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Superintendent Adrienne A. Harris Issues Guidance Encouraging Homeowners’ Insurers to Offer Free or Discounted Loss Mitigation Tools and Services

Superintendent Adrienne A. Harris Issues Guidance Encouraging Homeowners’ Insurers to Offer Free or Discounted Loss Mitigation Tools and Services

Guidance Will Facilitate the Adoption of Tools or Services to Mitigate Losses that Drive Up Homeowners’ Insurance Rates, Including Smart Water Monitor and Shut-off Devices

Today, New York Department of Financial Services (“DFS”) Superintendent Adrienne A. Harris issued a new circular letter encouraging property/casualty insurers to offer loss mitigation tools and services to policyholders for free or a reduced fee, such as smart water monitors and shutoff devices in connection with homeowners’ insurance policies. Greater adoption of available tools and services can help prevent or mitigate damages that increase insurance rates for homeowners. This guidance sets forth the Department’s expectations regarding free or reduced-fee loss mitigation tools and services and actuarially appropriate discounts for insureds that install devices or systems that mitigate or prevent losses

“The increasing severity and frequency of climate-related events is increasing losses and raising insurance rates across the country. In light of these challenges, DFS is focused every day on ensuring New York homeowners have access to affordable insurance,” said Superintendent Harris. “Adoption of loss mitigation tools and services supports both individuals and insurers by lowering homeowner costs, protecting homes, and reducing insurer risk, helping to create a more stable and resilient insurance market.”

Today’s guidance’s advises that, when including these tools and services in a policy, the policy should specify what is being offered, who is paying for the tools and services, and how much a policyholder must pay. An insurer should offer the tools and services in a fair and nondiscriminatory manner to like insureds.  DFS will not accept overly broad or vague language that could allow for unfair discrimination among like insureds or otherwise violate other provisions of the Insurance Law or regulations promulgated thereunder.

In addition, insurers are encouraged to file with DFS actuarially appropriate discounts for the installation of devices or systems that mitigate or prevent losses. In addition to these permissible discounts, the circular letter also reminds insurers that they must provide an actuarially appropriate reduction in rates for the fitting or retrofitting of homes with hurricane/storm shutters and hurricane resistant laminated glass windows or doors.

For a copy of the Circular Letter please visit the DFS website.

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