Maryland Gov. Martin O'Malley signed a bill earlier this month that should make homeowners insurance a little easier for people who are not insurance professionals to understand. The new law also calls for the Legislature to study anti-concurrent causation clauses and how insurers and the National Flood Insurance Program handle property insurance claims when a loss could be the result of two or more factors.
If you own a home but your eyes glaze over at the mere mention of property insurance, you were probably lucky enough to escape any damage from Superstorm Sandy. That does not mean you should just skim over everything to do with ACC clauses, though, especially considering the National Hurricane Center is forecasting an "active to extremely active" hurricane season this year.
The new law requires insurance companies to send policyholders a notice every year that explains the effect of an ACC clause. The notice will go only to homeowners whose policies include ACC clauses, and the process will begin with policies that are delivered, issued or renewed in this state on or after Jan. 1, 2014.
The law also includes direction on what that policyholder communication should look and sound like. First, the explanation must be clear and specific. Second, the notice must tell the policyholder to consult the policy for complete information about the exclusions under the ACC clause. And, the notice must inform policyholders that they can contact their agent or the insurer if they need more information about the ACC clause's exclusions.
The notice is just that: a notice. It will not be a part of the insurance policy and will not constitute a contract between the insurance company and the policyholder. If the insurance company fails to provide the notice, or fails to explain the coverage exclusions to the satisfaction of the policyholder, the policyholder may not sue.
With all that said, how many people are still wondering what anti-concurrent causation clauses are? We'll talk about that in our next post.
Source: Insurance Journal, "New Law in Maryland Will Require Insurers to Explain ACC Clause to Homeowners," May 6, 2013