Date: December 1, 2000
For more information contact: Eileen Mallow (608) 266-7843 or eileen.mallow@wisconsin.gov

Madison, WI--"I've always paid my premiums on time, so how can my insurance company cancel my coverage?"

Wisconsinites who have insured their homes and vehicles may wonder how insurance companies make decisions about continuing their coverage. The Office of the Commissioner of Insurance (OCI) has some tips to avoid "nonrenewal."

"Insurers are wary of continuing business in situations in which a risk is high or seems to be growing," said Phil Kress, OCI Property & Casualty Chief. "They take into account many factors at the time a policy is due to be renewed, so it's important not to be caught off-guard."

Insurance companies often use the following criteria when deciding whether to renew policies, Kress said.

• Claims history: How serious the claims have been and how often they've been made will affect a policyholder's renewal. If the company decides there have been too many serious claims or a lot of claims in a certain time period, it may choose not to renew the policy.
• Change in risk: Has the policyholder added a person with a poor driving record to the household? Has the homeowner added a business to the home with a greater risk of fire? A change in risk can be a reason for not being renewed, too.
• Condition of the insured item: Has the policyholder's house been neglected? Insurers believe that insured items in deteriorating condition are more likely to have claims filed on them or could cause an injury. Therefore many insurers choose not to insure unrepaired property or automobiles.
• Violations: If the policyholder had speeding tickets or other driving violations, an insurance company may consider that a greater risk and not renew the auto policy.

The size of any deductibles written into policies can be another factor. A deductible is an amount of money the policyholder pays for any replacements or repairs before the insurer begins to pay. If the policyholder picks a lower deductible amount - such as $50 or $100 - and then makes many small claims for small repairs, the claims history may look bad to an insurer.

Credit history can also affect a policyholder's ability to get insurance. Insurers may consider bad credit an indicator of a greater possibility of property loss or accident. It's also important to have a good credit rating if a property owner is not renewed and has to look for another insurer.

Insurers may establish their own standards for nonrenewals. In applying those standards, insurers, by law, may not unfairly discriminate. If Wisconsin residents have questions about their insurance, they can check with their insurance agents or companies or contact the OCI.

For more information about insurance topics, contact the OCI toll-free at 800-236-8517, by mail at Office of the Commissioner of Insurance, P.O. Box 7873, Madison, WI 53708-7873, by electronic mail at ociinformation@wisconsin.gov or check the OCI Web site at http://oci.wi.gov/oci_home.htm.