Christopher J. Knight Hawke McKeon & Sniscak, LLP BrAAAeaking up is hard to do: Agency Contract TERMINATIONS and “Act 143” UMBRELLA POLICY CANCELLATIONS: RECENT INSURANCE DEPARTMENT RAISE NEW QUESTIONS www.hmslegal.com Christopher J. Knight Hawke McKeon & Sniscak, LLP

DEPARTMENT DECISION DIGEST “That portion of an umbrella or excess liability policy providing liability coverage for an insured’s personal vehicles is subject to Act 68. Leonard/Geico, P12-12-016 (2013).”

Commissioner Decisions “The central purpose of both Act 68 and Act 205 is consumer protection relative to the issuance and continuation of these personal lines policies.”

Commissioner Decisions “Given the facts in the current case, the insurer met its burden of establishing that its actions did not violate Act 68 and that accordingly, its nonrenewal notice was effective to terminate the excess liability coverage. However, this is not because Act 68 is inapplicable to all umbrella/excess policies as argued by the insurer.”

Commissioner Decisions “Certain [excess and umbrella] policies fit within the definitions of Act 68. Such policies are personal lines polices covering the operation of non-commercial private passenger automobiles issued to natural persons and their households providing bodily injury and property damage liability coverage.”

Commissioner Decisions “In some circumstances, the consumer protections of Act 68 apply.” But adds: “Not all excess policies providing liability coverage for personal vehicles are subject to all of the requirements of Act 68.”

Commissioner Decisions “Strict compliance with both Act 68 and Act 205 when terminating the coverage is nonsensical in some ways and impossible in others. The Insurance Department has recognized this reality while maintaining the consumer protections by approving nonrenewal notices similar to the one used by [the company] in terminating the excess liability policy issued to the [insureds].”

Commissioner Decisions “[The Company] has complied with the statute by using a form similar to other Department-approved notice forms. Therefore, the Commissioner finds that [the Company’s] nonrenewal of [the] excess liability insurance policy does not violate Act 68.”

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