Amends existing law to revise provisions regarding cancellation and nonrenewal of certain policies.

LEGISLATURE OF THE STATE OF IDAHO Sixty-eighth Legislature Second Regular Session - 2026 IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 562 BY BUSINESS COMMITTEE AN ACT1 RELATING TO INSURANCE; AMENDING SECTION 41-1842, IDAHO CODE, TO REVISE PRO-2 VISIONS REGARDING NOTICE OF CANCELLATION AND NONRENEWAL; AMENDING SEC-3 TION 41-2401, IDAHO CODE, TO REVISE PROVISIONS REGARDING CANCELLATION4 AND NONRENEWAL; AND DECLARING AN EMERGENCY AND PROVIDING AN EFFECTIVE5 DATE.6

Be It Enacted by the Legislature of the State of Idaho:7

SECTION 1. That Section 41-1842, Idaho Code, be, and the same is hereby8 amended to read as follows:9 41-1842. COMMERCIAL INSURANCE -- CANCELLATION -- NONRENEWAL. (1) Ap-10 plicability. The provisions of this section apply only to:11 (a) Commercial property insurance policies;12 (b) Commercial liability insurance policies other than aviation and13 employer's liability insurance policies;14 (c) Commercial multiperil insurance policies.15 The provisions of this section do not apply to: block cancellations or16 block nonrenewals as provided in section 41-1841, Idaho Code, reinsurance,17 excess and surplus lines insurance, residual market risks, worker's compen-18 sation insurance, multistate location risks, policies subject to retrospec-19 tive rating plans, excess or umbrella policies and such other policies that20 are exempted by the director of the department of insurance.21 (2) Definitions. For the purposes of this section:22 (a) "Cancellation" means termination of a policy at a date other than23 its expiration date.24 (b) "Expiration date" means the date upon which coverage under a policy25 ends. It also means, for a policy written for a term longer than one (1)26 year or with no fixed expiration date, each annual anniversary date of27 such policy.28 (c) "Nonpayment of premium" means the failure or inability of the named29 insured to discharge any obligation in connection with the payment of30 premiums on a policy of insurance subject to this section, whether such31 payments are payable directly to the insurer or its agent or indirectly32 payable under a premium finance plan or extension of credit.33 (d) "Nonrenewal" or "not to renew" means termination of a policy at its34 expiration date.35 (e) "Renewal" or "to renew" means the issuance, or the offer so to is-36 sue, by an insurer of a policy succeeding a policy previously issued and37 delivered by the same insurer or an insurer within the same group of in-38 surers, or the issuance of a certificate or notice extending the term of39 an existing policy for a specified period beyond its expiration date.40 (3) Notice of cancellation.41

2 (a) Permissible cancellations. If coverage under a policy has not been1 in effect for sixty (60) days and the policy is not a renewal, cancella-2 tion of such policy shall be effected by mailing or delivering a written3 notice to the first-named insured at the last known mailing address4 shown on the policy at least thirty (30) days before the effective date5 of the cancellation, provided however, if such cancellation is for the6 reason stated in subsection (3)(a)(i) of this section, the time such7 cancellation may be effective following notice shall be as provided in8 subsection (3)(b)(i) of this section. A cancellation requested by the9 insured shall be effective on the later of the date requested by the in-10 sured or the date it is received by the insurer. After coverage has been11 in effect for more than sixty (60) days or after the effective date of a12 renewal policy, whichever is earlier, no insurer shall cancel a policy13 unless the cancellation is based on at least one (1) of the following14 reasons:15 (i) Nonpayment of premium.16 (ii) Fraud or material misrepresentation made by or with the17 knowledge of the named insured in obtaining the policy, continuing18 the policy, or in presenting a claim under the policy.19 (iii) Activities or omissions on the part of the named insured20 which increase any hazard insured against, including a failure to21 comply with loss control recommendations.22 (iv) Change in the risk which materially increases the risk of23 loss after insurance coverage has been issued or renewed includ-24 ing, but not limited to, an increase in exposure to regulation,25 legislation or court decision.26 (v) Loss or decrease of the insurer's reinsurance covering all or27 part of the risk or exposure by the policy.28 (vi) Determination by the director that the continuation of the29 policy would jeopardize an insurer's solvency or would place the30 insurer in violation of the insurance laws of this state or any31 other state.32 (vii) Violation or breach by the insured of any policy terms or33 conditions other than nonpayment of premium.34 (b) Notification of cancellation.35 (i) A notice of cancellation of insurance coverage by an in-36 surer shall be in writing and shall be mailed or delivered to the37 first-named insured at the last known mailing address as shown38 on the policy. Notices of cancellation based on subsections39 (3)(a)(ii) through (a)(vii) of this section shall be mailed or40 delivered at least thirty (30) sixty (60) days prior to the ef-41 fective date of the cancellation. Notices of cancellation for42 the reason stated in subsection (3)(a)(i) of this section without43 regard to when such cancellation shall be effected shall be mailed44 or delivered at least ten (10) days prior to the effective date of45 cancellation. If delivered via United States mail, the ten (10)46 day notification period shall begin to run five (5) days following47 the date of postmark. The notice shall state the effective date of48 the cancellation.49

