New York officials recently directed State Farm Insurance Co. to give 113 Long Island property owners the opportunity to renew their homeowners’ policies with the company.
The action came as the result of a complaint filed by one of the homeowners and a subsequent New York State Insurance Department inquiry. The homeowner said State Farm advised him that it would not renew his policy because the company was reducing its exposure to potential losses in coastal areas.
However, the department found that the company notice failed to advise the homeowner of the availability of coverage through the insurer of last resort, the New York Property Insurance Underwriting Association (NYPIUA). The notice also failed to provide contact information for the Coastal Market Assistance Program (C-MAP), another program administered by NYPIUA to help homeowners obtain insurance in coastal areas from private insurers.
The department said its investigation of the individual homeowner’s complaint led to the discovery that the same improper non-renewal notice had been sent to 112 other Long Islanders.
“Homeowners have specific rights when policies are non-renewed. Insurers must honor those rights by following the proper procedures,” Insurance Superintendent James Wrynn said.
Long Island’s susceptibility to coastal storms has led some larger insurers to reduce their exposure to potential losses by non-renewing some homeowners. Under state law, insurers are permitted to non-renew up to four percent of their homeowners’ policies annually on a statewide basis.
According to the insuranec department, when non-renewals occur:
- Homeowners must be advised of the non-renewal between 45 and 60 days before the effective date to give them time to obtain a replacement policy.
- Notices sent to homeowners must state the specific reason the policy is not being renewed, and must advise homeowners of NYPIUA and C-Map.
- Insurers are not required to send notices by registered mail, but they must maintain proof that the notice was mailed in a manner that satisfied the 45/60 day window.
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