Would Prevent Problems Encountered by Homeowners Following Hurricane Irene
TRENTON – Senate Majority Leader Barbara Buono (D-Middlesex) has introduced legislation to require insurance providers to develop a ‘homeowners insurance buyer’s guide’ to provide consumers with clear and detailed information about their policies, a measure intended to prevent problems experienced in the wake of Hurricane Irene by homeowners who were unclear as to whether certain property damages were covered under their policies.
“Homeowners should know exactly what is contained in their policy at the time of purchase, including whether damage from certain disasters, such as a hurricane or flooding, would be covered and to the extent their policy would cover it,” said Senator Buono. “Unfortunately, there is little information available for consumers on a pre-purchase basis. Further, even when consumers are able to access their policy, they still may not be able to fully comprehend the details. A plain-language guide would give consumers clear and concise information about available policies, providing them peace of mind during the purchasing process and eliminating any confusion should they find themselves in the position of having to file a claim.”
Under the bill, insurance providers would have to file the buyer’s guide with the Commissioner of Banking and Insurance as well as provide it to homeowners at the time of application for insurance and at the time of renewal. Each buyers guide would be required to include: (1) a brief description of all policy coverages, benefit limits, and perils (floods, hurricanes, etc.) insured against under each policy form offered by the insurer; and (2) a statement on how the policy coverages, benefit limits, and perils insured against under each policy form deviate from the corresponding Insurance Services Office standardized policy form offered by the insurer.
The Department of Banking and Insurance would also be required to post the information on its website, which would re-establish a homeowners insurance comparison guide for residents – a consumer tool the department decided to eliminate citing (Bulletin No. 10-38) the “complexity of current homeowners ratings systems” and the difficulty finding representative sample policies that are “meaningful to individual prospective insureds.” The Senator’s bill would reinstate the online consumer guide, but require more detailed information be made available regarding coverage offered under the policies.
“Without access to plain-language information on insurance policies, consumers are left with pages of legal documents, which many times they are forced to decipher under the stress of buying a new home or in the aftermath of a disaster,” said Senator Buono. “This legislation will re-instate necessary consumer protections to ensure homeowners are provided clear and accurate information about the type of coverage they are purchasing upfront. Further, it will require that detailed information regarding the type and cost of coverage offered by each provider in the state is made publicly available to allow homeowners to comparison shop and find a policy that best fits their needs.”