Chapter 631

631.36(5) (5) Renewal with altered terms.

631.36(5)(a) (a) General.

631.36(5)(a)1. 1. Subject to pars. (b) and (d), for any policy other than a policy described in subd. 2., if the insurer offers or purports to renew the policy but on less favorable terms or at higher premiums, the new terms or premiums take effect on the renewal date if the insurer sent by 1st class mail or delivered to the policyholder notice of the new terms or premiums at least 60 days prior to the renewal date. If the insurer notifies the policyholder within 60 days prior to the renewal date, the new terms or premiums do not take effect until 60 days after the notice is mailed or delivered, in which case the policyholder may elect to cancel the renewal policy at any time during the 60-day period. The notice shall include a statement of the policyholder’s right to cancel. If the policyholder elects to cancel the renewal policy during the 60-day period, return premiums or additional premium charges shall be calculated proportionately on the basis of the old premiums. If the insurer does not notify the policyholder of the new premiums or terms as required by this subsection prior to the renewal date, the insurer shall continue the policy for an additional period of time equivalent to the expiring term and at the same premiums and terms of the expiring policy, except as permitted under sub. (2) or (3).

631.36(5)(a)2. 2. Subject to pars. (b) and (d), for personal lines property and casualty policies, if the insurer offers or purports to renew the policy but on less favorable terms or at higher premiums, the new terms or premiums take effect on the renewal date if the insurer sent by 1st class mail or delivered to the policyholder notice of the new terms or premiums at least 45 days prior to the renewal date. If the insurer notifies the policyholder within 45 days prior to the renewal date, the new terms or premiums do not take effect until 45 days after the notice is mailed or delivered, in which case the policyholder may elect to cancel the renewal policy at any time during the 45-day period. The notice shall include a statement of the policyholder’s right to cancel. If the policyholder elects to cancel the renewal policy during the 45-day period, return premiums or additional premium charges shall be calculated proportionately on the basis of the old premiums. If the insurer does not notify the policyholder of the new premiums or terms as required by this subsection prior to the renewal date, the insurer shall continue the policy for an additional period of time equivalent to the expiring term and at the same premiums and terms of the expiring policy, except as permitted under sub. (2) or (3).

631.36(5)(b) (b) Exception. Paragraph (a) does not apply if the only change that is adverse to the policyholder is a premium increase and if either of the following applies to the premium increase:

631.36(5)(b)1. 1. The premium increase is less than 25 percent and is generally applicable to the class of business to which the policy belongs.

631.36(5)(b)2. 2. The premium increase results from a change based on action by the insured that alters the nature or extent of the risk insured against, including but not limited to a change in the classification or the units of exposure or increased policy coverage.

631.36(5)(c) (c) Anniversary alteration.

631.36(5)(c)1. 1. Subject to par. (d), for any policy other than a policy described in subd. 2., an insurer may alter the terms or premium of a policy issued for a term longer than one year or for an indefinite term on the anniversary date only if notice of less favorable terms or premiums is sent by 1st class mail or delivered to the policyholder at least 60 days prior to the anniversary date. If the insurer notifies the policyholder within 60 days prior to the anniversary date, the new terms or premiums do not take effect until 60 days after the notice is mailed or delivered, in which case the policyholder may elect to cancel the policy at any time during the 60-day period. The notice shall include a statement of the policyholder’s right to cancel. If the policyholder elects to cancel the policy during the 60-day period, return premiums or additional premium charges shall be calculated proportionately on the basis of the old premiums. If the insurer does not notify the policyholder of the new premiums or terms as required by this subsection prior to the anniversary date, the insurer shall continue the policy until the next anniversary date or the renewal date, whichever is earlier, at the same premiums and terms as for the previous period, except as permitted under sub. (2) or (3).