3 (ii) The insurer shall provide the first-named insured with a1 written statement setting forth the reason(s) for the cancella-2 tion if: (1) the insured requests such a statement in writing;3 and (2) the named insured agrees in writing to hold the insurer4 harmless from liability for any communication giving notice of5 or specifying the reasons for a cancellation or for any statement6 made in connection with an attempt to discover or verify the ex-7 istence of conditions which would be a reason for a cancellation8 under this section.9 (4) Notice of nonrenewal.10 (a) An insurer may decline to renew a policy if the insurer delivers or11 mails to the first-named insured, at the last known mailing address,12 written notice that the insurer will not renew the policy. Such no-13 tice shall be mailed or delivered at least forty-five (45) sixty (60)14 days before the expiration date. If the notice is mailed less than15 forty-five (45) sixty (60) days before expiration, coverage shall re-16 main in effect until forty-five (45) sixty (60) days after notice is17 mailed or delivered. Earned premium for any period of coverage that18 extends beyond the expiration date shall be considered pro rata based19 upon the previous year's rate. For purposes of this section, the trans-20 fer of a policyholder between companies within the same insurance group21 is not a nonrenewal or a refusal to renew. In addition, changes in de-22 ductibles, changes in premium, and changes in the amount of insurance or23 reductions in policy limits or coverage shall not be deemed to be nonre-24 newals or refusals to renew. Notice of nonrenewal is not required if:25 (i) The insurer or a company within the same insurance group has26 offered to issue a renewal policy; or27 (ii) Where the named insured has obtained replacement coverage or28 has agreed in writing to obtain replacement coverage.29 (b) If an insurer provides the notice described in subsection (4) of30 this section and thereafter the insurer extends the policy for ninety31 (90) days or less, an additional notice of nonrenewal is not required32 with respect to the extension.33 (5) Notice of premium or coverage changes. An insurer shall mail or de-34 liver to the named insured, at the last known mailing address, written no-35 tice of a total premium increase greater than ten percent (10%) which is the36 result of a comparable increase in premium rates, changes in deductibles,37 reductions in limits, or reductions in coverages at least thirty (30) days38 prior to the expiration date of the policy. If the insurer fails to provide39 such thirty (30) day notice, the coverage provided to the named insured shall40 remain in effect until thirty (30) days after such notice is given or until41 the effective date of replacement coverage obtained by the named insured,42 whichever first occurs. For the purposes of this section, notice is consid-43 ered given thirty (30) days following date of mailing or delivery of the no-44 tice to the named insured. If the insured elects not to renew, any earned45 premium for the period of extension of the terminated policy shall be calcu-46 lated pro rata at the lower of the current or previous year's rate. If the47 insured accepts the renewal, the premium increase, if any, and other changes48 shall be effective on and after the first day of the renewal term.49

4 (6) Proof of notice. Proof of mailing of notice of cancellation, or1 of nonrenewal or of premium or coverage changes, to the named insured at the2 last known mailing address showing on the policy, shall be sufficient proof3 of notice.4 (7) Application, effective date and termination. The provisions of5 this section shall apply only to policies with coverage effective dates af-6 ter the effective date of this section.7 (8) Rules. The director may promulgate rules to implement the pro-8 visions of this section. Every rule promulgated within the authority9 conferred by this act shall be of temporary effect and shall become permanent10 only by enactment by statute at the regular session of the legislature first11 following adoption of the rule. Rules not approved in the above manner shall12 be rejected, null, void and of no force and effect on July 1, following sub-13 mission of the rules to the legislature.14

SECTION 2. That Section 41-2401, Idaho Code, be, and the same is hereby15 amended to read as follows:16 41-2401. STANDARD FIRE POLICY. (1) No fire insurer shall issue any17 fire insurance policy covering on property or interest therein in this18 state, other than on the form known as the New York standard as revised in19 1943, except as follows:20 (a) An insurer may print on or in its policy its name, location, date21 of incorporation, plan of operation, whether stock, mutual, reciprocal22 or organized under special charter provisions, and if mutual or recip-23 rocal whether on cash premium or assessment plan; and if it be a stock24 company, the amount of its paid up capital stock, the names of its offi-25 cers and agents, the number and date of the policy, and, if it is issued26 by an agent, the words, "this policy shall not be valid until counter-27 signed by the duly authorized agent of the company at ...."; and, if a28 mutual or reciprocal insurer, the policy must state the contingent lia-29 bility, if any, of its policyholders, members, or subscribers for pay-30 ment of losses and expenses not provided for by its cash funds.31 (b) An insurer may print or use in its policies printed forms of de-32 scription and specifications of the property insured.33 (c) An insurer insuring against damage by lightning may print in the34 clause enumerating the perils insured against the additional words,35 "also any damage by lightning whether fire ensues or not," and in the36 clause providing for an apportionment of loss in case of other insurance37 the words, "whether by fire, lightning or both."38 (d) A domestic insurer may print in its policies any provisions which it39 is authorized or required by the law to insert therein, and any foreign40 insurer may, with the approval of the director, so print any provision41 required by its charter or deed of settlement, or by the laws of its own42 state or country, not contrary to the laws of this state; but the direc-43 tor shall require any provision which, in his opinion modifies the con-44 tract of insurance in such a way as to affect the question of loss, to45 be appended to the policy by an endorsement or rider as hereinafter pro-46 vided.47 (e) The blanks in the standard form may be completed in print or in writ-48 ing.49

