Senate Bill Would End Industry Blackballing of Consumers Who File a Claim
Santa Monica, CA – Insurance companies must be required to sell insurance policies to homeowners, consumer advocates will tell State Senators at a hearing today. The Foundation for Taxpayer and Consumer Rights (FTCR) is encouraging lawmakers to pass SB 64 (Speier) in order to combat an escalating insurance availability crisis.
“Homes are most families’ primary asset and Californians must have access to insurance coverage for their house,” said FTCR’s senior consumer advocate Douglas Heller. “If insurance availability becomes more restricted, it could trigger a disastrous economic fallout. This law is needed to curb the insurance industry’s practice of blackballing consumers who file legitimate claims.”
Throughout California, insurers have refused to renew their customers’ policies and have refused to sell new policies to many other homeowners simply because the consumer may have recently filed a claim or simply inquired about coverage. In conjunction with these severe and increasingly common practices, insurers have pushed rates up for most homeowners. As a result California consumers are having more difficulty finding and keeping affordable homeowners insurance. According to FTCR, the insurance industry, facing a bad economy and declining investment income, has attempted to tighten the insurance market and raise rates in order to avoid the financial challenges associated with current economic conditions.
“Insurance companies, like everyone, have to deal with the tough economy, but instead of tightening their own belts, the insurance industry is trying to squeeze its customers. And because homeowners cannot go without insurance, consumers have been forced to carry that burden.”
SB 64 would prevent insurers from making underwriting decisions — that is, whether or not to sell coverage to a consumer — based on the fact that a homeowner made an inquiry about their coverage or reported a loss, for which they did not intend to file a claim. Further, it would set clear standards for non-renewing or refusing to offer coverage to a policyholder, making it illegal for companies to take actions against the interests of consumers on the grounds that they filed a claim, or a series of claims. According to SB 64, insurers would be required to sell policies to all consumers who are, and whose homes are, insurable. In other words, as long as an insurer should be able to reasonably assess a risk, and as long as the customer has not been grossly negligent, with respect to their home, a homeowner would be ensured access to coverage.
FTCR says that by making insurance coverage readily available, SB 64 will stabilize the insurance marketplace for homeowners and, in conjunction with strong regulation by the insurance commissioner, will be crucial to restoring appropriate insurance premiums for the public.