631.36(5)(c)2. 2. Subject to par. (d), for personal lines property and casualty policies, an insurer may alter the terms or premium of a policy issued for a term longer than one year or for an indefinite term on the anniversary date only if notice of less favorable terms or premiums is sent by 1st class mail or delivered to the policyholder at least 45 days prior to the anniversary date. If the insurer notifies the policyholder within 45 days prior to the anniversary date, the new terms or premiums do not take effect until 45 days after the notice is mailed or delivered, in which case the policyholder may elect to cancel the policy at any time during the 45-day period. The notice shall include a statement of the policyholder’s right to cancel. If the policyholder elects to cancel the policy during the 45-day period, return premiums or additional premium charges shall be calculated proportionately on the basis of the old premiums. If the insurer does not notify the policyholder of the new premiums or terms as required by this subsection prior to the anniversary date, the insurer shall continue the policy until the next anniversary date or the renewal date, whichever is earlier, at the same premiums and terms as for the previous period, except as permitted under sub. (2) or (3).

631.36(5)(d) (d) Estimate. An insurer may give notice under par. (a) or (c) of a new premium by stating the actual amount or percentage increase to be charged. If the insurer cannot reasonably determine the actual amount or percentage increase 45 days prior to the renewal or anniversary date for a policy subject to par. (a) 2. or (c) 2., or 60 days prior to the renewal or anniversary date for any other policy, the notice shall include a good faith estimate of the increase based on information that the insurer can reasonably obtain. If an estimate is stated, the insurer shall renew or continue the policy at a premium that does not exceed the increase stated in the notice except as permitted under par. (b).

631.36(6) (6) Information about grounds. A notice of cancellation or nonrenewal under sub. (2) (b) or (4) shall state with reasonable precision the facts on which the insurer’s decision is based. No such notice is effective unless it so states the facts.

631.36(7) (7) Cancellation or nonrenewal notice.

631.36(7)(a) (a) Except as provided in par. (b), notice of cancellation or nonrenewal required under sub. (2) (b) or (4) is not effective unless the notice contains adequate instructions to the policyholder for applying for insurance through a risk-sharing plan under ch. 619, if a risk-sharing plan exists under ch. 619 for the kind of coverage being canceled or nonrenewed.

631.36(7)(b) (b) Paragraph (a) does not apply to a notice of cancellation or nonrenewal issued by the mandatory health care liability risk-sharing plan established under s. 619.04.

631.36(8) (8) Cancellation for nonpayment of premium. Subsections (6) and (7) do not apply if the ground for cancellation or nonrenewal is nonpayment of the premium and if the notice so states.

631.36(9) (9) Immunity. There is no liability on the part of and no cause of action of any nature arises against any insurer, its authorized representatives, its agents, its employees, or any firm, person or corporation furnishing to the insurer information relating to the reasons for cancellation or nonrenewal, for any statement made by them in complying or enabling the insurer to comply with this section, or for the provision of information pertaining thereto.

631.36 History History: 1975 c. 375, 421; 1977 c. 444 s. 11; 1979 c. 102; 1979 c. 110 s. 60 (11); 1981 c. 83; 1985 a. 335; 1989 a. 187, 332, 359; 1991 a. 315; 1995 a. 259; 1997 a. 27; 1999 a. 9; 2007 a. 168; 2013 a. 20; 2017 a. 241; 2019 a. 155.

631.36 Cross-reference Cross-reference: See also s. Ins 6.77, Wis. adm. code.

631.36 Annotation Sub. (2) (c) applies to cancellation of a binder. Terry v. Mongin Insurance Agency, 105 Wis. 2d 575, 314 N.W.2d 349 (1982).

631.36 Annotation A policy did not lapse as the result of the insured’s failure to pay a renewal premium before the policy’s expiration date when the insurer failed to notify the insured of the nonrenewal or of the premium due. Sausen v. American Family Mutual Insurance Co., 121 Wis. 2d 653, 360 N.W.2d 565 (Ct. App. 1984).

631.36 Annotation This section governs cancellation and recision of insurance contracts. WHEDA v. Verex Assurance, Inc., 166 Wis. 2d 636, 480 N.W.2d 490 (1992).

