Rutgers Law School Project Addresses ‘Use It And Lose It’ in Homeowners Insurance
A new report by the Rutgers Center for Risk and Responsibility at Rutgers Law School in Camden, N.J., in cooperation with United Policyholders, offers recommendations to state lawmakers in terms of how homeowners insurance claims are addressed by insurance companies following a loss.
The report states that many times when a homeowner suffers a loss and files a claim with an insurance company, the company will respond by raising homeowners premiums or refusing to renew the policy.
“Homeowners shouldn’t be penalized by their insurance companies because they actually use their insurance,” said Jay Feinman, co-director of the Rutgers center and a professor at the law school, in a Rutgers University press release.
The report, “State Rankings of Homeowners Insurance Protections: ‘Use It and Lose It,'” is part of the Essential Protections for Policyholders project, an initiative of the Rutgers Center for Risk and Responsibility in cooperation with United Policyholders.
The latest report focuses on addressing an issue in homeowners insurance known as “Use It and Lose It.” This occurs when a homeowner suffers a loss and files a claim, and the insurance company responds by raising the homeowners’ premium or even refusing to renew the policy.
The report explains that this can make it difficult to get claims properly handled or find comparable coverage at the right price if dropped by an insurance company. Ultimately, it could deter homeowners from filing claims even if the losses should be covered, the report adds.
Key findings show that 18 states have no explicit protection against this. The report also ranks each state by the level of protections it provides for policyholders.
The report found that Rhode Island and Texas both received the highest five-star ranking. Pennsylvania and Delaware each received four stars out of five, and New Jersey earned a three-star rating. New York received the lowest with a one-star rating, the release states.