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  Policyholders' Bill of Rights - Printer Friendly Version

Proposed Legislation

ARTICLE ONE - - Right to Reasonable Underwriting . . .

Insurers may refuse to insure, deny access to any form of insurance, or surcharge any applicant for Property and Casualty insurance based upon . . .

  • an applicant’s history of policy cancellations for non-payment of premium . .
  • prior claims experience involving at least Fifty Percent (50%) Comparative Negligence on the part of the applicant (auto only) . .
  • gross disregard for the maintenance of the property to be insured . .
  • use of the potential insured property for illegal purposes . .
  • applicant’s driving record (auto only) . .
  • applicant’s criminal record.

Insurers may not increase the premiums of, or reduce the benefits of, any policy or form of Property & Casualty insurance based upon claims loss experience which does not involve more than Fifty Percent (50%) comparative negligence on the part of the insured.

Other than for reason of non-payment of premium, insurers may not cancel, decline to renew, otherwise terminate or reduce the benefits of a Property & Casualty insurance policy unless the insurer can clearly demonstrate a high probability of . . .

  • gross disregard for maintenance of the insured property . .
  • use of the insured property for illegal purposes.

The insured shall have the right to appeal to the Department of Insurance an insurers’ decision to decline to insure, cancel, decline to renew or otherwise terminate or reduce the benefits of a Property & Casualty insurance policy.

The Director of the Department of Insurance shall create (or cause to be created) a Insurer’s Action Appellate Form for use by the insured.

The Director of the Department of Insurance shall define an Appeal Fee to be shared equally between the Insurer and Insured.

The Director of the Department of Insurance shall establish (or cause to be established) a program by which the insured’s Appeal Fee can be waived in special circumstances.

The Director of the Department of Insurance shall develop (or cause to be developed) a procedure for the expedient resolution of the Appeal Process.

The decision of the Appeal Process shall be binding upon both the insurer and insured.

The insurer’s action, having become subject to the Appeal Process, shall be suspended pending the decision of the Appeal Process.

In the event the insurer may prevail in the Appeal Process, the insurer’s action that precipitated the Appeal Process shall take effect no sooner that Thirty (30) Days following the Appeal Process decision.

Upon conclusion of the Appeal Process, both the insurer and insured shall have access to all records and documents that had been a part of the Appeal Process. A reasonable clerical and copying fee will apply for the duplication of these records and documents.

 

ARTICLE TWO - - Right to Reasonable Premiums . . .

The Department of Insurance shall define Minimum Viability Standards for Property & Casualty insurers.

Premium rate increases of Five Percent (5%) or less may be implemented Thirty (30) Days after filing a Notice of Rate Revision with the Department of Insurance. Said Notice of Rate Revision shall include all lines and forms of insurance written by the subject insurer and wholly owned subsidiaries thereof.

All Notices of Rate Revision shall be sworn to under oath and personally signed by the insurer’s statutory agent. All Notices of Rate Revision shall separately itemize the current and revised rates for all lines and forms of insurance written by the subject insurer(s). The Five Percent (5%) as expressed herein shall apply to the net effect of the combined premiums charged for by the subject insurer(s).

Insurers are limited to the filing of One (1) Notice of Rate Revision within any Twelve (12) Month period.

Any false or misleading information contained in the Notice of Rate Revision shall expose the insurer’s signing statutory agent, and those who provided information upon which the statutory agent relied, to criminal prosecution under Consumer Fraud statutes as well as civil and regulatory penalties.

The Department of Insurance may, at their option and expense, perform Random On-sight Audits of any insurer who has submitted a Notice of Rate Revision, within Seven (7) Years of any such Notice of Rate Revision, to determine the accuracy of the information contained in the Notice of Rate Revision.

Premium Rate Increases in excess of Five Percent (5%) annually require the prior approval of the Department of Insurance and are subject to a full accounting audit by the Department of Insurance and/or their designated representative.

Said audit shall be performed using Standards and Procedures defined by the Department of Insurance to determine compliance with Minimum Viability Standards.

Insurers filing a Request for Rate Increase in excess of Five Percent (5%) shall deposit funds in trust with the Department of Insurance in an amount equal to 150% of the projected costs of the audit. Excess audit costs will be paid by the insurer. Excess prepaid audit cost deposits will defer to the Department of Insurance to fund Random On-sight Audits of insurers who have filed a Notice of Rate Revision.

The Department of Insurance shall approve and/or modify requested rate increases as may be necessary to comply with Minimum Viability Standards. Requested rate increases found to be unnecessary to meet Minimum Viability Standards shall be rejected by the Department of Insurance. Insurers, for whom the Department of Insurance has approved a rate increase in excess of Five Percent (5%), may not apply for another rate increase or utilize the Notice of Rate Revision option for Twelve (12) Months after approval.

Insurers whose Request for Rate Increase in excess of Five Percent (5%) has been rejected by the Department of Insurance may use the Notice of Rate Revision option as outlined above but may not submit another Request for Rate Increase in excess of Five Percent (5%) for Thirty Six (36) Months after a Request for Rate Increase in excess of Five Percent (5%) has been rejected.

