By Joe Hudgins
Unless you have been living under a rock for the past year, you probably have noticed that property insurance, both new and renewal, is getting just a bit harder to place or keep with carriers. While this applies to both commercial and personal insurance, this article is directed at homeowner insurance.
I am hearing from members that one of the issues that they are dealing with relates to homeowner policy renewals. Specifically, carriers are using photo images of rooftops taken by drones, airplanes and even satellites to make renewal decisions on individual policies. The following Virginia insurance code deals with homeowner non renewals, it is 38.2-2114 B. and C.2.:
B. No policy or contract written to insure owner-occupied dwellings shall be terminated by an insurer by refusal to renew except at the expiration of the stated policy period or term and unless the insurer or its agent acting on behalf of the insurer mails or delivers to the named insured, at the address stated in the policy, or delivers electronically to the address provided by the named insured, written notice of the insurer's refusal to renew the policy or contract.
C. A written notice of cancellation of or refusal to renew a policy or contract written to insure owner-occupied dwellings shall:
2. State the specific reason for terminating the policy or contract and provide for the notification required by the provisions of §§ 38.2-608 and 38.2-609 and subsection B of § 38.2-610. However, those notification requirements shall not apply when the policy is being canceled or not renewed for the reason set forth in subdivision A 1;
Please note that the statute (38.2-2114 C.2.) requires that the non-renewal notice “state the specific reason” for the non-renewal. Although the statute does not state it, it is understood that the reason must be accurate as of the date the non-renewal notice is issued. In addition, the statute does not prevent a carrier from using aerial photo images to gather their underwriting information but, again, the non-renewal reason must be specific and accurate.
Finally, the specific reason cannot be one of the illegal reasons enumerated later in the statute (38.2-2114 I. 1 – 16 & J.). Of particular interest is 38.2-2114 I.14.:
I. No insurer or agent shall refuse to renew a policy written to insure an owner-occupied dwelling, solely because of any one or more of the following factors:
14. Any claim resulting primarily from natural causes;
That means that a carrier cannot non renew a homeowner policy solely due to wind or hail damage (or any other “natural cause loss” to a roof. But they can increase the deductible (no higher than 10% of Cov. A as of 12/31/2023) and premium as the result of a natural cause loss.
Joseph L. Hudgins, CPCU, is Vice President – Technical Research and Government Relations at IIAV.
Photo by Blake Wheeler on Unsplash
Independent Insurance Agents of Virginia