§ 4120 Scope of subchapter.
This subchapter shall apply to policies of property insurance, other than policies of inland marine insurance and policies of property insurance issued through a residual market mechanism, covering risks to property located in this State which take effect or are renewed after the effective date of this subchapter and which insure any of the following contingencies:
(1) Loss of or damage to real property which consists of not more than 4 residential units, 1 of which is the principal place of residence of the named insured; or
(2) Loss of or damage to personal property in which the named insured has an insurable interest where:
a. The personal property is used for personal, family or household purposes; and
b. The personal property is within a residential dwelling.
§ 4121 Definitions.
(a) "Renewal" or "to renew" means the issuance and delivery by an insurer at the end of a policy period of a policy superseding a policy previously issued and delivered by the same insurer or the issuance and delivery of a certificate or notice extending the term of an existing policy beyond its policy period or term. For the purposes of this subchapter, any policy period or term of less than 6 months shall be considered a policy period or term of 6 months and any policy period or term of more than 1 year or any policy with no fixed expiration date shall be considered a policy period or term of 1 year.
(b) "Nonpayment of premium" means the failure of the named insured to discharge any obligation in connection with the payment of premiums on policies of property insurance subject to this subchapter, whether such payments are directly payable to the insurer or its agent or indirectly payable under a premium finance plan or extension of credit. "Nonpayment of premium" shall include the failure to pay dues or fees where payment of such dues or fees is a prerequisite to obtaining or continuing property insurance coverage.
(c) "Termination" means either cancellation or nonrenewal of property insurance coverage in whole or in part. A cancellation occurs during the policy term. A nonrenewal occurs at the end of the policy term as set forth in subsection (a) of this section. For purposes of this subchapter, the transfer of a policyholder between companies within the same insurance group shall be considered a termination, but requiring a reasonable deductible, reasonable changes in the amount of insurance or reasonable reductions in policy limits or coverage shall not be considered a termination if such requirements are directly related to the hazard involved and are made on the renewal date of the policy.
(d) "Declination" is the refusal of an insurer, an agent or a broker to issue a property insurance policy on a written nonbinding application or written request for coverage. For the purpose of this subchapter, the offering of insurance coverage with a company within an insurance group which is different from the company requested on the nonbinding application or written request for coverage or the offering of insurance upon different terms than requested in the nonbinding application or written request for coverage shall be considered a declination.
§ 4122 Notification and reasons for declination or termination.
(a) Upon declining to insure any real or personal property subject to this subchapter, the insurer, agent or broker making such declination shall either provide the insurance applicant with a written explanation of the specific reasons for the declination or an explanation will be provided within 21 days of the timely receipt of the applicant's written request for such an explanation. An applicant's written request shall be timely under this subsection if received within 90 days of the date of notice of the declination. In the event of a declination by an insurer of a risk submitted by an agent or broker on behalf of the applicant, the insurer shall provide that agent or broker with a written explanation of the reasons for the declination. In the event the agent or broker is unable to effect insurance for the applicant through an admitted insurer other than a residual market mechanism, the agent or broker shall submit an explanation in writing to the applicant of all insurer declinations. No agent, broker or insurer not represented by an agent or broker shall decline to provide an insurance application form or other means of making a written request for insurance to a prospective applicant who requests insurance coverage from the agent, broker or insurer.
(b) A notice of cancellation of property insurance coverage by an insurer shall be in writing, shall be delivered to the named insured or mailed to the named insured at the last known address of the named insured, shall state the effective date of the cancellation and shall be accompanied by a written explanation of the specific reasons for the cancellation.
(c) At least 30 days before the end of a policy period, as described in § 4121(a) of this title, an insurer shall deliver or mail to the named insured, at the last known address of the named insured, either of the following: (1) Written notice of the insurer's offer to renew the policy if the applicable premium for the policy is received within a specified billing period; or (2) written notice of the insurer's intention not to renew the policy upon expiration of the current policy period. The notice of intention not to renew shall include or be accompanied by a written explanation of the insurer's specific reason or reasons for the nonrenewal. Proof of mailing of either notice shall be retained by the insurer for a period of not less than 1 year. If the insurer fails to comply with either paragraph (1) or (2) of this subsection, coverage shall be deemed renewed under the same terms and conditions until the named insured has accepted replacement coverage with another insurer or until the named insured has agreed to the nonrenewal.
§ 4123 Permissible cancellations.
After coverage has been in effect for more than 60 days or after the effective date of a renewal policy a notice of cancellation shall not be issued unless it is based upon at least 1 of the following reasons:
(1) Nonpayment of premium;
(2) Discovery of fraud or material misrepresentation made by or with the knowledge of the named insured in obtaining the policy, continuing the policy or in presenting a claim under the policy;
(3) Discovery of willful or reckless acts or omissions on the part of the named insured which increase any hazard insured against;
(4) The occurrence of a change in the risk which substantially increases any hazard insured against after insurance coverage has been issued or renewed;
(5) A violation of any local fire, health, safety, building or construction regulation or ordinance with respect to any insured property or the occupancy thereof which substantially increases any hazard insured against;
(6) A determination of the Insurance Commissioner that the continuation of the policy would place the insurer in violation of the insurance laws of this State;
(7) Real property taxes owing on the insured property have been delinquent for 2 or more years and continue delinquent at the time notice of cancellation is issued.
§ 4124 Discriminatory practices prohibited.
