Calif. Commissioner Announces New Emergency Regulations for Homeowners

August 22, 2003

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California Insurance Commissioner John Garamendi reiterated that homeowners are in crisis during a press conference in San Diego Aug. 21, announcing new additions to his “Homeowners Bill of Rights.”

Garamendi addressed his concerns with the use of the Comprehensive Loss Underwriting Exchange (CLUE) database, stating that the database is inaccurate and unfair to consumers. Several local area homeowners shared their own difficulties in obtaining coverage after their name appeared in the CLUE database, reportedly for something as simple as a telephone inquiry about their coverage.

Among Garamendi’s orders include the requirement that any information entered into the CLUE database be accurate, and that it be illegal for insurance companies to enter simple inquiries into the database.

The California Department of Insurance (CDI) enacted emergency regulations on July 23, restricting insurers from considering past losses when underwriting homeowners policies. The regs were challenged with a lawsuit filed by the American Insurance Association, Association of California Insurance Companies, and the Personal Insurance Federation of California. A court hearing will take place Aug. 22 in Sacramento in response to the suit.

Garamendi accused insurance companies of “blacklisting” consumers and said insurers are “refusing to look at future risks,” instead, underwriting based on the property’s past history.

The press conference was held to develop support for homeowners legislation, including AB 81 (R-Wyland, Escondido), which would “prohibit an insurance institution from reaching an adverse underwriting decision based on the fact that an individual has previously inquired about the scope or nature of coverage under a residential fire or property insurance policy, if that information is received from an insurance-support organization whose primary source of information is insurance institutions, and if the inquiry did not result in the filing of a claim.”

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