Pennsylvania's property and casualty basics questions cite a few statutes again and again:

• The standard fire policy and binder rules in 40 P.S. 636.
• Death-of-insured continuation (636.1).
• Residential cancellation and nonrenewal (40 P.S. 1171.5(a)(9) and 31 Pa. Code Chapter 59).
• Commercial cancellation and nonrenewal (Act 86 of 1986, 40 P.S. 3401-3407).
• Comparative negligence (42 Pa.C.S. 7102).

The general principles (insurable interest, ACV and replacement cost, coinsurance, negligence, contract law) are in the national basics guides. This page covers what Pennsylvania adds.

Binders and the standard fire policy (40 P.S. 636)

Binders

• A binder for temporary fire insurance may be oral or written and may not run more than 30 days. It includes the standard fire policy terms (636(5)(d)).

When the standard fire policy applies

• Its provisions are the minimum terms for fire insurance in Pennsylvania. Dwelling policies must include at least these provisions.
• An all-risk (open perils) policy doesn't have to use them (636(3)).
• On commercial business, an insurer may attach a statement that the policy doesn't cover terrorism (636(9)).

Coverage

• Insured perils: fire, lightning, and removal from endangered premises.
• Removed property is covered pro rata at each place it is taken, for 5 days.

What isn't covered

• Theft is excluded.
• Currency, deeds and securities aren't covered.
• Explosion or riot losses are covered only for an ensuing fire.
• Coverage is suspended while a building is vacant or unoccupied beyond 60 consecutive days.

Policy conditions

• Concealment or fraud voids the entire policy, before or after a loss.
• An assignment is valid only with the insurer's written consent.
• The insured may not abandon damaged property to the insurer.
• The mortgage clause protects the mortgagee even if the insured voids the coverage. A mortgagee gets at least 10 days' written notice of cancellation.
• When the insured cancels, the refund is figured on a short-rate basis.

Claims

• Proof of loss: the insured gives a signed, sworn proof within 60 days after the loss, unless extended in writing.
• Appraisal: after a written demand, each side picks an appraiser within 20 days.
• Repair option: an insurer that wants to repair or replace instead of paying cash gives notice within 30 days after proof of loss.
• Payment: a loss is payable 60 days after proof of loss and ascertainment of the loss.
• Suits: must be filed within 12 months after the loss.
• Other insurance: when two policies cover the same loss, they share it pro rata.
• Subrogation: after paying, the insurer may pursue subrogation against the responsible third party.

Death of the named insured (40 P.S. 636.1)

• Basic property coverage continues, if premiums are paid, until the property is sold or 180 days after the death, whichever comes first.

Residential cancellation and nonrenewal (40 P.S. 1171.5(a)(9); 31 Pa. Code Ch. 59)

Scope

• Applies to owner-occupied private residences with four or fewer household units (59.2-59.3).

First 60 days

• The insurer may cancel for any reason, with at least 30 days' notice sent no later than the 60th day (59.9(b)).

After 60 days

• Midterm cancellation only for stated reasons, such as:
  • Nonpayment.
  • Material misrepresentation.
  • A substantial increase in hazard.
  • The property no longer meeting FAIR Plan eligibility (59.4a).
• At least 30 days' notice for cancellation or nonrenewal.

The notice

• Must mention possible FAIR Plan eligibility.
• The insured may ask the Commissioner to review the action within 10 days of receiving the notice (59.7).

What counts as a nonrenewal

• A renewal must have coverage types and limits at least equal to the expiring policy. Offering lower limits is treated as a nonrenewal (1171.5).
• Offering to move the insured to an affiliated company is still a refusal to renew (59.4).
• Mailing a renewal premium notice at least 30 days before expiration counts as an offer to renew. If the insured doesn't pay, no nonrenewal notice is needed (59.9(a)).

Prohibited reasons

• Being a victim of domestic abuse (1171.5(a)(14)).
• Redlining: refusing to write a risk solely because of its geographic location (1171.5(a)(7)(iii)).

Commercial cancellation and nonrenewal (Act 86, 40 P.S. 3401-3407)

Scope

• Act 86 doesn't apply to workers' compensation policies (3407(b)).
• A new policy in force less than 60 days may be canceled with 30 days' notice, sent by the 60th day (3407(c)).

Midterm cancellation (3402) is allowed only for:

• Nonpayment.
• Fraud or material misrepresentation.
• A substantial change in insurability.
• A certified loss of reinsurance.
• Material noncompliance with policy terms.
• The insured's request.

Notice (3403)

• Nonrenewal: at least 60 days.
• Cancellation for nonpayment: at least 15 days.
• Renewal premium increase: at least 30 days' advance notice (3401).
• The notice must be clearly labeled and state the specific reasons.

After cancellation or nonrenewal

• Loss information: if the insured asks within 10 days of the notice, the insurer provides it within 30 days, covering the lesser of 3 years or the time insured (3403).
• Unearned premium: returned within 10 business days after an insurer cancellation, or 30 days after an insured cancellation (3404).
• Claims-made policies: the insured gets 60 days to buy an extended reporting period (tail) (3405).

Negligence

• Modified comparative negligence (42 Pa.C.S. 7102): a plaintiff recovers, reduced by their own share of fault, as long as that fault is not greater than the combined fault of the defendants.
• Statute of limitations: 2 years for personal injury negligence actions (42 Pa.C.S. 5524).

Guaranty association and residual markets

• The Pennsylvania Property and Casualty Insurance Guaranty Association pays covered claims of insolvent members:
  • $300,000 per claimant.
  • $10,000 for unearned premium.
  • Workers' comp is excluded.
  • First-party claims by insureds with net worth over $25 million are excluded.
• The FAIR Plan offers basic property insurance to risks the voluntary market won't write. See the Pennsylvania Other Property Insurance guide.
• Surplus lines placements carry a 3% premium tax and require a diligent search of admitted insurers (40 P.S. 991.1604, 991.1621).

Common exam traps

• Pennsylvania binders: 30 days, not 90.
• Standard fire policy: 60 days vacancy; 60 days for proof of loss; 12 months to sue; 10 days' notice to the mortgagee; theft excluded.
• Death of the named insured: coverage continues until a sale or 180 days.
• Homeowners: cancel for any reason in the first 60 days with 30 days' notice. After that, only for cause, still with 30 days' notice. The insured has 10 days to ask for review.
• Commercial: 60 days to nonrenew, 15 for nonpayment, 30 for a renewal premium increase, a 60-day tail window. Workers' comp is excluded from Act 86.
• Lower renewal limits count as a nonrenewal.