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F I S C A L   I M P A C T   R E P O R T

 

 

 

SPONSOR:

Beam

 

DATE TYPED:

03/05/03

 

HB

933

 

SHORT TITLE:

Homeowner Insurance Not-at-Fault Claims

 

SB

 

 

 

ANALYST:

Wilson

 

APPROPRIATION

 

Appropriation Contained

Estimated Additional Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

FY03

FY04

 

 

 

 

 

NFI

 

 

 

SOURCES OF INFORMATION

 

Responses Received From

Attorney General’s Office (AGO)

Public Regulation Commission (PRC)

 

SUMMARY

 

     Synopsis of Bill

 

House Bill 933 prohibits insurance companies from canceling or not renewing homeowners policies due to the submission of claims for which the policyholder was not at fault.   

 

     Significant Issues

 

Due in large part to the recent rise in mold and other water-related insurance claims across the country, many insurers are now canceling or not renewing homeowners policies if a water related claim has been submitted.

 

Furthermore, homeowners whose policies are cancelled or not renewed now often find it difficult to obtain coverage elsewhere because of the insurance industry’s widespread use of a proprietary data bank called CLUE, whereby homes with a history of water-related claims are effectually “blacklisted”. 

 

ADMINISTRATIVE IMPLICATIONS

 

The PRC’s Insurance Division’s one-person Investigations Unit may have an additional workload if companies resist complying with HB 933.   

 

TECHNICAL ISSUES

 

The PRC notes it is not clear whether HB 933 will void, for homeowners insurance, the provisions of § 59A-18-29-B, which give insurance companies the right to cancel any property and casualty insurance policy without cause during the first 60 days of the original policy period. 

 

Also, HB 933 could be expanded to prohibit the raising of homeowners premiums as well as the cancellation and non-renewal of policies due to the submission of claims for which the policy-holder was not at fault.

 

DW/yr