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An insurance company uses a process called “underwriting” to
decide (1) if it will offer an insurance policy to someone new and (2) if it
will continue to provide insurance for someone who is already its customer. Each
insurance company creates its own “underwriting guidelines” to help make these
decisions. Underwriting guidelines can be very different from one insurance
company to the next. Each company selects the risk factors that it will include
in its “underwriting guidelines.” These “underwriting guidelines” are very
private, and insurance companies or their agents will not provide these
guidelines to anyone besides their employees.
“Risk factors” are things about a person's life, home, or job
that insurance companies or agents consider during the underwriting process to
help decide if the company will offer insurance to that person. If a person has
too many “risk factors,” the insurance company will not offer that person
insurance or will cancel or not renew the person's insurance. Sometimes the risk
factors just result in an increase in premium. One of the most common “risk
factors” that will get your insurance canceled is making too many claims in a
few years, even if the claim payments are for small amounts of money. Maryland
law does not allow a cancellation if there are 2 weather-related claims in a
3-year period. Making 2 claims that are not weather-related in a 3-year period
may result in cancellation by some insurance companies. Inquiries to your
insurance company or agent regarding coverage for losses are not considered by
your insurance company as claims. Only when payment is made by your insurance
company is the claim considered for purposes of determining your “risk factors”.
Some other “risk factors” are:
Maryland insurance companies must follow Maryland law when
deciding what risk factors are included in their underwriting guidelines. This
law says that insurance companies cannot cancel or refuse insurance to someone
based on his or her race, religious beliefs, gender, national origin, physical
handicap or disability, or any other reason that is random or discriminatory.
Underwriting guidelines must also have some reasonable purpose that is related
to the insurance company's business of making a profit by insuring people and
their possessions.Examples of Underwriting Guidelines used by
companies in Maryland
One insurance company will not offer insurance to a person who
has large amounts of clutter in the home, including in the kitchen area and
around the water heater.One insurance company will cancel a person's insurance
if that person has more than 1 non-weather related claim in 3 years.One
insurance company will cancel a person's insurance for a second home, like a
beach or vacation house, if that person does not live in the second home at
least once every 30 days.
If you are a new customer, ask if two non-weather related claims
in the first three years will result in a notice of cancellation or non-renewal.
If you are already a customer of an insurance company ask if your insurance
will be cancelled or not renewed if you make two claims in the next three years.
If you already have one claim, ask if you will be cancelled or not renewed if
you file another claim in the next two years.
Please remember that cancellation or non-renewal of your
homeowners insurance may impact the cost and your ability to get insurance with
Maryland Attorney General's
OfficePeople's Insurance Counsel
Division200 St. Paul StreetBaltimore, Maryland,
21202410-576-64321 (888) 743-0023email: PIC@oag.state.md.us
200 St. Paul Place, Baltimore, MD 21202
410-576-6300 / 1-888-743-0023 toll-free / TDD: 410-576-6372