631.36 Annotation The state was the policyholder of its employee group health policy and it, not the insureds, was entitled to notice of policy changes under sub. (5). Schaefer v. Physicians Plus Insurance Corp., 174 Wis. 2d 488, 497 N.W.2d 776 (Ct. App. 1993).

631.36 Annotation Sub. (5) requires notice of policy changes effected by the insurer, not changes effected by the legislature or the courts. Roehl v. American Family Mutual Insurance Co., 222 Wis. 2d 136, 585 N.W.2d 893 (Ct. App. 1998), 98-1207.

631.36 Annotation Under former sub. (5), 2017 stats., if an insurer offers to renew a policy on less favorable terms within 60 days of the renewal date, the insurer must inform the insured that the terms do not become effective until 60 days after the renewal is sent and that the insured has the same 60 days to cancel. Failure to comply requires the insurer to continue the prior policy terms for an additional period equal to the term of the expiring policy. Hanson v. Prudential Property & Casualty Insurance Co., 224 Wis. 2d 356, 591 N.W.2d 619 (Ct. App. 1999), 98-0692.

631.36 Annotation Sub. (5) does not apply to reducing clause changes that are not initiated by the insurer but come into effect by statutory change, even when the insurer gratuitously sends a renewal notice discussing the altered terms. Sukala v. Heritage Mutual Insurance Co., 2000 WI App 266, 240 Wis. 2d 65, 622 N.W.2d 457, 99-1339.

631.36 Annotation An insurer may effectively eliminate the policyholder’s right to renewal if it provides valid notice of nonrenewal. If notice is not provided, the policyholder retains this right, and barring any application of an exception under sub. (4) (b), it may exercise its right to a renewal. Magyar v. Wisconsin Health Care Liability Insurance Plan, 2001 WI 41, 242 Wis. 2d 491, 625 N.W.2d 291, 98-3289.

631.36 Annotation Sub. (2) (c) contemplates two separate and distinct forms of notifying an insured of cancellation: postal mailing or personal delivery other than mailing. When the insurer informed the insured of its cancellation by mail, the trial court correctly measured the effective date of cancellation from the date of mailing. Schmitz v. Fire Insurance Exchange, 2005 WI App 76, 280 Wis. 2d 560, 696 N.W.2d 238, 04-1545.

631.36 Annotation Under the facts of this case, a policy “re-issued” in October 2013, and cancelled in December 2013, constituted a renewed policy that under sub. (2) the insurer was prohibited from cancelling in midterm absent specifically identified reasons. When the plaintiff and the insurer had engaged in a long series of policy cancellations and reinstatements, all the reissued policies contained the same policy number and a new declaration sheet listing forms and endorsements already in the plaintiff’s possession, and the final policy stated, in bold capital letters, “POLICY RE-ISSUED,” the insurer’s conduct would have led a reasonable insured to believe that the October 2013 policy was a renewed policy stemming back to the initial policy issued in 2010. LIR Investments LLC v. Stokelbusch, 2017 WI App 63, 378 Wis. 2d 91, 902 N.W.2d 801, 16-1386.

631.37 631.37 Special cancellation provisions. The following cancellation provisions apply to the policies specified, whether or not s. 631.36 is also applicable to them.

631.37(1) (1) Cancellation upon request of premium finance company. Section 138.12 (12) applies to cancellation on request of a premium finance company.

631.37(2) (2) Cancellation upon request of creditor. Section 424.303 applies to cancellation upon request of a creditor.

631.37(3) (3) Worker’s compensation insurance. Sections 102.31 (2) and 102.315 (10) apply to the termination of worker’s compensation insurance.

631.37(3m) (3m) Health care liability insurance. Section 655.24 (2) (b), (3) and (4) applies to the termination of a health care liability insurance policy.

631.37(4) (4) Special limitations on cancellation.

