The car in question was owned ,but not registered, by the insured. The insurer attempted to put the assigned risk policyholder on notice of cancellation with the following language: “As per section 18:2:3 violations of conditions on which insurance was issued. No insurable interest in the 2005 Chrysler.” The cancellation was ruled defective in Matter of Progressive Specialty Ins. Co. v New York Cent. Mut. Ins. Co. (What is Section 18:2:3 of the rules? What is an “insurable interest”?)
Assigned risk auto insurance policies issued pursuant to the New York Automobile Insurance Plan cannot be viewed as private, contractual relationships, but are special relationships subject to immediate oversight and supervision by the Superintendent of Insurance. A notice of cancellation under the NYAIP must set forth clear, specific statements as to the grounds for cancellation so that the insured might cure the same. The relevant inquiry is whether the notice given was adequate to advise an insured not versed in the terminology of the insurance trade of the specific reason for cancelling coverage. The fact that the insured is able to gather from a cryptic cancellation notice the reasons for its issuance does not relieve the insurer of its duty to specify.
“Section 18:2:3 of the rules”: NYAIP rule that concerns cancellation of a policy by an insurer, and permits a cancellation when the insured “has violated any of the terms or conditions upon the basis of which the insurance was issued.”
“Insurable Interest”: the need for actual protection exists: the auto policy holder must stand to suffer a direct financial loss if an accident does occur.
Link to the decision: http://www.nycourts.gov/reporter/pdfs/2012/2012_33730.pdf