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TABLE OF CONTENTS

• CITATION
• STATUS
• WHAT'S NEW
• ADOPTED TEXT

CITATION
18 DAC 702


STATUS
This regulation was assigned the status of Adopted Rule Notice
 on 12/01/2007.

Agency: Department of Insurance
StateNet Processing Date: 12/03/2007
StateNet Regulation ID: 2007 DE 2144


ADOPTED TEXT
                           DEPARTMENT OF INSURANCE

         Statutory Authority: 18 Delaware Code, Sections 314 and 3403
                       (18 Del.C. Sections 314 & 3403)
                            18 DE Admin. Code 702

    ORDER

    Docket No. 2007-527

    702 Required Disclosures For Residential Homeowners Polices

    FINAL

    Proposed changes to Regulation 702 relating to Required Disclosures for
Homeowners Policies were published in the Delaware Register of Regulations on
October 1, 2007. The comment period remained open until November 5, 2007.
There was no public hearing on the proposed changes to Regulation 702. Public
notice of the proposed changes to Regulation 702 in the Register of
Regulations and two newspapers of general circulation was in conformity with
Delaware law.

    Summary of the Evidence and Information Submitted

    Public comment was received from the Property Casualty Insurers of
America, Allstate Insurance Company and State Farm Mutual Automobile Insurance
Company. All three comments raised concern with what was believed by them to
be lengthy and, in their words, confusing notification requirements relative
to deductibles. Comments also raised the issue of insurers having insufficient
time to comply with the Regulation and suggested a later effective date.

    Findings of Fact

    Based on Delaware law and the record in this docket, I make the following
findings of fact:

    1. The best interest of Delaware homeowners is served by requiring
insurers to make homeowners aware of the types of risks or claims not insured
under their policies.

    2. The best interest of Delaware homeowners is served by informing them of
the specific deductibles required by their policies, as well as defining what
a deductible is, describing what triggers each deductible and describing how
each deductible is calculated.

    3. The best interest of the public is served by requiring insurers to
provide to the Department, for its approval, the forms that will be used in
compliance with Section 5.1.5.

    4. Having drafted the deductibles in question for the policies themselves,
and having already complied with Regulation 701 governing readability of
insurance policies, insurance carriers are capable of preparing statements
that comply with Section 5.1.5 and are also clear to their policyholders.

    Decision and Effective Date

    Based on the provisions of 18 Del.C. Sections 314) and 3403 and 29 Del.C.
Sections 10113-10118 and the record in this docket, I hereby adopt Regulation
702 as attached hereto to be effective on December 15, 2007.

    IT IS SO ORDERED this 14th day of November 2007.

    Matthew Denn, Insurance Commissioner

    702 Required Disclosures For Residential Homeowners Polices
    1.0 Authority

    This regulation is adopted by the Commissioner pursuant to 18 Del.C.
Sections 311(a) and 2304(1). It is promulgated in accordance with 29 Del.C.
Chapter 101.

    2.0 Purpose

    The purpose of this regulation is to ensure that homeowners insurance
policyholders are aware that they are not insured for certain types  of 
risks or claims, to the extent that they do not have such coverage,  and
that they are aware of any deductibles required by their coverage  .  This
regulation does not mandate any coverage by any carrier issuing homeowners
insurance in the State of Delaware.

    3.0 Applicability

    This regulation shall apply to homeowners insurance policies. A homeowners
insurance policy for purposes of this regulation means a property or casualty
contract of insurance covering residential properties as defined by 18 Del.C.
Section 4120.

    4.0 Requirement of Disclosure

    Insurers, upon initial delivery of a homeowners policy terms and
declaration page, and not less than once annually after delivery, shall
provide a form to the policyholder entitled "Important Information About Your
Homeowners Insurance." The title of the document shall be in at least 30 point
type.

    5.0 Content of Disclosure

    5.1 Each form presented pursuant to Section 4.0 of this Regulation shall
make the following disclosures:

    5.1.1 Disclosure that the policy does not cover damage caused by flooding,
and sufficient information to allow the policyholder to contact the National
Flood Insurance Program in order to purchase flood insurance if so desired.
The following language shall be sufficient to ensure compliance with this
subsection 5.1: "This policy does not cover damage to your property caused by
flooding. Flood insurance is available for communities and property that
participate in the National Flood Insurance Program ("NFIP"). Not all
communities participate in the NFIP. Flood insurance may be available even if
you do not live in a flood hazard area as defined by the NFIP. Please call the
NFIP at 1-800-427-4661 to see if your community and property are eligible for
coverage. If your community does not participate in the NFIP, you may contact
your insurance agent or broker to see if there is other flood insurance
coverage available to you." The disclosure may also inform the policyholder
that the insurer offers flood insurance as a participant in the NFIP's "Write
Your Own" program. The disclosure required by this subsection shall be
entitled "Flood Insurance," and the subsection title shall be in at least 18
point type.