631.37(4)(a) (a) School bus insurance. Section 121.53 (4) applies to school bus insurance.

631.37(4)(b) (b) Insurance on common carriers. Section 194.41 (2) applies to insurance on common carriers.

631.37(4)(c) (c) Driver education motor vehicles. Section 341.267 (6) applies to motor vehicles used for driver education.

631.37(4)(d) (d) Insurance of juveniles. Section 343.15 (4) (a) applies to motor vehicle policies covering juveniles as described therein.

631.37(4)(e) (e) Motor vehicle liability policy. Section 344.34 applies to motor vehicle liability policies certified under s. 344.31.

631.37(4)(f) (f) Health care liability policy. Section 655.25 applies to insurance issued by the mandatory health care liability risk-sharing plan established under s. 619.04.

631.37(4)(g) (g) Warranty reimbursement insurance policy. Section 632.185 (2) (e) applies to warranty reimbursement insurance policies.

631.37 History History: 1979 c. 102 ss. 165, 166; 1985 a. 83; 1989 a. 187; 1991 a. 315; 1993 a. 363; 2003 a. 302; 2007 a. 185; 2009 a. 245.

631.39 631.39 Renewals in affiliates.

631.39(1) (1) Scope. This section applies to property and casualty lines of insurance, excluding disability insurance, as defined in s. 645.675 (1) (h).

631.39(2) (2) Renewal requirements. An insurer may renew a policy in an affiliate without having to comply with s. 102.31 (2) (a) or 631.36 (4) or s. INS 21.01 (6), Wis. Adm. Code, if all of the following are satisfied:

631.39(2)(a) (a) All of the stock of, interest in, or control of the affiliate is held by one or more persons in the same insurance holding company system, as defined in s. 622.03 (2), that includes the insurer.

631.39(2)(b) (b) The affiliate holds a valid certificate of authority in this state for the kind of business necessary to write the policy being renewed.

631.39(2)(c) (c) If the policy renewed in the affiliate contains terms and conditions, except for the rates and rating plan, that are less advantageous to the policyholder than the policyholder’s current policy, the insurer complies with the requirements of s. 631.36 (5).

631.39(2)(d) (d) The insurer provides notice to the policyholder at least 60 days before the renewal date that the policy will be renewed in an affiliate.

631.39(2)(e) (e) The notice under par. (d) includes or states all of the following information:

631.39(2)(e)1. 1. The name and contact information of the company in which the policy will be renewed and that it is affiliated with the insurer.

631.39(2)(e)2. 2. That there will be no interruption of coverage.

631.39(2)(e)3. 3. That the premium for the renewal policy will be determined according to the rates and rating plan of the affiliate.

631.39(2)(e)4. 4. If the policy currently held by the policyholder is written by a mutual company and will be renewed in an affiliate that is a stock insurance company, that the policy will be renewed in an affiliate that is a stock insurance company and the policyholder will no longer have the rights that are granted to a mutual policyholder.

631.39(2)(e)5. 5. The A.M. Best or similar rating of the affiliate, if that rating is lower than the current A.M. Best or similar rating of the insurer.

631.39(2)(e)6. 6. If the amount of the premium for the policy after it is renewed in the affiliate will increase 25 percent or more from the amount of the premium prior to being renewed in the affiliate, notice of the increased premium.

631.39(2)(f) (f) If the policy is a worker’s compensation insurance policy under ch. 102, the insurer provides notice to the department of workforce development at least 60 days prior to renewal of the policy in an affiliate notifying the department of the name of the affiliate in which the policy is to be renewed.

631.39(3) (3) Applicability of other law. Sections 611.78 and 618.32 do not apply to renewals under this section.

631.39 History History: 2017 a. 241.

631.41 631.41 Policies jointly issued. Two or more insurers may together issue a policy in which their liability is either several or joint and several. If it is several, the heading of the policy shall conspicuously so state and the policy shall conspicuously state the proportion or amount of premium to be paid to each insurer and the type and the proportion or amount of liability each insurer agrees to assume.

