-four of the banking law, is cancelled, the insurer or insurers

within a reasonable time not to exceed sixty days after the effective

date of the cancellation shall return whatever gross unearned premiums

are due under the insurance contract or contracts to the bank, lending

institution, premium finance agency or sales finance company, for the

benefit of the insured.

(e) Whenever an insurance contract, issued by or on behalf of an

authorized insurer or insurers, the premiums for which are advanced

under a premium finance agreement as defined in section five hundred

fifty-four of the banking law, is cancelled, upon such cancellation the

authorized insurer or insurers shall return the gross unearned premiums

due under the insurance contract or contracts, on a pro rata basis to

the bank, lending institution, premium finance agency or premium finance

company, for the benefit of the insured, provided, however, that such

authorized 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.