New York Orders Two Insurers to Reinstate 260 Policies

January 10, 2010

The New York State Insurance Department has ordered insurers Homesite Insurance Co. and Security Mutual Insurance Co. to reinstate 260 homeowners’ policies across the state.

Regulators say the insurers improperly cancelled or non-renewed the policies. The department began investigating the cancellations after complaints by four policyholders. The complaints focused on some unoccupied homes and coastal area homes.

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. The agent advised her to keep some furnishings in the home. The home was vandalized, and Security Mutual denied the homeowner’s claim for the damages and cancelled her policy mid-term because the home was unoccupied.

Regulators say 19 other policyholders were also improperly terminated because homes were not occupied.

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.

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.

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