Losing Your Insurance

Knowing your rights can help you if you are rejected for homeowners insurance or lose your coverage. If you request it, a company must explain in writing its reason for declining, canceling, or not renewing your policy. Texas law prohibits companies from denying, canceling, or refusing to renew a policy solely on the basis of your credit. You may file a complaint with TDI if you believe a company improperly denied you insurance.


CLUE®
Many companies use the Comprehensive Loss Underwriting Exchange (CLUE) to review an applicant´s claims history. CLUE lists the property insurance claims history of houses - regardless of ownership - and individuals for the preceding three years.
Federal law gives you the right to challenge wrong information. If an insurance company based part of its decision to deny you coverage on a CLUE report, you can get a free copy of the report by calling the ChoicePoint Consumer Center or visiting its website

1-800-456-6004

www.choicetrust.com/index2.htm

Before calling, get the CLUE reference number from the company´s denial letter or from the company. Using the reference number will speed the process by making sure you are requesting the right report.
CLUE is a registered trademark of Equifax Inc.


Cancellation and Nonrenewal
Cancellation means either you or the insurance company stops coverage before your policy´s normal expiration date. When a policy is canceled, the company must refund your premium, minus the portion paid for coverage actually received.
Nonrenewal means a company refuses to renew your policy when it expires. A company must give you written notice at least 30 days before your policy´s expiration date. If the company does not notify you in writing in the required time, it must renew the policy at your request.


Note: A company cannot nonrenew or raise your premium because of a claim you filed that was not paid or was not payable under your policy.
Cancellation & Nonrenewal Summary for Homeowners, Renters, Condominium, Dwelling, and Farm and Ranch Owners Policies
Cancellation

Notice Required: 10 days (30 days´ notice is required if the policy is canceled within the first 60 days)

A company may cancel your policy within the first 60 days only if it identifies an undisclosed additional risk of loss that is not the subject of a prior claim

A company may not cancel your policy after 60 days, except for fraud, increased risk, or nonpayment of premium

Nonrenewal

Notice required: 30 days

A company may nonrenew your policy for deterioration of your property or if you file three or more nonweather-related claims in three years

Exceptions:

• If the company fails to notify you after a second nonweather-related claim, it cannot refuse to renew your policy because of a third claim.
• A company cannot use the first two appliance-related claims to determine the number of nonweather-related claims for the purposes of nonrenewing your policy.
• Instead of nonrenewal, the company can charge an added premium called a surcharge. A company can add a surcharge for filing two or more nonweather-related claims the previous policy year.
• A company may require you to make repairs to your home before renewing your policy. Generally, companies will give you six months to a year to make repairs. If the repairs are needed because of a storm or other covered loss, the company must pay for the work (minus your deductible). If the repairs are required because of deterioration or normal wear and tear - a worn-out roof, for instance - you are responsible for paying for them yourself.

A company may not nonrenew your policy for weather-related claims or for claims that were not paid or not payable under your policy.
Also, keep in mind that if you move out of your house and it remains vacant for 60 days or longer, most policies automatically suspend coverage for damages. The policy´s liability coverages will continue, however. The vacancy also could cause the company to refuse to renew the policy when it expires.

Your Rights Against Unfair Discrimination

An insurance company cannot deny, refuse to renew, limit, or charge more for coverage because of your race, color, religion, or national origin.
A company also cannot deny, refuse to renew, limit, or charge more for coverage because of your age, gender, marital status, geographic location, disability or partial disability - unless the refusal, limitation, or higher rate is "based on sound underwriting or actuarial principles." Sound underwriting or actuarial principles means the company would have to show valid statistical evidence that your home presents a greater risk for a loss than other homes it is willing to insure.
A company cannot unfairly discriminate between individuals of the same rate class and with essentially the same risk in its rates, policy terms, and benefits, or in any other manner unless the refusal, limitation, or higher rate is "based on sound actuarial principles."
In addition, a company cannot refuse to insure a home based solely on its age or low value. Companies can offer discounts for newer homes and require updates to the wiring, plumbing, and heating systems before agreeing to insure an older home.

If You Have a Claim

If you have a claim, the company must start investigating your claim within 15 days after receiving written notice. However, the company may ask you for more information. Once you send the information, the company has 15 business days to accept or reject your claim. If the company agrees to pay, it must do so within five business days. If the company rejects your claim, it must say why in writing.
Exceptions:

• A company that needs more time can take 45 days to make a decision if it sends you a notice explaining the delay.
• A company that suspects arson has 30 days after receiving the required paperwork to either accept or reject a claim.
• TDI can give companies an extra 15 days after a major natural disaster.
• Surplus lines carriers have 20 days to pay your claim after agreeing to do so.

