Insurance Law/Insurance Denial Information Sharing
QUESTION: If an insurance company declines to renew your homeowner's policy, are they able to put this information into a database, similar to C.L.U.E., that other potential insurers will be able to access? Similarly, when filling out online forms
for insurance quotes, if a person answers yes to a question regarding whether they have been denied insurance can this information then shared or placed into a database? Thank you for any information.
ANSWER: Hi Eric-
I'm not aware of any formal database that insurers document non-renewal information, however, if you lie about a material fact, such as having been non-renewed by a prior carrier, and then have a claim, and they find out that that issue would have made you ineligible for coverage based on their underwriting guidelines, they would have grounds to deny the claim.
When you start homeowners insurance, the company has a 60 day window to accept or deny coverage. If you were non-renewed due to condition issue of the house instead of claims, that would likely come up in their underwriting process. They can then issue a cancellation notice if the policy is in the first 60 days (longer in a few states).
I do not recommend giving incorrect information. Some companies may informally share information as they underwrite, and verify coverage with the prior carrier.
Hope this helps.
---------- FOLLOW-UP ----------
QUESTION: I'm curious about the process of underwriting after the start of the policy. Does the insurance company just ask the policyholder for more extensive information than what was provided during the initial application, or is there more to the process? Thank you for any information.
There is more to the process. They will look at credit history, sometimes even criminal history. C L U E would be looked at for claim history. They may require a previous declaration page, and will usually send out an inspector to take photos of the home. The application will usually ask information as to the details of the house, such as the age of the roof. There may be more based on the insurance company, but that's what comes to mind.
Hope that helps. Do remember insurance fraud is a crime. :)