Growing Trend: Insurance Policy Cancellations

August 12, 2002

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State Says No-Renewals Now No. 1 Insurance Consumer Complaint

Posted: 4:08 p.m. PDT August 9, 2002

SACRAMENTO, Calif. -- Discovering that your insurance company has just

dropped you is a real jolt and, unfortunately, a growing trend in

California.

Insurers are choosing to not renew many homeowner insurance policies without

warning. And it's completely legal.

Marcus got the bad news by letter. His homeowners' policy was canceled

because, they wrote, he'd made three water damage claims over three years.

" I was told that they don't care if you've been with them 50 years, "

said.

AAA did replace 's roof after storm damage, but then said no more.

According to the state Insurance Commission's office, non-renewal is now the

No. 1 insurance consumer complaint in California.

If you have filed a claim or two or three with your insurance company with

the last two or three years, you're more likely to get that letter that

you're being non-renewed, " said state Insurance Commission spokeswoman Nanci

Kramer.

The insurance industry blames the problems on explosion of claims for water

damage and mold.

Companies at this point are losing substantial sums of money, hundreds of

millions of dollars on an annual basis because of the water and the mold

claims -- claims that as recently as three years didn't exist at all, at

least the mold claims, " said Personal Insurance Federation spokesman Dan

Dunmoyer.

said that no other insurance company would cover him. Experts say that

insurance companies share a special database, where the claims history of a

person or a property can be used to deny coverage.

" In some situations, we've had new home buyers buying a property from

someone else, where it had a mold or water claim. they were told they cannot

find insurance, " Kramer said.

The state advises consumers to avoid making a series of small claims,

especially about water damage or mold. The state also says that consumers

should consider paying damage repair themselves if they can afford it. Being

aware of insurance trends may help homeowners preserve their current

policies.

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