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CU Praises New California Homeowners Insurance Protections

Friday, July 11, 2003
Norma Garcia – 415-431-6747


SAN FRANCISCO, CA – Consumers Union, the nonprofit publisher of Consumer Reports, praised California Insurance Commissioner John Garamendi on July 11 for taking steps to help homeowners secure affordable, quality insurance coverage. The Commissioner announced emergency insurance regulations in response to numerous complaints from homeowners who were having a difficult time getting reasonably-priced coverage or faced significant premium increases and cancellations after filing minor claims.
“Homeowners insurance is a necessity that must be available to Californians at a reasonable price,” said Norma Garcia, Staff Attorney with Consumers Union’s West Coast Regional Office. “These regulations are needed to protect consumers from unfair rate increases, cancellations, and denials.”
The Department reported that it has received a record number of complaints from homeowners who have had their insurance coverage cancelled or not renewed after filing a claim or simply making an inquiry about their coverage. The emergency regulations make it clear that these industry practices are not permissible.
The Department has also received numerous complaints from policyholders that were unable to obtain coverage because insurers relied on information contained in the Comprehensive Loss Underwriting Exchange, a database that reportedly contains incomplete or erroneous information about previous claims. The emergency regulation requires insurers to verify information obtained from the CLUE database before it can be used as the basis for underwriting decisions.
“It is very troubling to hear accounts of homeowners who were hit with big rate increases for simply making an inquiry about a potential claim or those who were denied coverage because of claims filed by the previous owner of their new home,” said Garcia. “We are pleased that Insurance Commissioner John Garamendi has acted to protect California consumers from these abusive industry practices and urge other states to adopt similar rules”

Consumers Union, nonprofit publisher of Consumer Reports, is an independent, nonprofit testing and information organization, serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition, and other consumer concerns. Since 1936, our mission has been to test products, inform the public, and protect consumers.