1. Forms
2. PR
3. PR-02-05

What the Form Is

The PR 02 05 is an endorsement titled "Illinois Changes--Cancellation and Nonrenewal". Its primary purpose is to amend the standard cancellation and nonrenewal terms of an insurance policy to ensure full compliance with the specific insurance laws and regulations mandated by the state of Illinois. This form overrides or supplements the policy's general provisions concerning termination, ensuring that both the insurer's and the insured's rights and obligations regarding cancellation and nonrenewal adhere to Illinois law.

Classes of Business It Applies To

The search results indicate this endorsement was part of the "1998 Professional Liability Simplified Multistate Forms And Endorsements Revisions" approved in Illinois. Therefore, it primarily applies to Professional Liability insurance policies. It may also be applicable to other commercial lines policies if it's considered a state-specific interline endorsement, as the revisions also covered "Multistate Interline Endorsements".

Real-world example: A medical malpractice insurance policy (a form of Professional Liability) issued to a doctor practicing in Illinois would likely include the PR 02 05 endorsement to govern how and when the policy can be cancelled or non-renewed, ensuring compliance with Illinois' specific rules for such actions, which might differ from standard policy terms or other states' rules.

Special Considerations

Key considerations for the PR 02 05 endorsement include:

• State-Specific Mandate: This form is tailored specifically for Illinois and reflects its unique regulatory landscape regarding policy terminations. Its use is critical for policies written in this state.
• Compliance: Failure to use this endorsement, or to adhere to its provisions, can lead to regulatory penalties, policyholder disputes, and findings that a cancellation or nonrenewal was improper under Illinois law.
• Notice Requirements: Illinois law typically specifies minimum notice periods that insurers must provide to policyholders before cancelling or non-renewing a policy. This endorsement will incorporate those specific timeframes. For instance, Illinois might require a 60-day notice for nonrenewal of a professional liability policy, and this form would ensure that provision is part of the contract.
• Permissible Reasons: The endorsement will also reflect Illinois' rules on valid reasons for an insurer to cancel or non-renew a policy.

Key Information for Agents and Underwriters

• Mandatory Attachment: Agents must ensure this endorsement is included with all applicable new and renewal policies written for insureds in Illinois to avoid compliance issues.
• Risk Assessment: While the endorsement itself doesn't directly impact risk assessment for the underlying coverage, adherence to its terms is crucial for mitigating regulatory and legal risks for the insurer.
• Underwriting Guidelines: Underwriters must be familiar with the Illinois-specific cancellation and nonrenewal provisions imposed by this endorsement. This includes understanding the grounds upon which a policy can be terminated or non-renewed and the procedural requirements. For example, an underwriter cannot decide to non-renew a policy for a reason not permitted by Illinois law as reflected in this endorsement.
• Policy Language Precedence: This state-specific endorsement typically takes precedence over any conflicting general terms in the base policy regarding cancellation and nonrenewal.
• Related Forms: The approval of PR 02 05 was associated with the withdrawal of PR 02 00 "Earlier Notice Of Cancellation Provided By Us", indicating a change in how cancellation notices were handled.