Calif. Commissioner Issues First Homeowners Bill of Rights Order

California Department of Insurance (CDI) Commissioner John Garamendi implemented the first step in his Homeowner’s Bill of Rights April 25 by releasing a regulatory advisory to insurers reminding them to review and follow law when using loss or claims history to determine a homeowner’s eligibility for coverage.

The commissioner’s action stems from a growing number of formal complaints from homeowners unable to find affordable insurance or who are denied coverage altogether based on information insurers report to the electronic loss databases, including CLUE and A-Plus.

Insurers determine a homeowner’s eligibility and price for coverage based on their insurance activity, among other factors. “In many of the cases we have investigated, we found the information recorded by the insurer was incorrect, erroneous, or questionably related to the risk of future loss, which results in expensive premiums and unjustified denials of coverage for homeowners,” said Garamendi. “I am using this advisory to draw insurer’s attention to the laws and regulations already on the books to protect consumers from what has evolved into the use it and lose it concept of homeowner’s insurance.”

Commissioner Garamendi’s Homeowner’s Bill of Rights includes reinforcing existing regulations and sponsoring legislation that will strengthen consumer protection on a number of issues including the use of loss history reports and banning the use of credit scoring in underwriting. CDI is also developing comprehensive consumer education programs on other homeowner insurance related issues, including title and mortgage guarantee insurance.