“Use it and lose it”

New CA Court Ruling: March 2, 2005

Home Insurers Can Cancel Coverage After Claims Filed or Loss Inquiries

The power of insurance companies and the uncertainty that they will be there when you need them was underscored by a new court ruling in California. State Insurance Commissioner John Garamendi has no power to stop insurance companies from canceling coverage for homeowners who file claims or just make inquiries about losses, a state appeals court ruled last week.

The court said the state’s limited authority over homeowners’ insurance leaves insurers free to refuse renewals to policyholders who claim losses — a practice sometimes called “use it and lose it.” American Insurance v. Garamendi.

Reconsider your “asset protection,” especially if your plan consists only of insurance.


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