Chapter 083
2012 -- H 7484 SUBSTITUTE A
Enacted 05/21/12
A N A C T
RELATING TO
INSURANCE - FIRE INSURANCE POLICIES AND RESERVES
Introduced By: Representatives Kennedy, Messier, Ferri, and McNamara
Date Introduced: February 09, 2012
It is enacted by the
General Assembly as follows:
SECTION 1. Section 27-5-3.7 of the General Laws in Chapter
27-5 entitled "Fire
Insurance Policies and
Reserves" is hereby repealed.
27-5-3.7.
Hurricane deductibles, triggers and policyholder notice. -- (a)
The
provisions of this section shall be applicable to policies
issuing or renewing on or after July 1,
2008.
(b) In all instances
where an insurance company licensed to do business in this state
offers or includes any deductible and/or mitigation measure
related to such deductible for any
type of personal lines residential property insurance on
dwelling houses, the insurance company
shall provide prominent and clear notice to insureds, that shall be included in the policy issuance
or renewal package and shall fully disclose all details
pertaining to any such deductible and/or
mitigation measure.
(c) The insurer may
apply a deductible specific to windstorm coverage where:
(1) The deductible is
specifically approved by the director and shall not exceed five
percent (5%) of the insured value.
(2) The deductible
shall be applicable to losses due to a hurricane during the period
commencing with the issuance of a hurricane warning bulletin for
any part of the state by the
National and concluding twenty-four (24) hours after the
termination of the last
hurricane warning bulletin for any part of the state.
(3) The deductible,
whether it is a flat dollar deductible or a percentage deductible shall
be presented by at least two (2) examples that
illustrate the application of the deductible to the
insured. Nothing herein shall prohibit the insurer from
providing any additional information to the
insured to assist in the insured's understanding of the
deductible to be applied to the insured's
policy.
(4) The deductible
set forth above shall not be applied to any insured, if the insured has
installed approved mitigation measures to protect against
windstorm damage and the insurer has
either inspected the property or the insured has submitted
satisfactory proof of installation of the
approved mitigation measures. The insurance commissioner, in
consultation with the state
building code commissioner, shall adopt and may amend or
revise a list of mitigation measures,
based so far as reasonably feasible on national standards
for such measures and practices in other
comparable states. The list of mitigation measures adopted by
the insurance commissioner shall
be considered approved mitigation measures for purposes
of this subdivision.
(5) For the
application of the hurricane deductible in
hurricane when a hurricane results in hurricane force sustained
winds as reported by the national
weather service for
of the state, losses are due to a hurricane when a
hurricane results in hurricane force sustained
winds as reported by the national weather service for any
other location in the state. All terms are
as defined by the national weather service.
(d) Premium credits
shall be applied to policies with deductibles as set forth in
subsection 27-5-3.7(c).
(e) (1) An insurer may require mitigation measures to protect
against windstorm damage
only after specific approval of the substance of such
mitigation measures by the director;
(2) Mitigation
measures to be taken by an insured are clearly explained, including a
complete illustration of the dollar impact upon the premiums
to be charged to insureds if the
requested mitigation activities are undertaken;
(3) No mandatory
deductible for windstorm damage shall be included in the policy;
(4) An insurer shall
write the requested coverage at the premium rate that includes the
premium credit to be realized with the completion of the
mitigation efforts;
(5) The insurer
shall affirmatively state the length of time during which discount given
for the mitigation efforts will apply; and
(6) No insurer shall
subsequently non-renew an insured who has taken the mitigation
steps requested by the insurer for reasons of the insurers
exposure to catastrophe loss, unless for
non-payment of premium, fraud, breach by the insured of a
provision of the policy, reversal or a
lack of maintenance of the mitigation steps, or insurer
solvency concerns or adverse loss history.
(f) Penalties for
failure to comply with the provisions of this section shall be
administered by the director in accordance with the provisions of
section 42-14-16.
(g) The department
of business regulation shall have authority to adopt such rules,
including emergency rules, as may be necessary or desirable to
effectuate the purposes of this
section.
SECTION 2. Title 27 of the General Laws entitled
"INSURANCE" is hereby amended
by adding thereto the following chapter:
CHAPTER
76
WEATHER
RELATED LOSSES
27-76-1.
Applicability. -- The provisions of this
chapter shall be applicable only to
personal lines residential property insurance on dwelling
houses.
27-76-2. Hurricane
deductibles, triggers and policyholder notice. -- (a) The
provisions of this section shall be applicable to policies issuing
or renewing on or after July 1,
2008.
(b) In all instances
where an insurance company licensed to do business in this state
offers or includes any deductible and/or mitigation measure
related to such deductible for any
type of personal lines residential property insurance on
dwelling houses, the insurance company
shall provide prominent and clear notice to insureds that shall be included in the policy issuance
or renewal package and shall fully disclose all details
pertaining to any such deductible and/or
mitigation measure.
(c) The insurer may
apply a deductible specific to windstorm coverage where:
(1) The deductible is
specifically approved by the director and shall not exceed five
percent (5%) of the insured value.
(2) The deductible
shall be applicable to losses due to a hurricane during the period
commencing with the issuance of a hurricane-warning bulletin for
any part of the state by the
hurricane warning bulletin for any part of the state.
(3) The deductible,
whether it is a flat dollar deductible or a percentage deductible shall
be presented by at least two (2) examples that illustrate
the application of the deductible to the
insured. Nothing herein shall prohibit the insurer from
providing any additional information to the
insured to assist in the insured's understanding of the
deductible to be applied to the insured's
policy.