631.41 History History: 1975 c. 375.

631.43 631.43 Other insurance provisions.

631.43(1) (1) General. When 2 or more policies promise to indemnify an insured against the same loss, no “other insurance” provisions of the policy may reduce the aggregate protection of the insured below the lesser of the actual insured loss suffered by the insured or the total indemnification promised by the policies if there were no “other insurance” provisions. The policies may by their terms define the extent to which each is primary and each excess, but if the policies contain inconsistent terms on that point, the insurers shall be jointly and severally liable to the insured on any coverage where the terms are inconsistent, each to the full amount of coverage it provided. Settlement among the insurers shall not alter any rights of the insured.

631.43(2) (2) Fraud as a defense. Subsection (1) does not affect the right of an insurer to defend against a claim under the policy on the ground of fraudulent misrepresentation.

631.43(3) (3) Exception. Subsection (1) does not affect the rights of insurers to limit, restrict, reduce, or exclude coverage under s. 632.32 (5) (b), (c), or (f) to (j).

631.43 History History: 1975 c. 375; 1979 c. 102; 1995 a. 21; 2009 a. 28; 2011 a. 14.

631.43 Note NOTE: 1995 Wisconsin Act 21, which became effective on July 15, 1995, made significant changes in the law regarding the “stacking” of insurance policy coverage.

631.43 Annotation A clause providing that any amount payable under the insurer’s policy would be reduced by monies paid by other insurance company’s uninsured motorist coverage was not valid; therefore, the plaintiff was entitled to the entire benefits under both uninsured motorist provisions. Landvatter v. Globe Security Insurance Co., 100 Wis. 2d 21, 300 N.W.2d 875 (Ct. App. 1980).

631.43 Annotation An insurance policy provision that prohibits the stacking of uninsured motorist benefits against the same insurer is prohibited by sub. (1). Tahtinen v. MSI Insurance Co., 122 Wis. 2d 158, 361 N.W.2d 673 (1985).

631.43 Annotation Sub. (1) only prohibits the use of reducing clauses in indemnity coverages, not in underinsured motorist coverage. Kuehn v. Safeco Insurance Co. of America, 140 Wis. 2d 620, 412 N.W.2d 126 (Ct. App. 1987).

631.43 Annotation If a single insurance contract incorporates coverage for two vehicles, charging two separate premiums, two policies have been issued under this section. Krause v. Massachusetts Bay Insurance Co., 161 Wis. 2d 711, 468 N.W.2d 755 (Ct. App. 1991).

631.43 Annotation A fleet policy listing individual vehicles and assessing separate premiums for each is a separate policy for each vehicle and a single limit provision contained in the policy violates sub. (1). Carrington v. St. Paul Fire & Marine Insurance Co., 169 Wis. 2d 211, 485 N.W.2d 267 (1992).

631.43 Annotation Carrington, 169 Wis. 2d 211 (1992), is extended to underinsured motorist coverage. An insured who pays separate premiums for each vehicle under a single policy can stack underinsured motorist coverage even though the policy contains a limit of liability clause. West Bend Mutual Insurance Co. v. Playman, 171 Wis. 2d 37, 489 N.W.2d 915 (1992).

631.43 Annotation Although a policy’s limit of liability language has been held invalid under this section for the purpose of preventing stacking, it is still valid for determining each policy’s limit of liability. Schaefer v. General Casualty Co. of Wisconsin, 175 Wis. 2d 80, 498 N.W.2d 855 (Ct. App. 1993).

631.43 Annotation The lack of underinsured motorist coverage on an accident vehicle was irrelevant when the insured had the coverage on two other vehicles. Under sub. (1), a policy definition amounting to a “drive-other-car” exclusion is invalid. Rodey v. Stoner, 180 Wis. 2d 309, 509 N.W.2d 316 (Ct. App. 1993). See also Patraw v. American Family Mutual Insurance Co., 185 Wis. 2d 757, 519 N.W.2d 643 (Ct. App. 1994).

