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Consumer Complaints Help Reverse Insurance Company Decisions

The New York State Insurance Department today announced that it has directed two insurance companies, Homesite Insurance Company and Security Mutual Insurance Company, to offer to reinstate 260 homeowners' policies across the state.

The Insurance Department took the action after finding that the insurers had improperly cancelled or non-renewed the policies. The action followed an inquiry begun when four of the homeowners filed complaints with the Department.

"This proves that individual consumers can make a difference. Every year, the Department closes more than 60,000 cases brought to us by consumers. The Department investigates these complaints and will act to make sure that legitimate complaints are resolved on behalf of consumers," Insurance Superintendent James Wrynn said.

The Insurance Department reversed decisions by Homesite and Security Mutual canceling 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 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 cancelled 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 Insurance 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. Six of the Homesite policy terminations that were reversed involved unoccupied homes.

While the Jefferson County woman's policy was reinstated, the insurance company was not compelled to pay her claim for the $1,500 in damages that occurred in the vandalism because of an exclusion in her policy.

Also reversed was a decision by Homesite to terminate 174 other homeowners' policies. 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. Insurers are permitted to non-renew up to four percent of their homeowners' policies annually on a statewide basis.

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.

Wrynn urged consumers to contact their insurance agent, broker or company whenever they have a question involving an action that affects their insurance coverage. Consumers who are unable to resolve disputes with insurers are urged to contact the Insurance Department's Consumer Services Bureau from 9 a.m. to 4:30 p.m., Monday through Friday toll-free at 800-342-3736, or by filing a complaint through the Department's website,

Department of Financial Services


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