Legislation would limit insurance cancellations Measure seeks to aid residents filing multiple weather-related claims

March 12, 1998|By Michael Dresser | Michael Dresser,SUN STAFF

Murray Sentner figures the reason to have insurance is so it will be there when a customer runs into a stretch of rotten luck.

But when bad weather and a defective washing machine combined to hand the 74-year-old Bowie man three "oddball accidents" in two years, says Sentner, the "grubby sons of guns" at his homeowner's insurance company refused to renew his coverage.

Sentner's story and hundreds like it are the reason the Maryland House of Delegates is considering a bill that would prohibit insurers from canceling a policy when fewer than three weather-related claims have been filed within a three-year period.

Steven B. Larsen, the state insurance commissioner, told the House Economic Matters Committee last week that his agency gets about 600 complaints a year from homeowners whose policies have been terminated by companies because of multiple claims.

"These people are outraged," Larsen said.

Sentner recalls that description would have applied to him the day his insurance agent tried to "coerce" him not to file a claim after a washing machine connection hose burst, causing about $9,000 damage to his home.

"I didn't react too well to this form of menace because I have insurance to cover this type of contingency," said the veteran of Omaha Beach and the Battle of the Bulge.

The company's complaint was that Sentner had filed claims twice in the previous two years because of separate weather-related accidents. The first, which came after his patio roof collapsed in the blizzard of 1996, amounted to $1,200. Another, the result of a flash flood in 1997, came to $400.

Sentner said he filed an $8,500 claim for the washing machine incident despite the agent's warning that the company has a policy of "three strikes and you're out."

Two months later, the company refused to renew his policy.

According to Larsen, homeowners who lose their coverage often have to pay hundreds of dollars more for a new policy.

Under the legislation, Sentner's two weather-related accidents could not have been held against him. The bill would also apply to auto insurance, forbidding companies to terminate coverage because of one or two claims within three years for accidents in which the customer was not at fault.

Last week, insurance industry lobbyists told the House committee they could support the bill if certain amendments were added.

For insurers, the appeal of the bill is that it could undo some of the more onerous effects of a 1987 Maryland Court of Special Appeals decision.

In the case of Crumlish vs. Insurance Commissioner, the court held that insurance companies could not decline to renew a policy unless they had statistical evidence to back up their decisions.

Minor Carter, a lobbyist for the Maryland Association of Mutual Insurance Companies, said the ruling has led to some cases that violate common sense.

He noted the example of a customer whose German shepherd attacked and killed a pit bull, resulting in a claim that led the company to tell the owner he had to get rid of the dog to get the policy renewed.

Carter said that when the customer appealed, a hearing examiner ruled against the company because it could offer no specific studies showing that vicious dogs are likely to attack again.

Larsen said he, too, has become disenchanted with the Crumlish decision because it has sometimes been used against consumers by companies noting questionable studies. "Crumlish has kind of been flopped on its head. It was meant to be a shield and it was turned into a sword," he said.

The commissioner said he would like to see a bill that couples the new consumer protections with some exceptions to Crumlish that would let insurers end coverage without delay under certain circumstances.

In its present form, the bill would give the commissioner the authority to spell out those exceptions by regulation. But Larsen said he was open to the idea of putting those provisions in the law -- a protection the companies say they prefer.

The bill, sponsored by Del. Mary Ann Love, has important support from Del. Michael E. Busch, a fellow Anne Arundel Democrat who chairs the Economic Matters Committee. Busch said he and Larsen have been working closely on the issue since early in the legislative session.

The status quo, Busch said, is "unfair to consumers and unfair to the industry." He expressed optimism that language can be worked out in time for the House to pass the bill and send it to the Senate.

As for Sentner, his problems with his insurance company have been resolved.

Instead of spending more money for less coverage under a new policy, he complained to the insurance commissioner, the attorney general and his state senator. After an Insurance Administration investigation, the company backed down and extended his coverage, Sentner said.

"I don't like to get pushed around," he said. "I didn't get pushed around in combat, and I won't get pushed around now."

Pub Date: 3/12/98

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