631.43 Annotation Liability coverages insuring against the risk of loss arising out of specified, owned vehicles do not insure against the same loss and thus sub. (1) does not apply to those coverages. Weimer v. Country Mutual Insurance Co., 211 Wis. 2d 848, 565 N.W.2d 595 (Ct. App. 1997), 96-1440.

631.43 Annotation The applicability of sub. (1) cannot be ascertained by resorting to historical definitions of indemnity and liability insurance. An analysis must be made of whether a particular policy promises to indemnify the insured against the same loss as another policy. Taylor v. Greatway Insurance Co., 2000 WI App 64, 233 Wis. 2d 703, 608 N.W.2d 722, 99-1329.

631.43 Annotation Sub. (1) did not invalidate a provision excluding coverage for a vehicle not owned by the driver but made regularly available to him when the owner’s policy insured against losses arising from the use of the vehicle. The policies did not insure against the “same loss” within the meaning of sub. (1). Martin v. American Family Mutual Insurance Co., 2002 WI 40, 252 Wis. 2d 103, 643 N.W.2d 452, 00-2344.

631.43 Annotation Section 632.05 (2), the valued policy law, does not provide that an insured is entitled to the limits of all policies insuring a dwelling. Instead, sub. (1), the pro rata statute, specifically governs situations when two or more policies indemnify against the same loss. Absent the consent of the insurers, insureds are entitled to the full amount of their loss but not to the full amount of both policies if the combined limits exceed the actual loss. Wegner v. West Bend Mutual Insurance Co., 2007 WI App 18, 298 Wis. 2d 420, 728 N.W.2d 30, 05-3193.

631.43 Annotation Sub. (1) refers specifically to “other insurance” provisions. The accepted meaning of “other insurance” provisions does not include application to successive insurance policies. “Other insurance” refers only to two or more policies insuring the same risk, and the same interest, for the benefit of the same person, during the same period. The issue here was not which of two or more policies pays first, because they were not concurrent policies between competing insurers that applied to the same time period, but successive policies from the same insurer. Plastics Engineering Co. v. Liberty Mutual Insurance Co., 2009 WI 13, 315 Wis. 2d 556, 759 N.W.2d 613, 08-0333.

631.43 Annotation Stacking uninsured motorist coverage. Hannula. WBB Oct. 1985.

631.45 631.45 Limitations on loss to be borne by insurer.

631.45(1) (1) General. An insurance policy indemnifying an insured against loss may by clear language limit the part of the loss to be borne by the insurer to a specified or determinable maximum amount, to loss in excess of a specified or determinable amount, to a specified percentage of the loss, which may vary with the amount of the loss, or by a combination of these methods. If the policy covers various risks, different limitations may be provided separately for each risk if the policy clearly so states.

631.45(2) (2) Property coinsurance. A policy indemnifying an insured against loss of or damage to property may limit the part of the loss to be borne by the insurer to a percentage of the total loss that corresponds to the ratio of the insured sum to a specified percentage of the value of the insured property.

631.45 History History: 1975 c. 375.

631.45 Annotation Public policy does not prohibit insurance coverage for statutorily imposed multiple damages. Cieslewicz v. Mutual Service Casualty Insurance Co., 84 Wis. 2d 91, 267 N.W.2d 595 (1978).

631.45 Annotation Under the facts of the case, the insurer’s tender of the policy limits into court did not relieve the insurer of its duty to defend the insured in the lawsuit. Gross v. Lloyds of London Insurance Co., 121 Wis. 2d 78, 358 N.W.2d 266 (1984).

631.45 Annotation Although a policy’s limit of liability language has been held invalid under s. 631.43 for the purpose of preventing stacking, it is still valid for determining each policy’s limit of liability. Schaefer v. General Casualty Co. of Wisconsin, 175 Wis. 2d 80, 498 N.W.2d 855 (Ct. App. 1993).