 

ARTICLE THREE - - Right to Reasonable Recovery . . .

Uninsured Motorist and Under-Insured Motorist Coverage shall include (unless offered as a separate coverage) the right of the consumer to recover all forms of Property Damage loss that flows from the covered incident. Such Property Damage recovery benefit, when offered as a separate coverage, shall be included with the Uninsured Motorist and Under-Insured Motorist Coverages unless the policyholder signs a separate waiver specifically rejecting such coverage. The policyholder shall be provided a duplicate copy of said signed rejection.

Physical Damage Coverage (i.e. Collision, Comprehensive, etc) shall include (unless offered as a separate coverage) the right of the consumer to recover any documented loss in market value of the insured property that flows from the covered incident. Such Loss in Market Value benefit, when offered as a separate coverage, shall be included with any Physical Damage coverage unless the policyholder signs a separate waiver specifically rejecting such coverage. The policyholder shall be provided a duplicate copy of said signed rejection.

Any Property and Casualty insurer that writes Physical Damage coverage that allows the insurer to evaluate Physical Damage claims on the basis of utilizing parts or materials not produced, licensed or approved by the Original Equipment Manufacturer shall provide written notice to the policyholder that such contractual right is held by the insurer. Said notice shall inform the policyholder of any real or potential consequences related to the use of such generic parts and shall require the signature of the policyholder acknowledging notification of such insurer right and the real or potential consequences thereof. The Director of the Department of Insurance shall define the factors to be included in the description of “Real or Potential Consequences” which must include the impact on any pre-existing manufacturer’s warranty(s) and the impact on the post-repair resale value of the insured property when non-OEM parts are utilized. The policyholder shall be provided a duplicate copy of said signed notification.

That portion of a Physical Damage policy commonly referred to as the “Appraisal Clause” shall include the option of having a third party to the process (umpire, referee, third appraiser, etc) be appointed by a “Court of Jurisdiction”. If the “Appraisal” process should result in a settlement increase of Twenty Five Percent (25%) or more, the insurer shall reimburse to the policyholder all costs incurred relative to participating in the “Appraisal” process. Upon request of the policyholder, the insurer shall tender payment to the policyholder in an amount equal to the highest offer of settlement made by the insurer prior to the “Appraisal Clause” being invoked.

When an insurer steers, directs, suggests or otherwise encourages the use of a specific repair facility or group of facilities, and a consumer chooses to utilize such facility, the insurer shall warrant the damaged property to be fully restored to pre-loss level of appearance, function, safety and warranty protection. If an insurer becomes involved directly or indirectly in defining the scope and/or method of repair to be employed in addressing covered damage, said insurer shall warrant repairs against defects in workmanship and/or materials. Said warranties, as referenced herein, shall be for the balance of any existing manufacturer warranty or five (5) years, whichever is greater. Said warranties shall be transferable to a buyer in due course of the repaired property. All Original Equipment Manufacturer repair guidelines will be strictly adhered to. If any repair falls short of this level of restoration, the insurer shall pay whatever re-repair or additional repair cost is necessary to achieve pre-loss appearance, function and safety. No insurer shall require any consumer to return to the same repairer for any additional work necessary. Such re-repair or additional repair, as referenced herein, shall not be subject to any policy contract limitations. Insurer shall provide comparable substitute transportation during the time re-repairs or additional repairs are being performed.

All repaired vehicles, for which insurance funds were involved in payment of the repairs, shall display a permanent record of the insurance claim information in a conspicuous location in the engine compartment of the repaired vehicle. Said permanent record shall be affixed to the repaired vehicle by an authorized representative of the insurer when the repairs have been fully completed but prior to delivery of the repaired vehicle back to the owner. Said claim information shall identify the insurer, claim number, date of loss, date of warranty inception (if applicable), identity of the individual affixing the record and the name and phone number of the repairing facility.

The Department of Insurance, upon petition to and order from a Court of Jurisdiction, shall have the authority to require any insurance carrier to comply with any/all statutes/regulations governing the conduct of an insurance carrier in first party claim situations be applied to third party liability situations.

 

ARTICLE FOUR - - Right to Reasonable Enforcement . . .

The Director of the Department of Insurance, or their designated representative, shall, after a thorough investigation of a Consumer Complaint where a departure from the code of conduct as outlined herein is found to exist, impose a fine against the insurer of no less than Five Thousand Dollars ($5,000.00) and no more than the Director of the Department of Insurance deems appropriate to discourage such mis-conduct in the future. The cost of the complaint investigation shall be added to the amount of the fine.

 

ARTICLE FIVE - - Right to Insurer Accountability . . .

The code of conduct as outlined herein, as well as the investigatory files relative to a given insurer, shall be admissible in any civil action alleging violations hereof.

 

A Mission of the Insurance Consumer Advocate Network . . . ( Empowering Consumers Nationwide )

This Document can be accessed online at:
www.iCan2000.com   /   www.ProDiscussions.com

Rev. 10/13/2002