WILLIAM DONALD SCHAEFER, Governor

Ch. 328

(2)     (i) Except as provided in subparagraph (ii) of this paragraph, if the
insurer receives a copy of a cancellation notice issued under subsection (c) of this section
more than 30 days after the effective date of cancellation specified in the notice, the
insurance contract shall be cancelled effective on the date the notice is received by the
insurer.

(ii) If the premium finance company fails to meet the 30-day notice
requirement under this subsection because the policyholder's installment payment is
dishonored after the effective date specified in the notice of cancellation:

1.       The dishonored payment is ineffective; and

2.       The insurer may waive the 30-day notice requirement.

(3)     The cancellations made under this subsection shall be made as if the
notice of cancellation had been submitted by the insured, but without requiring the return
of the insurance policy.

(e)     All statutory, regulatory, and contractual restrictions providing that the
insured may not cancel his insurance contract unless notice is given to a governmental
agency, mortgagee or other third party shall apply where cancellation is effected under
the provisions of this section. The insurer, in accordance with said prescribed notice
where it is required to give such notice in behalf of itself or the insured, shall give notice
to such governmental agency, mortgagee or other person; 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 company.

(f)      (1) (I) Whenever an insurance contract is cancelled in accordance with
this section, the insurer shall return whatever gross unearned premiums are due under
the contract, exclusive of agents' earned commissions, to the premium finance company
for the account of the insured or insureds within a reasonable time not to exceed 60 days
after the receipt by the insurer of the notice of cancellation, or after the completion of
any payroll audit necessary to determine the amount of premium earned while the policy
was in force.

(II) The audit shall be performed within 60 days after the receipt by
the insurer of the notice of cancellation.

(2) (I) UPON THE RETURN BY AN INSURER TO A PREMIUM FINANCE
COMPANY OF ANY GROSS UNEARNED PREMIUM DUE UNDER AN INSURANCE
CONTRACT, THE PREMIUM FINANCE COMPANY SHALL REFUND TO THE INSURED
THE AMOUNT OF UNEARNED PREMIUM THAT IS IN EXCESS OF ANY AMOUNT DUE
UNDER THE PREMIUM FINANCE AGREEMENT.

(II)     A PREMIUM FINANCE COMPANY IS NOT REQUIRED TO MAKE A
REFUND TO THE INSURED IF THE AMOUNT OF THE REFUND WOULD BE LESS THAN

$5.

(III)   WHENEVER AN INSURANCE CONTRACT IS CANCELED UNDER
THIS SECTION, A PREMIUM FINANCE COMPANY MAY NOT COLLECT FROM AN
INSURED ANY AMOUNT DUE UNDER THE PREMIUM FINANCE AGREEMENT THAT IS
LESS THAN $5.

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