insurance company uses a process called “underwriting” to
decide (1) if it will offer an insurance policy to someone new
and (2) if it will continue to provide insurance for someone
who is already its customer. Each insurance company creates its
own “underwriting guidelines” to help make these
decisions. Underwriting guidelines can be very different from
one insurance company to the next. Each company selects the risk
factors that it will include in its “underwriting guidelines.” These “underwriting
guidelines” are very private, and insurance companies or
their agents will not provide these guidelines to anyone besides
are Risk Factors?
factors” are things about a person’s life, home,
or job that insurance companies or agents consider during the
underwriting process to help decide if the company will offer
insurance to that person. If a person has too many “risk
factors,” the insurance company will not offer that person
insurance or will cancel or not renew the person’s insurance.
Sometimes the risk factors just result in an increase in premium.
One of the most common “risk factors” that will get
your insurance canceled is making too many claims in a few years,
even if the claim payments are for small amounts of money. Maryland
law does not allow a cancellation if there are 2 weather-related
claims in a 3-year period. Making 2 claims that are not weather-related
in a 3-year period may result in cancellation by some insurance
companies. Inquiries to your insurance company or agent regarding
coverage for losses are not considered by your insurance company
as claims. Only when payment is made by your insurance company
is the claim considered for purposes of determining your “risk
other “risk factors” are:
a swimming pool at your house
a trampoline at your house
an older house or a certain type of roof
self-employed or working at home
keeping your home’s exterior in good repair
What are Maryland’s laws for Underwriting guidelines?
insurance companies must follow Maryland law when deciding what
risk factors are included in their underwriting guidelines. This
law says that insurance companies cannot cancel or refuse insurance
to someone based on his or her race, religious beliefs, gender,
national origin, physical handicap or disability, or any other
reason that is random or discriminatory. Underwriting guidelines
must also have some reasonable purpose that is related to the
insurance company’s business of making a profit by insuring
people and their possessions.
Examples of Underwriting Guidelines used by companies in Maryland
insurance company will not offer insurance to a person who has
large amounts of clutter in the home, including in the kitchen
area and around the water heater.One insurance company will cancel
a person’s insurance if that person has more than 1 non-weather
related claim in 3 years.One insurance company will cancel a
person’s insurance for a second home, like a beach or vacation
house, if that person does not live in the second home at least
once every 30 days.
What Should You Ask Your Agent About Underwriting Guidelines?
you are a new customer, ask if two non-weather related claims
in the first three years will result in a notice of cancellation
If you are already a customer of an insurance company ask if your insurance
will be cancelled or not renewed if you make two claims in the next three years.
If you already have one claim, ask if you will be cancelled or not renewed
if you file another claim in the next two years.
remember that cancellation or non-renewal of your homeowners
insurance may impact the cost and your ability to get insurance
with another company.
Attorney General’s Office
Insurance Counsel Division
St. Paul Street
Baltimore, Maryland, 21202
1 (888) 743-0023
here for a Printable Brochure (PDF)