WASHINGTON, DC—The growing number of extreme weather events, combined with inflation and rising construction costs, have destabilized the home insurance market. As a result, consumers are facing skyrocketing home insurance costs, or losing coverage altogether in their time of greatest need.
After gathering more than 500 stories from its members and engaging more than 56,000 consumers to develop solutions, Consumer Reports (CR) has released a Homeowners Insurance Bill of Rights. The initiative calls for stronger consumer protections and increased transparency at every stage of the homeowner’s relationship with an insurance provider—from shopping for a policy, to maintaining coverage, to getting benefits after a disaster.
CR aims to work with the insurance industry to embrace these baseline standards, and advocate for policymakers to codify them in laws and regulations. CR also launched a petition today calling on home insurance companies to adopt these protections, giving consumers a direct way to support stronger safeguards for homeowners.
“This Bill of Rights lays out the basic, common-sense protections every homeowner should be guaranteed,” said Alexandra Grose, senior counsel for Consumer Reports. “It provides a clear framework for how to bring greater fairness to the marketplace and ensure families aren’t left unprotected when disaster strikes.”
Homeowners insurance is largely regulated at the state level, and some states have better consumer protections than others, which can affect how rates are determined, the types of coverage offered, and the availability of insurance in certain areas. In almost every case, versions of CR’s nine proposed rights have already been established by law in at least one or more U.S. states.
“We consider these rights to be the basics of what all insurers should provide in every state,” said Sara Enright, senior director of safety and sustainability for Consumer Reports. “The insurance industry is already complying with most of these rights in some states. We think many insurance companies would be willing to extend these important protections to all policyholders if they knew they were competing on a level playing field.”
To bring greater fairness to the marketplace, CR believes policyholders should have a right to, and be guaranteed, the following basic rights across all states:
- A clear, plain-language explanation of what is—and isn’t—covered by your policy: Consumers should receive a standardized, easy-to-read explanation of what their policy covers and what it excludes before purchase or renewal, including all named perils and limits.
- Know which risk factors are used to determine eligibility and set rates: Insurers should clearly disclose the main factors that determine a homeowner’s eligibility and premiums, and proactively share information about all risks identified for the property, enabling homeowners to make informed coverage and mitigation decisions.
- Fair access to coverage based on property risk, not your finances: Applicants should be assessed primarily on property and location-specific risk factors that directly affect the likelihood of loss, not on unrelated financial or demographic characteristics such as credit scores, income, or neighborhood demographics.
- Receive written notice and a full explanation well in advance of major changes to your insurance policy: Policyholders should receive at least 60 days’ written notice before non-renewals, cancellations, or rate increases of 10% or more, with clear explanations and opportunities to correct errors.
- Benefit from incentives to “harden” your home against severe weather or wildfire risks: Consumers should receive clear, advance notice of possible home improvements, understand how those upgrades will affect premiums or coverage, and be guaranteed any discounts or continued coverage offered for completing them.
- Insurance security during and after declared States of Emergency: Following a state or federal emergency declaration, homeowners should be protected by at least a one-year moratorium on non-renewals and cancellations, and be given a 60-day grace period for delayed premium payments. In the case of a total loss, this moratorium should be extended for a minimum of 24 months.
- Face no penalties for inquiries and unpaid claims: Policyholders should not face higher premiums or cancellations for seeking information about potential claims or having a claim closed without payment.
- Prompt, full, and fair payment on a claim: Simple claims should be investigated, accepted or denied, and payments distributed within 30 days of submission, or else insurers should promptly notify the claimant of the need for more information and provide policyholders a reasonable timeline for the investigation.
- Immediate and adequate financial support for emergency housing and essentials: Insurers should provide prompt emergency financial assistance after a declared disaster to cover emergency housing and basic needs, without requiring an itemized list of lost assets.
“These are not extreme demands. They are essential safeguards for families and their homes,” said Grose. “These rights are necessary for a fair marketplace. By adopting these protections nationwide, insurers and policymakers can help stabilze the market, improve consumer trust, and ensure homeowners are not left unprotected in their time of greatest need.”
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Media Contacts: Emily Akpan, emily.akpan@consumer.org | Michael McCauley, michael.mccauley@consumer.org