Insurance Counsel Division - News Archive
September 6, 2012 - Water Back-Up Endorsements
Several Insurance Companies Have Significantly Lowered Available Water Back-Up Coverage.
Section 19-202 of the Maryland Insurance Article requires that all insurance companies offering homeowner policies offer coverage for losses that are caused by or result from water that backs up through sewers or drains and is not caused by the negligence of the insured. Several insurance companies have recently significantly increased the cost of this coverage, while at the same time decreasing the amount of coverage.
For example, certain insurers previously offered water back-up coverage for $30, which provided covered up to value of your home. Therefore, if your deductible was $500, and water backed up through your sewer or drain resulting in a $7,000 loss, you would have been entitled to a payment of $6,500 (Total Loss of $7,000 - Deductible of $500 = $6,500).
However, these same insurers are now charging $70 for $3,000 of coverage. Therefore, if your deductible is $500, and water backs up through your sewer or drain resulting in a $7,000 loss, you would only be entitled to a payment of $2,500 (Maximum Amount of Coverage $3,000 - Deductible of $500 = $2,500).
Please be aware of this important reduction in coverage, and be sure to review your coverage, if you choose to renew your current policy.
August 16, 2012 - MIA Bulletin 12-16
Filing Too Many Claims With Insurance Carrier May Lead To Cancellation or Nonrenewal
Many insurers will cancel or non-renew a homeowner's insurance policy if a policyholder submits multiple non-weather related claims within a three year period. During the most recent Maryland legislative session, a bill was passed that requires all insurance companies offering homeowner insurance to provide a written notice to policyholders that explains how claims made by policyholders may be considered for the purpose of cancelling or refusing to renew policies. In October 2012, Maryland policyholders can expect to find a notice from their insurance company explaining this practice. The Maryland Insurance Administration has recently released a bulletin that establishes the language the insurance companies must use in notifying policyholders. Please click here to review the language.
Far too many Maryland homeowners lose their insurance every year for filing just two claims within a three year period. Being non-renewed can create a substantial financial burden, including increased rates and reduced coverage. Sadly, the upcoming notice will not advise homeowners exactly how many claims a homeowner may file before they might receive a cancellation or non-renewal notice. The People's Insurance Counsel Division recommends that you ask your insurer how many claims you may file before you will be subject to cancellation. If your insurer won't tell you, we recommend that you shop around for a new insurer who will give you this information.
August 10, 2012 - Switching Your Insurance Agent Might Lead To Increased Premiums - But Don't Allow It
Recently, the Maryland Insurance Administration found an insurer in violation of the Insurance Code for raising a homeowner's premiums just because the homeowner switched agents. Because of a so-called "system limitation," the insurer canceled the homeowner's current policy when he requested a new agent and issued a new policy. Despite the policies being identical, the premium increased 40%. If you change insurance agents and are required to pay higher premiums, you should complain to the Maryland Insurance Administration. You might be entitled to a reduced premium and a refund for over payments.
State Farm's Refusal To Pay To Replace A Collapsed Carport Is Upheld By The Maryland Insurance Administration
In a surprising decision by the Maryland Insurance Administration (MIA), a homeowners policy issued by the State Farm Fire and Casualty Company to a Maryland resident did not cover their free standing permanent carport when it collapsed in 2010 due to a heavy snow storm. The carport owners complained to the MIA when State Farm refused to pay on the carport claim because the insurer claimed the carport was not a "building" and collapse coverage was only provided to insured buildings. The terms "building" and "other structure" are both used in the State Farm policy, but neither term is defined. According to State Farm, a "building "has a roof and at least three walls so a carport was not a building. The MIA upheld State Farm's interpretation of what constitutes a "building" and ruled against the insurance consumer.
If you own a carport or any other structure on your property without walls (i.e., play sets, gazebos, swimming pools, etc.) and especially if you have State Farm homeowner's insurance, you should check with your agent immediately about coverage. Find out what coverage is provided if it blows down, collapses under snow and ice, gets damaged by a tree or other falling object or is vandalized. Ask your agent to get written answers from your insurer's claims staff.
Attorney General’s Office
Insurance Counsel Division
St. Paul Street
Baltimore, Maryland, 21202
1 (888) 743-0023