The New York State Insurance Department announced late last month that it has directed two insurance companies, Homesite Insurance Co. and Security Mutual Insurance Co., to offer to reinstate 260 homeowners' policies across the state.
The department took the action after finding that the insurers had improperly cancelled or failed to renew the policies. The action followed an inquiry begun when four of the homeowners filed complaints with the department.
The department reversed decisions by Homesite and Security Mutual to cancel policies on some unoccupied homes and coastal area homes, and for premature non-renewal of other policies.
The terminations involving unoccupied homes came to light when a homeowner north of Watertown in Jefferson County complained that her Security Mutual policy was cancelled while she was in the process of relocating.
The woman had advised her insurance agent that she would be putting her home up for sale and that it would be unoccupied while she was relocating, the department says. The agent advised her to keep some furnishings in the home. The home was then vandalized, but Security Mutual denied the homeowner's claim for the damages and canceled her policy mid-term because the home was unoccupied.
However, under the insurance law, an insurer may not consider non-occupancy as the sole factor in issuing a mid-term cancellation. Non-occupancy may be considered only if it is among other factors that increase risk to a property.
The department directed Security Mutual to offer to reinstate the woman's policy, along with the policies of 19 other homeowners that were also improperly terminated because homes were not occupied.
Also reversed was a decision by Homesite to terminate 174 other homeowners' policies. (Six of the Homesite policy terminations that were reversed involved unoccupied homes.) The terminations were deemed improper because the homeowners failed to receive, as required by law, information about the availability of coverage through the New York Property Insurance Underwriting Association (NYPIUA). Some of the termination notices also failed to include information about C-MAP, a program designed to help homeowners obtain insurance in coastal areas.
Insurers notifying consumers that policies are not being renewed must state the specific reason for the non-renewals. These notices must be sent to homeowners between 45 and 60 days prior to the effective date that the policies will not be renewed.
Homesite was also directed to offer to renew 60 homeowners' policies that the company initially decided to terminate before the end of the policy periods. Under the law, homeowners' policies must remain in effect for a minimum period of three years, except in certain situations, such as when consumers fail to pay premiums.