A company that takes too long to pay is liable for your reasonable attorney fees plus damages equal to 18 percent of your claim if you sue and win. In an insurance claim lawsuit, the insurance company has the burden of proving it was not obligated to pay. If you are financing your home, your insurance company may require your lender to sign or approve your claim check. When this happens, the lender must act within 10 business days after receiving the request. Failure to act within this time period could result in a $500 civil penalty. Complaints about lenders failing to process claim payments should be directed to the Texas Attorney General´s Office

1-800-252-8011

Claim Tips

To make the claim process run smoothly and to protect your rights, follow these steps:

• Know your coverage. Your policy´s dollar limits and benefits appear on your policy´s Declarations page. If you need help, ask your agent or company representative.
• If you have a loss, notify your agent or insurance company immediately. Report losses involving theft or crime to the police.
• Make a list of your damaged property. If possible, photograph or videotape the damage before making any repairs.
• Make only temporary repairs to protect your house and belongings. The insurance company may deny your claim if you make permanent repairs before it inspects the damage. If you are not sure whether a repair is considered permanent, contact the insurance company before beginning repairs. The cost of these repairs and for storing personal belongings is covered by your policy. It is important to make only temporary repairs.
• Keep receipts. For personal property claims, you must provide evidence that you bought the replacement items. If you bought materials for temporary repairs, receipts will help you get reimbursed quickly.
• Try to be there when the insurance company´s adjuster inspects your home. You may have your own contractor or builder represent you. In times of major disasters, it might not be possible to meet with the adjuster.
• If you have to move because of a disaster, make sure your address is visible. Leave a sign with your temporary address, phone number, and the name of your insurance company.

Proof of loss. Within 15 days after you report your loss, the company may request a signed, notarized proof-of-loss form. In most cases, the company will ask you to estimate the replacement cost of the household items you lost and the cost of repairing your home. Contractors, catalogs, and retailers are good sources of current price information.

• Include sales tax in your cost estimates.
• Ask whether you should use exact costs, or if you can round numbers to the nearest dollar.
• Don´t forget to include small items such as kitchen utensils or clothing accessories.
• The company will use the form to decide the value of your claim, so make your list as complete and as detailed as possible. Include photos and receipts. Be sure to keep copies for your records.

By Hamza HAsnain
Final estimate. The adjuster will prepare an estimate of the cost to repair or replace your home and any personal belongings. The insurance company´s offer is based on this estimate.


Disputes. If you disagree with the adjuster´s estimate, tell the company why. The company may have overlooked something and may make adjustments. If you still disagree, you can use a process called appraisal.
The appraisal process governs only disputes over the amount to be paid. It is not for settling disputes about coverage or the cause of a loss.
You and the company each hire an appraiser. The two appraisers then choose a third one as umpire. Your appraiser and the company´s appraiser make their own estimates of your loss. If they differ, the umpire makes the final decision, which is binding on both you and the company. You are responsible for the expenses of your appraiser and for half of the umpire´s expenses.


Public insurance adjusters. Public insurance adjusters charge fees to help negotiate claim settlements with insurance companies. If you hire a public adjuster, you may have less money to repair or replace your property. The public adjuster´s fee may be a flat fee, an hourly rate, or a percentage of the amount paid in the settlement of the claim. The method for calculating the commission must be included in the public adjuster´s contract with you, along with a statement that the adjuster´s commission may not exceed 10 percent of the entire claim. In some instances, a public adjuster is entitled only to reasonable compensation for time and expenses. Public adjusters may not give legal advice and may not participate, either directly or indirectly, in the reconstruction or repair of your damaged property. Nor may they engage in any activity that would be a conflict of interest.


Payment. Once the company agrees to pay all or part of your claim, it must do so within five business days. If you don´t get your check within five days, contact your agent or company.


Note: Most companies pay homeowners claims with two checks. The first, issued after the adjuster reviews your loss, is for the estimated cost of repairs, minus depreciation and your deductible. The company issues the second check for the balance of your claim after receiving the contractor´s bill for the finished job, as long as the repairs or replacements are completed within 365 days of the date of loss. You may submit a written request for an additional 180 days extension.