5 (f) An insurer may print upon policies issued in compliance with the1 preceding provisions of this section the words, "Idaho standard pol-2 icy."3 (g) An insurer may write upon the margin or across the face of the pol-4 icy, or write or print in type not smaller than nonpareil upon a slip,5 slips, rider or riders to be attached thereto, provisions adding to or6 relating to those contained in the standard form; and all such slips,7 riders, endorsements and provisions must be signed by the officers or8 agents of the insurer so using them.9 (h) If the policy be made by a mutual, reciprocal or other insurer hav-10 ing special regulations lawfully applicable to its organization, mem-11 bership, policies or contracts of insurance such regulations shall ap-12 ply to and form a part of the policy as the same may be written or printed13 upon, attached or appended thereto.14 (i) Every policy shall have legibly inscribed upon its face and filing15 back suitable words to designate whether the insurer making such insur-16 ance be a stock, mutual or reciprocal insurer, provided, that any in-17 surer organized under special charter provisions may so indicate upon18 its policy and may add a statement of the plan under which it operates in19 this state.20 (j) Every fire policy shall contain language that provides for a thirty21 (30) sixty (60) day written notice to the insured prior to cancellation22 of the policy, accompanied by the reason for the cancellation, provided23 however, that where cancellation is for the nonpayment of premium, at24 least ten (10) days' notice of such cancellation, accompanied by the25 reason for the cancellation, shall be given. If delivered via United26 States mail, such ten (10) day notification period shall begin to run27 five (5) days following the date of postmark. Proof of mailing of no-28 tice of cancellation, or of intention not to renew, or of reasons for29 cancellation or nonrenewal to the named insured at his address shall be30 sufficient proof of notice.31 (k) Every fire policy shall contain language that provides for a sixty32 (60) day written notice to the insured prior to nonrenewal of the policy33 accompanied by the reason for the nonrenewal. If the notice is mailed34 less than sixty (60) days before expiration, coverage shall remain in35 effect until sixty (60) days after notice is mailed or delivered. Proof36 of mailing of notice of intention not to renew to the named insured at37 his address shall be sufficient proof of notice.38 (k) (l) Every fire policy shall provide that it becomes effective at39 12:01 a.m. of the standard time of the place where the property covered40 by the insurance is located, on the effective date of the policy.41 (2) An insurer issuing the standard fire policy is authorized to affix42 thereto or include therein a written statement that the policy does not cover43 loss or damage caused by nuclear reaction, nuclear radiation or radioactive44 contamination, all whether directly or indirectly resulting from an insured45 peril under the policy; but nothing herein contained shall be construed to46 prohibit the attachment to any such policy of an endorsement or endorsements47 specifically assuming coverage for loss or damage caused by nuclear reac-48 tion, nuclear radiation or radioactive contamination.49

6 (3) The standard fire policy is not mandatory for vehicle insurance, or1 for marine insurance, or inland marine insurance as the same is defined pur-2 suant to section 41-1401(2), Idaho Code, or for insurance on growing crops.3 (4) Any policy or contract otherwise subject to the provisions of sub-4 section (1) hereof, which includes either on an unspecified basis as to the5 coverage or for a single premium coverage against the peril of fire and sub-6 stantial coverage against other perils need not comply with the provisions7 of subsection (1) hereof, provided:8 (a) Such policy or contract shall afford coverage, with respect to the9 peril of fire, not less than the coverage afforded by such standard fire10 policy,11 (b) The provisions in relation to mortgagee interests and obligations12 in such standard fire policy shall be incorporated therein without13 change,14 (c) Such policy or contract is complete as to all of its terms with-15 out reference to the standard form of fire insurance policy or any other16 policy, and17 (d) The director is satisfied that such policy or contract complies18 with the provisions hereof.19 (5) With respect to a commercial insurance policy, such standard fire20 insurance policy may exclude coverage for loss by fire or other perils in-21 sured against if the fire or other perils are caused directly or indirectly22 by terrorism. As used in this section, the term "terrorism" means a violent23 act or an act that:24 (a) Is dangerous to human life, property or infrastructure;25 (b) Results in damage within the United States, or outside of the United26 States in the case of an air carrier or vessel or the premises of a United27 States mission; and28 (c) Is committed by an individual or individuals, as part of an effort29 to coerce the civilian population of the United States or to influence30 the policy or affect the conduct of the United States government by co-31 ercion.32

SECTION 3. An emergency existing therefor, which emergency is hereby33 declared to exist, this act shall be in full force and effect on and after34 July 1, 2026.35