SLS 10RS-208 ORIGINAL
Page 1 of 2
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
Regular Session, 2010
SENATE BILL NO. 246
BY SENATOR MCPHERSON
INSURANCE POLICIES. Removes ten percent penalty on early cancellation of insurance
policies. (8/15/10)
AN ACT1
To amend and reenact R.S. 22:885(B), relative to cancellation of an insurance policy by the2
insured; to provide with respect to the prohibition by the insurer to assess a penalty3
against the insured for cancellation prior to the expiration of any policy; and to4
provide for related matters.5
Be it enacted by the Legislature of Louisiana:6
Section 1. R.S. 22:885(B) is hereby amended and reenacted to read as follows: 7
ยง885. Cancellation by the insured; surrender8
* * *9
B. Within thirty days following such cancellation the insurer shall pay to the10
insured or to the person entitled thereto as shown by the insurer's records, any11
unearned portion of any premium paid on the policy as computed on the customary12
short rate or as otherwise specified in the policy, and any unearned commission. In13
the event the automobile insurance policy is canceled for nonpayment to the finance14
company, any unearned premium and commission shall be computed on a pro rata15
basis. If no premium has been paid on the policy, the insured shall be liable to the16
insurer for premium for the period during which the policy was in force. Except for17 SB NO. 246
SLS 10RS-208 ORIGINAL
Page 2 of 2
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
surplus line insurers, any assessment of a monetary penalty by an insurer1
against an insured as a result of the insured's cancellation prior to the2
expiration of any policy is prohibited.3
* * *4
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Cheryl Horne.
DIGEST
Present law permits an insured to cancel and surrender any policy which is cancellable at the
insured's option. Requires the insurer to pay to the insured any unearned portion of any
premium paid on the policy as computed on the customary short rate or as specified in the
policy, and any unearned commission.
Proposed law retains present law but adds provisions that, except for surplus line insurers,
the assessment of any monetary penalty by an insurer against the insured who elects to
cancel a policy prior to its expiration is prohibited.
Effective August 15, 2010.
(Amends R.S. 22:885(B))