An Act eliminate penalty charges when canceling auto insurance

194th Legislature (2025-2026) Introduced by Jamie Murphy

Imposes pro-rata refunds for MA auto insurance when policyholders cancel or switch, with no surcharges beyond days in force; insurers must refund prepaid policies accordingly.

Summary: An Act to Eliminate Penalty Charges When Canceling Auto Insurance (HD 1987)

What the bill would do

Create a consumer-friendly rule for auto insurance cancellations or switches: policyholders who cancel a policy or switch to another insurer would receive a pro rata rebate for the exact number of days the policy was in effect, with no additional surcharges or expenses beyond those days.

This would be achieved by amending Massachusetts General Laws, Chapter 175, Section 22C, to add a new provision governing refunds for policy cancellations and changes.

Key provisions

Amends Chapter 175, Section 22C (as appearing in the 2014 official edition) by inserting at the end:

“When policy holders change auto insurance companies or cancel prepaid policies they shall be entitled to a pro rate rebate for the exact number of days paid for in the policy without any surcharge or expenses beyond the exact days the policy was in effect.”

Applies to both changes in insurer and cancellations of prepaid policies.

Provisions specify that refunds should reflect only the days the policy was actually in force, with no extra penalties or fees beyond those days.

Who would be affected

Policyholders in Massachusetts who cancel auto insurance mid-term or before the policy expiration and who are prepaid.

Insurance carriers operating in Massachusetts, which would need to adjust billing, refund calculations, and customer communications to comply with the pro rata refund requirement.

Procedural and timeline aspects

Status: Proposed bill introduced in the 194th General Court (2025-2026).

Bill details:

House Docket No. 1987
Filed January 15, 2025
Introduced by Representative James M. Murphy (Weymouth) with co-petition from Tram Nguyen (4th Norfolk, 18th Essex districts).

Legislative history notes the same issue was previously raised in the 2023-2024 session (House Bill No. 1102), indicating ongoing consideration of this reform.

Next steps (if advanced): committee review (likely in Financial Services), potential amendments, and floor votes in both the House and Senate, followed by gubernatorial approval or veto.

Potential impact

Consumer protection: ensures fair refunds by eliminating hidden penalties when canceling or switching auto insurance.

Administrative impact on insurers: requires accurate pro rata calculations and refund processing; may affect revenue recognition and customer service workflows.

No explicit fiscal impact is provided in the bill text; any cost or savings would depend on implementation details and insurer practices if enacted.

This summary captures the bill’s intent, key change to law, who is affected, and the legislative process context based on the bill text and docket information available.