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§ 23-405. Return of unearned premiums after cancellation of insurance contract

West's Annotated Code of MarylandInsuranceEffective: July 1, 2013

West's Annotated Code of Maryland
Insurance (Refs & Annos)
Title 23. Premium Financing
Subtitle 4. Cancellation of Insurance Contract Under Power of Attorney (Refs & Annos)
Effective: July 1, 2013
MD Code, Insurance, § 23-405
§ 23-405. Return of unearned premiums after cancellation of insurance contract
Currentness
In general
(a)(1) Notwithstanding any other provision of this article, when an insurance contract is canceled, whether by a premium finance company, an insurer, or an insured, the insurer shall return any gross unearned premiums that are due under the insurance contract, computed pro rata, and excluding any expense constant, administrative fee, or any nonrefundable charge filed with and approved by the Commissioner, to the premium finance company for the account of the insured within a reasonable time not exceeding 45 days after:
(i) receipt by the insurer of a notice of cancellation from the premium finance company or the insured;
(ii) the date the insurer cancels the insurance contract; or
(iii) with respect to commercial automobile, fire, or liability insurance, completion of any audit necessary to determine the amount of premium earned while the insurance contract was in force.
(2) An audit under paragraph (1)(iii) of this subsection shall be performed within 45 days after the insurer receives the notice of cancellation.
Refund of unearned premiums exceeding amount due
(b)(1) After the insurer returns to the premium finance company any gross unearned premiums that are due under the insurance contract, the premium finance company shall refund to the insured the amount of unearned premium that exceeds any amount due under the premium finance agreement.
(2) A premium finance company need not make a refund to the insured if the amount of the refund would be less than $5.
Return of unearned premiums to person other than premium finance company
(c) Whenever an insurer, after receiving notice of the existence of a premium finance agreement, returns any unearned premiums to a person other than the premium finance company named in the premium finance agreement, the insurer shall be directly responsible to the premium finance company for all unearned premiums arising from the cancellation of the premium finance agreement.
Failure of insurer to return premium
(d)(1) An insurer that fails to return any premium required under this section shall pay interest of 1% per month on the unearned premium that has not been returned until the unearned premium is returned.
(2) Any payment under this subsection to the premium finance company shall be credited to the account of the insured.
Deductions from returned premiums prohibited
(e) An insurer may not deduct from any return premium any amount owed to the insurer by the insured under any other insurance contract.
Gross unearned commissions returned to insurer
(f) An insurance producer shall return any gross unearned commissions, calculated as provided in subsection (a)(1) of this section, to an insurer within a reasonable period of time as required by the insurer.

Credits

Added by Acts 1996, c. 11, § 1, eff. Oct. 1, 1997. Amended by Acts 1997, c. 273, § 1, eff. Oct. 1, 1997; Acts 1997, c. 708, § 1, eff. Oct. 1, 1997; Acts 1998, c. 716, § 1, eff. Oct. 1, 1998; Acts 1999, c. 677, § 1, eff. Oct. 1, 1999; Acts 2001, c. 219, § 1, eff. Oct. 1, 2001; Acts 2001, c. 731, § 9, eff. July 2, 2001; Acts 2002, c. 19, § 5, eff. April 9, 2002; Acts 2013, c. 334, § 1, eff. July 1, 2013.
Formerly Art. 48A, § 486G.
MD Code, Insurance, § 23-405, MD INSURANCE § 23-405
Current through legislation effective through April 9, 2023, from the 2024 Regular Session of the General Assembly. Some statute sections may be more current, see credits for details.
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