SLS 10RS-208 ENGROSSED
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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. Prohibits certain assessments of a monetary penalty by an insurer
against an insured as a result of the insured's cancellation of a policy prior to the expiration
of the policy. (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 pro rata rate or as otherwise specified in the policy, and any unearned13
commission. In the event the automobile a personal line or commercial line14
insurance policy is canceled for nonpayment to the finance company, any unearned15
premium and commission shall be computed on a pro rata basis. If no premium has16
been paid on the policy, the insured shall be liable to the insurer for premium for the17 SB NO. 246
SLS 10RS-208 ENGROSSED
Page 2 of 2
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
period during which the policy was in force. Except for surplus line insurers, any1
assessment of a monetary penalty by an insurer against an insured as a result2
of the insured's cancellation prior to the expiration of any policy is prohibited.3
* * *4
The original instrument was prepared by Cheryl Horne. The following digest,
which does not constitute a part of the legislative instrument, was prepared
by Thomas L. Tyler.
DIGEST
McPherson (SB 246)
Present law permits an insured to cancel and surrender any policy which can be canceled 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 requires that the payment be computed on the customary pro rata rate.
Present law provides that if an automobile policy is canceled for nonpayment to a finance
company, then the unearned premium and commission be computed on a pro rata basis.
Proposed law provides that if a personal line or commercial line policy is canceled, any
unearned premium and commission be computed on a pro rata basis.
Proposed law provides 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))
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Insurance to the original
bill.
1. Adds provision that payment on any unearned premium be computed on the
customary pro rata rate.