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The New York Department of Insurance has schooled insurers in the Empire State on the rules of cancellation. Specifically, they’ve reminded insurance companies to stop cancelling homeowner’s insurance just because a property is unoccupied.
The lesson in question, which addresses numerous complaints made by consumers who received cancellation notices, was distributed in the form of a circular letter (a sort of advisory bulletin) addressed to insurers, reminding them that the practice of cancelling policies solely on the basis of unoccupied houses is illegal.
According to a report in the Insurance Journal, the Department launched an investigation, which confirmed that a number of insurance companies were determining that homes had become unoccupied, and improperly cancelled the owner’s policies claiming that the “…lack of occupancy constituted physical changes within the meaning of the policy language.” Among the policies cancelled was that of a husband and wife who were residing in a nursing home.
The same circular letter also advised that insurers are not allowed to use the presence of a foreclosure action as the basis for cancellation either, since such filings to not constitute “willful or reckless” acts, or increase the likelihood of a hazard to the insured property.
New York Department of Insurance Superintendent Eric Dinallo asks that policyholders who believe their cancellations were illegal contact his Department. Dinallo says, “Consumers should know that the Insurance Department will act vigorously to protect homeowners. This includes homeowners who may be involved in forfeiture proceedings, which have increased because of the troubled economy. Insurance companies need to understand that the insurance law protects all homeowners from improper non-occupancy cancellations.”