Rutgers Law School in New Jersey Launches Project to Improve Homeowners Insurance

The Rutgers Center for Risk and Responsibility at Rutgers Law School in Camden, N.J., in collaboration with United Policyholders, is seeking to improve homeowners insurance nationally through its recently launched national project. The project analyzes state laws to ensure policyholders are receiving essential insurance coverage.

“Policyholders need to know what they are buying, insurance companies need to deliver on the promises they make and state regulators have a responsibility to make sure that happens,” said Jay Feinman, author of the project report, professor of insurance law, torts and contract law at Rutgers Law School, and co-director of the Rutgers Center for Risk and Responsibility.

The Essential Protections for Policyholders Project is a two-year project that focuses much of its research on consumers that file ordinary claims and how some of the best states are protecting insurance consumers, Feinman said.

The project aims to identify and expand on essential protections in an effort to strengthen what can be a complicated and challenging process, as there is a significant knowledge gap in how homeowners coverage varies nationally, according to Feinman. It focuses primarily on state legislation and regulation concerning the relationship between homeowners and insurance companies.

Protections the project found as essential for homeowners were selected by importance based on United Policyholders’ and Feinman’s experience in the insurance industry.

“For most state legislators, unless a lot of constituents face damage due to a flood, a wildfire or a tornado, this isn’t a high priority issue,” Feinman said. “We want to provide these resources for when they do focus on it more heavily.”

A team of research assistants for the project examined the laws in place nationally across all 50 states and worked to evaluate which states were doing the best job protecting insurance consumers, Feinman said. The project outlines four key issues for insurance consumers: buying insurance, coverage, the claims process and disaster victims.

“This is not a wish list of what I would like to see every state doing; these are essential protections and the most important things that many states are already doing,” he added.

Although each state regulates insurance and insurance companies, states often differ dramatically in how much and what kind of regulation is provided for policyholders, the project website states.

“With homeowners insurance, it can be difficult to find out what a policy covers, and no insurance company is going to give you a copy of the policy in advance,” Feinman said. “Even if they did, most people wouldn’t understand it and wouldn’t know how to compare it to other policies. People tend to shop on price rather than coverage and quality.”

With this in mind, one change recommended for states is requiring insurance companies to offer a policy comparison tool as well as list the most important terms of the policy on their websites, Feinman explained. Additionally, it is recommended that states provide real information to help measure the quality of each policy, he said.

“I don’t expect that any state will adopt the whole package, but as certain issues become important in particular states, we are able to say, ‘This is what everybody is doing currently, and here are our recommendations,'” Feinman said.

One reason the project provides an important resource for state legislators, insurance companies and policyholders alike is that it goes beyond simply buying insurance, he explained.

“That’s certainly important, but one attraction of this project is it is comprehensive and goes across the whole life span — from buying insurance, to questions consumers may have filing a claim, to what happens when lots of people have claims,” he said. “It addresses the whole process.”

Topics Legislation New Markets New Jersey Education Homeowners Universities