the article on it being illegal for a company to cancel a policy soley because it has become unoccupied for one reason or another, does that apply just in New York?
Ellen…got to believe that the NY Dept. has no authority outside of NYS so I would say it is for NY policies only. Guess we need to obtain a copy of the Department’s circular letter to clarify whether this restricts only mid-term cancellations or does it also apply to 45 day notices of non-renewal too??
Thanks Dan. After I posted the comment, I thought the same thing but wondered if other states have thier own rules for this too.However, I do believe they cannot cancel midterm but seems they are allowed to non renew, I know for a fact that although becoming unoccupied is not specifically listed as a non renewal reason, they do use the “Physical Change” to the property as a reason.
The quote made by the NY BOI should have read, “Consumers should know that the Insurance Department will act vigorously to protect the image of the Insurance Department and future political aspirations of the Commissioner.”
To suggest that there has been no change in the risk due to a dwelling being unoccupied or in foreclosure is simply ludicrous. I can understand preventing the insurance companies from canceling midterm, and perhaps requiring the current carrier to renew the coverage on a vacant dwelling form, but to suggest that the complexity of the risk has not changed due to unoccupancy or foreclosure, and stating that it is illegal to cancel the policy due to the imagined increase in risk, is ignoring facts in favor of political expediency.
What’s next? Will the Bureau of Insurance, in a show of its “Power for the People”, mandate that homeowner policies include coverage for loss due to vandalism or malicious mischief in an unoccupied dwelling?
The policy does state the company may cancel if the risk has “substantially” changed since the policy was issued, but goes on to add “if any termination provision in this policy confilcts with the law in your state, this provision is amended to comply with the law”
Here’s the law for PA – it’s Act 205 which is the unfair insurance practices act.
It states that an insurer cannot cancel a policy in midterm or nonrenew EXCEPT for only a few reasons – one of which is that there has been a substantial change or increase in hazard since the policy was issued.
In Cox/State Farm, P88-6-7 (1988), it was determined that “A vacant dwelling constitutes an increased risk of loss from fire, wind, hail and snow-storms and increased liability hazard from that of an owner-occupied dwelling.”
Based upon this, an insurer could cancel or nonrenew since the vacant property now makes it a substantial change or increase in hazard.
Thanks for all your input. PA Mike I knew it made sense that it is an increase in exposure which is why they can non renew but you never know, common sense and insurance do not always go hand in hand. thanks to all.
There are different definitions for “vacancy” versus “unoccupied”.
If a home is fully furnished, all services on and the insured is wintering in FL for a month it is unoccupied and will typically not be canceled.
If the same home has no furniture, not being maintained, no services then the home is “vacant” and a substantial change in risk for an insurance company. There are freezing pipes, vandalism / theft of pipes, fixtures etc that can and do occur.
There has been plenty of documentation on high foreclosure areas having vacant homes damaged through both intentional and unintentional acts. Does the mtg company foot the bill in this instance if the home is damaged. Nope. They collect for their insurable interest in the property and all of our rates go up accrordingly.
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the article on it being illegal for a company to cancel a policy soley because it has become unoccupied for one reason or another, does that apply just in New York?
Ellen…got to believe that the NY Dept. has no authority outside of NYS so I would say it is for NY policies only. Guess we need to obtain a copy of the Department’s circular letter to clarify whether this restricts only mid-term cancellations or does it also apply to 45 day notices of non-renewal too??
Thanks Dan. After I posted the comment, I thought the same thing but wondered if other states have thier own rules for this too.However, I do believe they cannot cancel midterm but seems they are allowed to non renew, I know for a fact that although becoming unoccupied is not specifically listed as a non renewal reason, they do use the “Physical Change” to the property as a reason.
What a crock.
The quote made by the NY BOI should have read, “Consumers should know that the Insurance Department will act vigorously to protect the image of the Insurance Department and future political aspirations of the Commissioner.”
To suggest that there has been no change in the risk due to a dwelling being unoccupied or in foreclosure is simply ludicrous. I can understand preventing the insurance companies from canceling midterm, and perhaps requiring the current carrier to renew the coverage on a vacant dwelling form, but to suggest that the complexity of the risk has not changed due to unoccupancy or foreclosure, and stating that it is illegal to cancel the policy due to the imagined increase in risk, is ignoring facts in favor of political expediency.
What’s next? Will the Bureau of Insurance, in a show of its “Power for the People”, mandate that homeowner policies include coverage for loss due to vandalism or malicious mischief in an unoccupied dwelling?
Yepper, Change We Can Believe In!
The policy does state the company may cancel if the risk has “substantially” changed since the policy was issued, but goes on to add “if any termination provision in this policy confilcts with the law in your state, this provision is amended to comply with the law”
Here’s the law for PA – it’s Act 205 which is the unfair insurance practices act.
It states that an insurer cannot cancel a policy in midterm or nonrenew EXCEPT for only a few reasons – one of which is that there has been a substantial change or increase in hazard since the policy was issued.
In Cox/State Farm, P88-6-7 (1988), it was determined that “A vacant dwelling constitutes an increased risk of loss from fire, wind, hail and snow-storms and increased liability hazard from that of an owner-occupied dwelling.”
Based upon this, an insurer could cancel or nonrenew since the vacant property now makes it a substantial change or increase in hazard.
Go Steelers!
Thanks for all your input. PA Mike I knew it made sense that it is an increase in exposure which is why they can non renew but you never know, common sense and insurance do not always go hand in hand. thanks to all.
There are different definitions for “vacancy” versus “unoccupied”.
If a home is fully furnished, all services on and the insured is wintering in FL for a month it is unoccupied and will typically not be canceled.
If the same home has no furniture, not being maintained, no services then the home is “vacant” and a substantial change in risk for an insurance company. There are freezing pipes, vandalism / theft of pipes, fixtures etc that can and do occur.
There has been plenty of documentation on high foreclosure areas having vacant homes damaged through both intentional and unintentional acts. Does the mtg company foot the bill in this instance if the home is damaged. Nope. They collect for their insurable interest in the property and all of our rates go up accrordingly.
I just checked the NYSID website and there is no Circular Letter addressing this issue.
http://www.ins.state.ny.us/circltr/2008/cl08_23.pdf