How Long Should Carrier Remain on Risk After Terminating Agency Contract?

• By: The Big "I" Virtual University
• July 24, 2026

Q: If an agent in New York no longer represents a carrier, how long does the carrier need to remain on the customer’s risk for auto, home and umbrella?

Response 1: The carrier may have to renew some policies through your agency for up to three more years. Subsection (j) of Section 3425 of New York Insurance law sets the rules for situations where a personal lines carrier is terminating an agency’s contract. Review the New York Department of Financial Services Office of General Counsel’s opinion on the law. 

Here is a summary of Section 3425:

Personal Lines Policies Other Than Auto

• The carrier must offer to continue the policy for any remaining part of the three-year required policy period.
• If the three-year policy period ends within one year of the carrier giving the agency the termination notice, the carrier must offer to continue the policy through the terminated agency for at least the next one-year policy period. After that one year, if the insured requests, the carrier must offer to continue the policy through the terminated agency for the last two years of the new three-year required policy period.
• If the three-year policy period ends more than one year after the carrier gave the agency the termination notice, the carrier does not have to offer to continue the policy through the terminated agency.

Personal Auto Policies

• The carrier must offer to continue the policy for any remaining part of the one-year required policy period.
• At the insured’s request, the carrier must offer to continue the policy through the terminated agency for three successive one-year policy periods that commence within a year after the carrier gave the agency the termination notice.
• The carrier retains the right to cancel the policy for any reason within the first 60 days; to cancel for a reason permitted by law—nonpayment, driver’s license suspension or revocation, fraud or material misrepresentation—or non-renew up to 2% of policies in a rating territory each calendar year.

Other Requirements

• The carrier must accept all business meeting its current underwriting standards from the terminated agency for 120 days after giving the agency the termination notice.
• The terminated agency is entitled to receive commissions on the continued policies at the carrier’s prevailing commission rate for those lines of business.

Response 2: The answer is specific to your state. In our state, the insurance company is required to continue coverage, but any connection to the initial agency would disappear. The insured would have to choose another agent and provide an agent of record.

If you’re asking about whether the company must continue the policy with you as the agent, that again is going to follow the rules in your state. I’d guess the answer will be no, because the agent-carrier relationship no longer exists. You should call your state’s insurance regulator.                  

Response 3: The carrier must either continue the policy or issue a nonrenewal notice with a legal reason and legally required advance notice to the insured. If legal notice is not sent, the policy will stay in force. 

If your agency contract with the carrier has been terminated, you will not get commission for those policies renewing after the agency termination date. Hence, you should do your best to move that carrier’s policies to another carrier in your agency. Do your best to replicate coverage and make your insured very clear on any coverage differences and document that communication.

This question was originally submitted by an agent through the Big “I” Virtual University’s (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.

This article is intended for general informational purposes only, and any opinions expressed are solely those of the author(s). The article is provided “as is” with no warranties or representations of any kind, and any liability is disclaimed that is in any way connected to reliance on or use of the information contained therein. The article is not intended to constitute and should not be considered legal or other professional advice, nor shall it serve as a substitute for obtaining such advice. If specific expert advice is required or desired, the services of an appropriate, competent professional, such as an attorney or accountant, should be sought.