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Wednesday, May 8, 2013

States Pass Homeowners Insurance Notice Laws in Response to Hurricane Sandy Challenges

By Adam Maarec and Chris Datskos, McIntyre & Lemon, PLLC

Two states have passed laws that make new requirements for homeowners insurance, New Jersey and Maryland.

The New Jersey law requires one-page summary of homeowners insurance coverages. All homeowners insurance policies that are issued, delivered, or renewed in New Jersey must contain a consumer information brochure that is written in simple, clear, understandable, and easily readable language, which explains the insurer's hurricane deductible program, if any, and includes any required information on flood insurance. The amended law now requires the insurer, as part of the brochure, to provide a 1-page summary of the policy that includes notable coverages and exclusions and states that the summary is only provided as guidance to the homeowner in understanding the terms of the policy. An insurer must provide a consumer information brochure to the insured at least annually at the time of policy renewal. The new requirements are not effective until implementing regulations are issued by the New Jersey Department of Banking and Insurance.

Read New Jersey's law.

The Maryland law requires explanation of anti-concurrent causation clauses. An insurer issuing a homeowners insurance policy in Maryland that contains an anti-concurrent causation (ACC) clause, which excludes coverage when a loss is due to a combination of covered and excluded events, must give the policyholder an annual notice that: (1) is clear and specific; (2) describes the ACC clause; (3) informs the insured to read the entire policy for all the exclusions; and (4) states that the insured should communicate with the insurance producer or the insurer for additional information regarding the scope of the exclusions. This required notice is not part of the policy and does not create a private right of action for the policyholder. The law also requires the Maryland House Economic Matters Committee and Senate Finance Committee to study a number of issues related to the use and effects of an ACC clause. The law becomes effective January 1, 2014.

Read Maryland's law.