The declination or termination of a policy of property insurance subject to this subchapter by an insurer, agent or broker is prohibited if the declination or termination is:
(1) Based upon the race, religion, nationality, ethnic group, age, sex or marital status of the applicant or named insured;
(2) Based solely upon the lawful occupation or profession of the applicant or named insured, except that this provision shall not apply to an insurer, agent or broker which limits its market to 1 lawful occupation or profession or to several related lawful occupations or professions;
(3) Based upon the age or location of the residence of the applicant or named insured unless such decision is for a business purpose which is not a mere pretext for unfair discrimination;
(4) Based upon the fact that another insurer previously declined to insure the applicant or terminated an existing policy in which the applicant was named insured;
(5) Based upon the fact that the applicant or named insured previously obtained insurance coverage through a residual market insurance mechanism.
§ 4125 Enforcement.
(a) Upon a complaint of person filed within 90 days of any violation of this subchapter, the Commissioner shall determine whether such complaint is reasonably founded. If the Commissioner determines that such complaint is reasonably founded, or if the Commissioner otherwise has reason to believe that an insurer, agent or broker has engaged in practices which violate this subchapter and that a proceeding in respect thereto would be in the public interest, the Commissioner shall set a date for a public hearing to determine whether a violation of this subchapter has in fact occurred. Such hearing shall be held upon no less than 10 days' notice to the person charged and the complainant, if any. Such notice shall set forth the specified grounds upon which the complaint is based. If a hearing is based upon a complaint, the hearing shall be set no later than 30 days from the date the complaint was filed. The hearing shall take place before a hearing examiner who shall make a record of the evidence and set forth findings and conclusions. Once a prima facie violation of this subchapter has been established, the person charged in the complaint shall have the burden of showing that such violation was based on a reason not prohibited by this subchapter. The findings of fact determined by the hearing examiner shall be reviewed by the Commissioner who shall issue a final order. A petition for hearing may be filed within 30 days of the final order of the Commissioner.
(b) If the Commissioner determines in a final order that:
(1) An insurer has violated § 4123 and § 4124 of this title, the Commissioner may require the insurer to:
a. Accept the application or written request for insurance coverage at a rate and on the same terms and conditions as are available to other risks similarly situated; or
b. Reinstate insurance coverage to the end of the policy period; or
c. Continue insurance coverage at a rate and on the same terms and conditions as are available to other risks similarly situated.
(2) Any person has violated this subchapter, the Commissioner may:
a. Issue a cease and desist order to restrain such person from engaging in practices which violate this subchapter; or
b. Assess a penalty against such person of up to $500 for each violation of this subchapter.
§ 4126 Civil liability and actions; limitation.
(a) If the Commissioner determined in a final order that an insurer has violated § 4123 or § 4124 of this title, the applicant or named insured aggrieved by the violation may bring an action in a court of competent jurisdiction in this State to recover from such insurer any loss, not otherwise recovered through insurance, which would have been paid under the insurance coverage that was declined or terminated in violation of this subchapter.
(b) Any amounts recovered under subsection (a) of this section shall not be duplicative of any recovery obtained through the exercise of any other statutory or common-law cause of action arising out of the same occurrence. No action under this section shall be brought 2 years after the date of a final order of the Commissioner finding a violation of § 4123 or § 4124 of this title.
§ 4127 Judicial review.
Any person aggrieved by any determination or order of the Commissioner under this subchapter may seek judicial review in the Superior Court. Failure of the Commissioner to act upon a complaint under this subchapter within 30 days of the filing of such complaint shall constitute a determination that the complaint was not reasonably founded. Review in the Superior Court shall be de novo.
§ 4128 Immunity.
(a) There shall be no liability on the part of and no cause of action shall arise against:
(1) The Insurance Commissioner;
(2) Any insurer or its authorized representatives, agents or employees;
(3) Any licensed insurance agent or broker; or
(4) Any person furnishing information to an insurer as to reasons for a termination or declination for any communication giving notice of or specifying the reasons for a declination.
(b) Subsection (a) of this section shall not apply to statements made in bad faith with malice in fact.
§ 4129 Notice.
During the pendency of any claim received pursuant to a property insurance policy, the insurer shall be required to give prompt and timely written notice to a policyholder making a claim informing the policyholder of the applicable state statute of limitations or any contractual period of limitations regarding the filing of an action for the claimant's damages under the contract.
§ 4130 Nonrenewal.
(a)(1) An insurer may not refuse to renew a policy of homeowners insurance solely on the basis of:
a. Claims caused by weather, unless 3 or more such claims have been made against the policy during the 36 months immediately preceding the expiration of the current policy period; or
b. Claims not caused by weather, unless 2 or more claims have been made against the policy; or
c. A combination of claims caused by weather and claims not caused by weather, unless such combination of claims has been made against the policy during the 36 months immediately preceding the expiration of the current policy period; or
d. Claims closed without payment, notwithstanding any other provision of this section.
(2) However, an insurer may nonrenew a homeowner's policy if:
a. The claim or claims asserted against the policy demonstrate that there has been a substantial change or increase in the hazard or in the risk assumed by the carrier subsequent to the date the policy was issued, and such nonrenewal is applied to other homeowners policies similarly situated; or
b. The policyholder has refused or failed to make objectively necessary changes or repairs after being notified by the insurer that failure to make such changes or repairs will constitute a breach of contractual duties, conditions or warranties that will change or increase the hazard or risk assumed by the insurer subsequent to the date the policy was issued.
(b) "Homeowners insurance" for purposes of this section and § 4131 of this title shall mean property insurance as defined at §§ 4103(4)d. and 4120 of this title insuring any real or personal property used by a person as a permanent or temporary place of residence.
§ 4131 Inquiries.
An insurer shall not consider an inquiry regarding a homeowners policy or a loss under that policy to be a claim for purposes of making underwriting decisions, including but not limited to decisions to nonrenew a policy. An inquiry is any contact initiated by an insured that is not the filing of a claim to an insurer.