    5.1.2 Disclosure that the policy may not cover the full cost of
replacement without depreciation of the property, and sufficient information
to allow the policyholder to purchase such coverage from the carrier if it is
offered by the carrier. The following language shall be sufficient to ensure
compliance with this subsection 5.2: "This policy may not cover the full cost
of replacing your home if your home should be destroyed in an event otherwise
covered by this policy. You may purchase additional coverage from us
sufficient to cover the full cost of replacing your home, at an additional
cost." The disclosure required by this subsection shall be entitled "Replacing
Your Home," and the subsection title shall be in at least 18 point type.

    5.1.3 Disclosure of any limitations in the policy regarding reimbursement
for items stolen from the property, including but not limited to jewelry,
furs, fine art, etc. and sufficient information to allow the policyholder to
purchase insurance which would not contain such limitation if such coverage is
offered by the insurer. The following language shall be sufficient to ensure
compliance with this subsection 5.3: "This policy may not cover the value of
all items stolen from your home. Please carefully review your policy to
determine which items stolen from your home are not covered by this policy."
The disclosure required by this subsection shall be entitled "Reimbursement
for Stolen Items," and the subsection title shall be in at least 18 point
type.

    5.1.4 Disclosure of any formal practice followed by the insurer regarding
non-renewal of the policy on the occurrence of certain factors or on the basis
of claims asserted by the policyholder. The following language shall be
sufficient to ensure compliance with this subsection 5.4: "We have a policy of
declining to renew homeowners insurance policies under the following
circumstances: (list the claim activities or occurrences that are likely to
cause non-renewal of a policyholder's policy)." The disclosure required by
this subsection shall be entitled "Non-Renewal of Your Policy," and the
subsection title shall be in at least 18 point type.

     5.1.5 Disclosure of information regarding any required deductibles,
which disclosure shall include the following information: 

     5.1.5.1 A description of what a deductible is, including a statement
that the policyholder is responsible for payment of the entire amount of the
deductible; 

     5.1.5.2 A full description of the circumstances that will trigger
applicability of each deductible; 

     5.1.5.3 A description and example(s) of how each deductible will be
calculated; 

     5.1.5.4 The following statement: "Deductibles are not required by
state law and are not uniform across insurance companies, and therefore the
charge for each deductible may vary between insurers." 

     The disclosure required by this subsection shall be entitled
"Policyholder Payment of Deductibles: and the title shall be in at least 18
point type. 

    5.2 Where a policy provides full coverage for any of the items required by
sections 5.1.1 through 5.1.3,  or where the policy does not require payment
of a deductible,  the insurer may indicate that the disclosure, as to each
such item, is not applicable or "N/ A."

     6.0 Time for Compliance 

     Insurers required by Section 5.1.5 to provide disclosures regarding
payment of insurance deductibles must submit the forms containing the language
they propose for compliance with Section 5.1.5 to the Insurance Commissioner
for approval by December 15, 2007. 

     6   7  .0 Review and Approval of Forms

    All forms required by this regulation shall be submitted to and approved
by the Commissioner, or his representative, pursuant to 18 Del.C. Section 2712
et seq.

     7   8  .0 Severability

    If any provision of this regulation, or the application of any such
provision to any person or circumstances, shall be held invalid, the remainder
of such provisions, and the application of such provisions to any person or
circumstance other than those as to which it is held invalid, shall not be
affected.

     8   9  .0 Causes of Action

    This regulation shall not create, nor form the basis for, a cause of
action for any person or entity, other than the Delaware Department of
Insurance, against any insurer for violation of the provisions hereof.

     9   10  .0 Effective Date

    The effective date of this regulation shall be January 1, 2006.

    9 DE Reg. 438 (09/01/05)

    11 DE Reg. 805 (12/01/07) (Final)

WHAT'S NEW
Description of Changes
There are no recorded changes for this document.

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