Chapter 631

631.22(1) (1) In this section “consumer insurance policy” means a life, disability, property or casualty insurance policy, or a certificate or a substitute for a certificate for group life, disability, property or casualty insurance coverage, which is issued to a person for a personal, family or household purpose and a copy of which is customarily, in the insurance industry, delivered or is required by law, rule or agreement to be delivered to the person obtaining insurance coverage.

631.22(2) (2) An insurer may provide a consumer insurance policy which is delivered to a person obtaining insurance coverage and is not exempt under sub. (5) only if the consumer insurance policy is coherent, written in commonly understood language, legible, appropriately divided and captioned by its various sections and presented in a meaningful sequence. The commissioner shall promulgate rules establishing standards for the determination of compliance with this subsection.

631.22(3) (3) This section does not apply to specific language or format required by state or federal law, rule or regulation.

631.22(4) (4) This section applies only to consumer insurance policies delivered on or after the date which is 6 months after May 8, 1980 except the commissioner may provide by rule that this section will not apply to specific types of consumer insurance policies until a later date which is not later than the date which is 2 years after May 8, 1980 if the commissioner determines that delayed application is necessary to prevent an unreasonable burden upon insurers issuing those types of consumer insurance policies.

631.22(5) (5) The commissioner may by rule exempt a type of consumer insurance policy from the application of this section if the commissioner finds that type of consumer insurance policy is generally understood by persons to whom it is delivered or that those persons are otherwise adequately protected.

631.22(6) (6) A violation of this section does not void or render voidable any portion of an insurance policy and is not a defense to an action under the insurance policy.

631.22 History History: 1979 c. 218.

631.23 631.23 Authorized clauses for insurance forms.

631.23(1) (1) Promulgation of clauses. The commissioner may not promulgate mandatory uniform clauses that preclude an insurer from filing its own forms under s. 631.20; the commissioner may only disapprove such forms on the basis of the criteria stated in that section. Subject thereto, the commissioner may promulgate authorized clauses by rule upon a finding that:

631.23(1)(a) (a) Price or coverage competition is ineffective because diversity in language or content makes comparison difficult;

631.23(1)(b) (b) Provision of language, content or form of specific clauses is necessary to provide certainty of meaning of those clauses;

631.23(1)(c) (c) Regulation of contract forms would be more effective or litigation would be substantially reduced if there were increased standardization of certain clauses; or

631.23(1)(d) (d) Reasonable minimum standards of insurance protection are needed for policies to serve a useful purpose.

631.23(2) (2) Degree of specificity. Any rule creating an authorized clause may prescribe that to be treated as an authorized clause there must be verbatim or substantial adherence to prescribed language, that certain standards or criteria must be met, or that certain drafting principles must be followed. The rules may also permit liberalization of prescribed language. If the proposed rule prescribed verbatim adherence, the commissioner shall make a finding that substantial adherence to the prescribed language is not sufficient and that liberalization of prescribed language will frustrate the purposes of the prescription. If an insurer uses authorized clauses as part of filed forms the commissioner may only disapprove those clauses under s. 631.20 upon a finding that improper combination of clauses makes them violate the criteria of s. 631.20.

631.23 History History: 1975 c. 375, 421; 1979 c. 221; 2007 a. 168.

631.23 Cross-reference Cross-reference: See also s. Ins 6.76, Wis. adm. code.

631.24 631.24 Credit life and disability insurance. Section 631.20 does not apply to credit life and disability insurance forms which are subject to approval under s. 424.209.

631.24 History History: 1979 c. 102.

631.27 631.27 Rules of law as provisions of contracts. By rule, the commissioner may require an insurer to insert in a policy any rule of law stated in chs. 600 to 646 and 655 that is applicable to the contents or interpretation of an insurance contract.

631.27 History History: 1975 c. 375; 1979 c. 89; 1989 a. 187 s. 29.

631.28 631.28 Notice of right to file complaint.

631.28(1) (1) Requirement to provide notice. Every insurer shall provide notice to its policyholders and its insureds of the right to file a complaint with the office in the manner prescribed by rule under sub. (2).

631.28(2) (2) Contents by rule. The commissioner shall promulgate rules specifying the contents of a notice that insurers must disseminate under sub. (1), and when and in what manner the notice must be provided. The rules shall describe how a policyholder, insured or other person may make a complaint with the office about an insurer, an intermediary or other insurance matter. The rules may also specify the form, including the type size, in which insurers must present the notice.

631.28 History History: 1991 a. 154.

631.28 Cross-reference Cross-reference: See also s. Ins 6.85, Wis. adm. code.

subch. III of ch. 631 SUBCHAPTER III

SPECIFIC CLAUSES IN CONTRACTS

631.31 631.31 Clauses required to be on first page.

