Dover – Insurance Commissioner Matt Denn and members of the Senate and House Insurance Committees said Thursday that they will pursue a new law in the wake of a Delaware court ruling that would allow insurance companies to refuse to renew homeowner insurance for policyholders who make claims against their policies, or even ask questions about doing so.

 

On Wednesday, a Delaware Superior Court judge ruled in favor of two insurance industry groups in a lawsuit seeking to overturn a 2005 Department of Insurance regulation banning the practice of non-renewing homeowners insurance policies as a result of making claims. The regulation also prohibited insurers from treating simple questions from policyholders as claims. The insurers had argued in court that the Insurance Department did not have the authority to take such actions by regulation.   

 

Commissioner Denn stated that he would appeal the Superior Court’s decision to the Delaware Supreme Court.  While the appeal is pending, Commissioner Denn and legislative leaders will seek to enact legislation to provide the same protection afforded by the disputed regulation. 

 

“We will fight on every available front to protect homeowners from abusive practices by the insurance industry,” Commissioner Denn said. 

 

State Sen. David Sokola, a member of the Senate Insurance Committee, will be the chief sponsor of the legislation to be introduced on January 8. 

 

“It is completely unfair for insurance companies to punish homeowners for making routine claims against their homeowners insurance,” Sen. Sokola said.  “I am disappointed that the court has prevented the Insurance Department from prohibiting this practice, and I hope the General Assembly will work with Commissioner Denn to pass this legislation promptly so homeowners can once again be protected.”

 

State Rep. Valerie Longhurst, a member of the House Economic Development, Banking and Insurance Committee and the chief House sponsor of the new legislation, pointed out that the regulation in question was implemented only after the House of Representatives failed to address the issue in 2005. 

 

“The last time the House of Representatives was given a bill to address this problem, it did not act,” she said.  “Now that the legislature may be the only body that can protect homeowners from these unfair practices, I hope the House will take this issue more seriously.”

 

The case is C.A. No. 05C-10-309 SCD, American Insurance Association and Property and Casualty Insurers Association of America vs. Delaware Department of Insurance.

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