BILL REQ. #:  H-0481.2 

Read first time 01/27/09.   Referred to Committee on Financial Institutions & Insurance.

     AN ACT Relating to underwriting actions for insurance on residential property; and adding a new section to chapter 48.18 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   A new section is added to chapter 48.18 RCW to read as follows:
     (1) For the purposes of this section:
     (a) "Excluded insurance claim" means:
     (i) A claim resulting from a loss due to natural causes including, but not limited to, floods, earthquakes, lightning, and any weather-related event in which the loss is not the result of negligence by the insured; and
     (ii) A claim that is filed but not paid or payable under the policy.
     (b) "Insured" means a current policyholder or a person or entity that is covered under the insurance policy.
     (c) "Residential property" means any real estate upon which is constructed or intended to be constructed a single family dwelling or multiple family dwelling of four or less units
     (d) "Underwriting action" means an insurer:
     (i) Cancels or refuses to renew an insurance policy; or
     (ii) Changes the terms or benefits in an insurance policy.
     (2) This section applies to insurance on residential property.
     (3) An insurer may not take an underwriting action on a policy insuring residential property based on claim history if an insured has made less than three excluded insurance claims for any loss that occurred during the preceding thirty-six months.
     (4) An insurer must provide written notice in a timely fashion to an insured who has filed two excluded insurance claims with the insurer on residential property within the preceding thirty-six months to inform the insured that the insurer may take an underwriting action if a third excluded insurance claim on residential property is filed with the insurer during the thirty-six month period. If the notice is not provided to the insured prior of the filing of a third excluded insurance claim within the thirty-six month time period, the insurer may not take any underwriting action based on excluded insurance claims, except as allowed under subsection (5) of this section. The notice must:
     (a) Include information regarding the previous claims;
     (b) Clearly state that the insured may face an underwriting action if another excluded insurance claim is submitted within a specified time period; and
     (c) Clearly state that the insured may face an underwriting action for claims that are not excluded insurance claims or for other reasons allowed under Title 48 RCW.
     (5) An insurer may take an underwriting action due to other factors that are not prohibited by this section. Nothing in this section prevents an insurer from taking an underwriting action where a claim involves fraud by an insured or a claim results from an intentional act of an insured.