631.31(1) (1) List of clauses. The following clauses of insurance policies shall appear on the first page of the policy:

631.31(1)(a) (a) Corporate name. The name of the insurer as required by s. 631.64;

631.31(1)(b) (b) Several liability. Information that 2 or more insurers undertake only several liability, as required by s. 631.41;

631.31(1)(c) (c) Assessability. That the policy is assessable as required by s. 631.65;

631.31(1)(d) (d) Variable benefits. A statement that benefits are variable, as required by s. 632.45 (1); and

631.31(1)(e) (e) Right to return policy. The right to return a disability insurance policy under s. 632.73, except that this clause may be conspicuously attached to the first page rather than printed on it.

631.31(2) (2) Manner of display. Clauses listed in sub. (1) shall be displayed conspicuously and separately from any other clauses.

631.31 History History: 1975 c. 375; 1981 c. 218.

631.36 631.36 Termination of insurance contracts by insurers.

631.36(1) (1) Scope of application.

631.36(1)(a) (a) General. Except as otherwise provided in this section or in other statutes or by rule under par. (c), this section applies to all contracts of insurance based on forms that are subject to filing under s. 601.58 or 631.20.

631.36(1)(b) (b) Contracts more favorable to policyholder. The contract may provide terms more favorable to policyholders than are required by this section.

631.36(1)(c) (c) Exemption by rule. The commissioner may by rule totally or partially exempt from this section classes or parts of classes of insurance contracts if the policyholders do not need protection against arbitrary or unannounced termination.

631.36(1)(d) (d) Other rights. The rights provided by this section are in addition to and do not prejudice any other rights the policyholder may have at common law or under other statutes.

631.36(1)(e) (e) Rescission or reformation. This section does not apply to the rescission or reformation of any insurance contract.

631.36(2) (2) Midterm cancellation.

631.36(2)(a) (a) Permissible grounds. Except as provided by par. (c) and sub. (3) and s. 655.24 (2) (b), no insurance policy may be canceled by the insurer prior to the expiration of the agreed term except for failure to pay a premium when due or on grounds stated in the policy, which must be comprehended within one of the following classes:

631.36(2)(a)1. 1. Material misrepresentation;

631.36(2)(a)2. 2. Substantial change in the risk assumed, except to the extent that the insurer should reasonably have foreseen the change or contemplated the risk in writing the contract;

631.36(2)(a)3. 3. Substantial breaches of contractual duties, conditions or warranties; or

631.36(2)(a)4. 4. Attainment of the age specified as the terminal age for coverage, in which case the insurer may cancel by notice under par. (b) accompanied by a tender of a proportional return of premium.

631.36(2)(b) (b) Notice. No cancellation under par. (a) is effective until at least 10 days after the 1st class mailing or delivery of a written notice to the policyholder.

631.36(2)(c) (c) New policies. Paragraphs (a) and (b) do not apply to any insurance policy that has not been previously renewed if the policy has been in effect less than 60 days at the time the notice of cancellation is mailed or delivered. No cancellation under this paragraph is effective until at least 10 days after the 1st class mailing or delivery of a written notice to the policyholder. Subsections (6) and (7) do not apply to such a policy.

631.36(3) (3) Anniversary cancellation or alteration. A policy may be issued for a term longer than one year or for an indefinite term with a clause providing for cancellation by the insurer in the manner provided in sub. (4) (a) for nonrenewals, except the notice must be given at least 60 days prior to any anniversary date and an insurer may not cancel a policy solely because of the termination of an insurance marketing intermediary’s contract with the insurer unless the insurer complies with sub. (4m). The clause may also provide for alteration of the terms or premium by the insurer as provided in sub. (5) (c), except the clause must then permit cancellation by the policyholders as provided in sub. (5) (c).

631.36(4) (4) Nonrenewal.

631.36(4)(a) (a) Notice required. Subject to subs. (2) and (3), a policyholder has a right to have the policy renewed, on the terms then being applied by the insurer to similar risks, for an additional period of time equivalent to the expiring term if the agreed term is one year or less, or for one year if the agreed term is longer than one year, unless at least 60 days prior to the date of expiration provided in the policy a notice of intention not to renew the policy beyond the agreed expiration date is mailed or delivered to the policyholder, or with respect to failure timely to pay a renewal premium a notice is given, not more than 75 days nor less than 10 days prior to the due date of the premium, which states clearly the effect of nonpayment of premium by the due date.

631.36(4)(am) (am) Prohibited nonrenewals. Notwithstanding par. (a) an insurer may not refuse to renew a policy solely because of the termination of an insurance marketing intermediary’s contract with the insurer unless the insurer complies with sub. (4m).

631.36(4)(b) (b) Exceptions. This subsection does not apply if the policyholder has insured elsewhere, has accepted replacement coverage, or has requested or agreed to nonrenewal, if the policy is renewed in an affiliate in compliance with s. 631.39, or if the policy is expressly designated as nonrenewable.

631.36(4m) (4m) Policy cancellation. An insurer may refuse to renew or may cancel a policy under sub. (3) or (4) solely because of the termination of an insurance marketing intermediary’s contract with the insurer only if the notice of nonrenewal or cancellation contains an offer to continue or renew the policy with the insurer if the insurer receives a written request from the policyholder prior to the cancellation or renewal date. The insurer shall continue or renew the policy if a timely request is received unless the policyholder does not meet normal underwriting criteria.

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.