(4) The deductible
set forth above shall not be applied to any insured, if the insured has
installed approved mitigation measures to protect against
windstorm damage and the insurer has
either inspected the property or the insured has submitted
satisfactory proof of installation of the
approved mitigation measures. The insurance commissioner, in
consultation with the state
building code commissioner, shall adopt and may amend or
revise a list of mitigation measures,
based so far as reasonably feasible on national standards
for such measures and practices in other
comparable states. The list of mitigation measures adopted by
the insurance commissioner shall
be considered approved mitigation measures for purposes
of this subdivision.
(5) For the
application of the hurricane deductible on
hurricane when a hurricane results in hurricane force sustained
winds as reported by the national
weather service for
of the state, losses are due to a hurricane when a
hurricane results in hurricane force sustained
winds as reported by the national weather service for any
other location in the state. All terms are
as defined by the national weather service.
(d) Premium credits
shall be applied to policies with deductibles as set forth in subsection
27-76-2(c).
(e)(1) An insurer may
require mitigation measures to protect against windstorm damage
only after specific approval of the substance of such
mitigation measures by the director;
(2) Mitigation
measures to be taken by an insured are clearly explained, including a
complete illustration of the dollar impact upon the premiums
to be charged to insureds if the
requested mitigation activities are undertaken;
(3) No mandatory
deductible for windstorm damage shall be included in the policy;
(4) An insurer shall
write the requested coverage at the premium rate that includes the
premium credit to be realized with the completion of the
mitigation efforts;
(5) The insurer shall
affirmatively state the length of time during which discount given
for the mitigation efforts will apply; and
(6) No insurer shall
subsequently non-renew an insured who has taken the mitigation
steps requested by the insurer for reasons of the insurers
exposure to catastrophe loss, unless for
non-payment of premium, fraud, breach by the insured of a
provision of the policy, reversal or a
lack of maintenance of the mitigation steps, or insurer
solvency concerns or adverse loss history.
(f) Penalties for
failure to comply with the provisions of this section shall be administered
by the director in accordance with the provisions of
section 42-14-16.
(g) The department of
business regulation shall have authority to adopt such rules,
including emergency rules, as may be necessary or desirable to
effectuate the purposes of this
section.
27-76-5.
Hurricane Mediation. -- The department of business
regulation is hereby
authorized to establish by regulation a non-adversarial
non-binding alternative dispute resolution
procedure for the effective, fair, and timely handling of
personal lines insurance claims arising
out of damages to residential property caused by
hurricanes. The provisions of this section shall
not apply to disputes of coverage under the insurance
policy.
27-76-6.
State of emergency; effect upon insurance policies; rules.
-- The
department of business regulation may promulgate regulations to
take effect upon the declaration
of a catastrophe, as declared by a nationally recognized
catastrophe loss index provider, that
address any of the following or other matters related to the
catastrophe for insurance policies
issued in this state:
(1) Reporting
requirements for claims related to the emergency;
(2) Grace periods for
payment of insurance premiums and performance of other duties by
insureds (other than the duty to mitigate); and/or
(3) Temporary
postponement of cancellations and nonrenewals of
insurance policies.
27-76-9.
Severability. -- If a court holds any section
or portion of a section of this
chapter or the applicability thereof to any person or
circumstance invalid, the remainder of the
chapter shall not be affected thereby.
SECTION 3. Chapter 27-76 of the General Laws entitled
“Weather-Related Losses” is
hereby amended by adding thereto the following sections:
27-76-3.
Residential property insurance hurricane deductible application.
-- (a) For
all deductibles as provided for in section 27-76-2, such
deductible may only be applied once to all
hurricane losses that are subject to the hurricane deductible
during the calendar year.
(b) If an insured
incurs a hurricane loss from more than one hurricane during a calendar
year that are subject to the separate deductible referred
to in subsection (a), the insurer may apply
the deductible to the succeeding hurricane that is equal to
the remaining amount of the separate
deductible or the amount of the deductible that applies to all
perils other than a hurricane,
whichever is greater. Insurers may require policyholders to
produce receipts or other records of
such losses in order to apply such losses to subsequent
hurricane claims.
27-76-4.
Notice of Property Loss. -- No insurance policy
or contract covering damages
to personal lines residential property may be cancelled
or nonrenewed, nor may the premium for
such a policy be increased solely as a result of inquiries
or claims made under the policy which
resulted in no loss payout or resulted in a loss payout of
less than five hundred dollars ($500).
The provisions of this section shall not apply where
more than one non-catastrophic claim is
made under the policy in a three (3) year period which
resulted in any loss payout.
27-76-7.
Use of Prior Claim Experience of Insured Property. --
No insurer may refuse
to insure, cancel, nonrenew or
surcharge an insurance policy covering damages to personal lines
residential property based solely upon prior claim experience for
property damage claims at the
insured property while under the ownership of someone other
than the current insured unless the
risk from which the claim originated has not been
mitigated.
27-76-8.
Use of Claim Experience resulting from Catastrophic Events.
-- No insurer
may refuse to insure, cancel, nonrenew
or surcharge a policy or contract covering damages to
personal lines residential property solely as a result of
damages sustained in a catastrophic event.
SECTION 4. This act shall take effect upon passage, except
for Section 3. Section 3 of
this act shall take effect on January 1, 2013, and shall
be effective for and applicable to policies
issued or renewed on and/or after January 1, 2013.
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LC01425/SUB A
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