Denn Announces New Homeowner Insurance Protections

Dover – Homeowners in Delaware should see fewer policy cancellations and will get new information about their coverage under a package of new homeowner insurance initiatives announced by Insurance Commissioner Matt Denn Thursday. Tougher penalties for, and increased responsiveness from, insurance companies were also part of the announcement. The proposed regulation is similar to homeowner protections sought by state Sen. David Sokola as part of Senate Bill 173. Dover – Homeowners in Delaware should see fewer policy cancellations and will get new information about their coverage under a package of new homeowner insurance initiatives announced by Insurance Commissioner Matt Denn Thursday.

The package is the first part of a “Focus On Homeowners” initiative by the Insurance Commissioner’s Office, which will extend through August and September.

Banning Unfair Cancellations: A new regulation proposed by Commissioner Denn would prohibit insurance companies from canceling a homeowner policy simply because of a few claims. The proposal would only allow “non-renewals” based on claims if there has been a “substantial change in the hazard or the risk” from the time that the policy was issued, or there have been claims for weather-related damage that are the result of the homeowner not making that the insurer had asked for.

“It is unfair and, in my opinion, unethical for a company to cancel a policy simply because a homeowner has utilized their policy as intended,” Commissioner Denn said. “After years of paying their premiums, that should not happen, and under this new regulation, it won’t.”

Protection against non-renewals is already offered in surrounding states and for other kinds of insurance in Delaware.

“Non-renewals als o label homeowners as insurance risks in a national database used by insurers and can lead to higher premiums and even more trouble getting adequate insurance,” Commissioner Denn said during the announcement at the Keller Williams realty office in Dover. “And, as the realtors here will tell you, making it tougher to get insurance makes it tougher to own a home, since it is a requirement for a mortgage.”

The proposed regulation is similar to homeowner protections sought by state Sen. David Sokola as part of Senate Bill 173. The legislation passed the Senate but did not pass the state House of Representatives before it adjourned for the year. Commissioner Denn said he wanted to protect homeowners by regulation until Sen. Sokola’s bill can be passed.

A public hearing on the proposed regulation will be held September 1.

Disclosure About Coverage Gaps: Insurance companies are now required to send homeowners an annual notice about potentially costly gaps in the insurance coverage, Commissioner Denn said.

“There have been numerous stories in the national press this past year about families who have suffered total losses of their homes, or serious flood damage, only to find out that their policies don’t cover flood damage, as most do not, or that their policies will not provide them with enough money to rebuild homes that are damaged or destroyed,” Commissioner Denn said.

But now in Delaware, homeowners will be told by their insurance companies what they need to do to get flood insurance, adequate theft insurance, and adequate insurance to cover the real ‘replacement value’ of their home. The disclosures from insurance companies will start in January, attached to homeowners’ annual renewal notices.

“Many homeowners just don’t know that they have these gaps in their coverage. Now they will know,” Commissioner Denn said.

Tougher Penalties For Companies: Commissioner Denn also announced implementation of tougher financial penalties for insurance companies who are found to have engaged in bad conduct, as well as a shortened statutory time frame for responding to the Insurance Commissioner’s Office when a consumer has made a complaint. The changes are a result of the signing of House Substitute 1 for House Bill 90.

Insurance companies can now be fined up to $300,000 per year for a pattern of unfair treatment of their policyholders, three times the previous maximum fines. Insurance companies also now have 21 days to provide a substantive response to the Insurance Commissioner’s office when contacted about a consumer complaint. Previously, there was no statutory time limit on responding to a consumer complaint.

“These new fines and penalties for insurance companies will ensure that our laws and regulations are followed, because the cost of not following them has just gone way up,” Commissioner Denn said.

Joining the com missioner at the announcement Thursday were advocates for homeowner and consumer rights: Vincent White, president of the Delaware Association of Realtors; Fred Neil of the Delaware Manufactured Home Owners Association; and John Flaherty of Common Cause of Delaware.

Commissioner Denn said he would unveil other steps in his “Focus On Homeowners” initiative over the coming weeks.