Connecticut Regulators Rap Insurers for Dropping Home Policies Over Roof Stains

The Connecticut Insurance Department recently reminded homeowners insurance companies in the state that looks aren’t everything — especially when it comes to roofs.

In a March 19 notice, the department warned insurance companies that they can’t use cosmetic roof conditions, like streaking or discoloration, as justification for refusing to renew a home insurance policy.

The CID “received complaints from both agents and insured individuals, prompting our decision to conduct an investigation,” Mary Quinn, director of communications and digital media for the department, told Insurify. “Following a thorough review, CID determined that issuing the notice was necessary to clearly communicate our expectations to insurance carriers and protect consumers.”

“This practice will not be tolerated in Connecticut,” the department’s notice stated.

Not a reason for non-renewal

Cosmetic issues aren’t evidence of actual damage that could increase the risk a homeowner would file a claim, according to the department. Instead, insurers should look at conditions like water building up and pooling on the roof surface, poor patchwork, or a tarp’s presence to assess whether a roof is damaged enough to support a non-renewal notice, the state instructed.

The department also warned insurers against using nonspecific reasons for non-renewals such as “claims experience,” “underwriting judgment,” or “increase in hazard.”

“Those reasons do not provide the definitive notice necessary to enable the insured to remedy the circumstances causing the insurer’s action,” the state said.

Appropriate uses for aerial photography

While insurance companies can’t use aerial photos of cosmetic blemishes to support non-renewal, they can use the tactic to document actual damage.

“The department does not seek to broadly restrict the use of aerial imagery in underwriting, as we recognize the value of this tool,” the department said. “However, appropriate guardrails pertaining to the use of aerial imagery are needed to protect consumers from unsupported underwriting action.”

Further, the department said it’s up to insurers to detail the intended guardrails in the underwriting guidelines filed with the Insurance Department.

Connecticut’s home insurance landscape

Connecticut is one of the most affordable states for homeowners insurance, according to Insurify data. In 2023, the average annual cost of homeowners insurance in Connecticut was $1,583 for homes valued at $300,000 — 11% lower than the national average.

Home insurance rates in Connecticut actually decreased 3% from 2022 to 2023, Insurify data shows. But Constitution State homeowners are looking at increasing costs in 2024, like many other areas in the country.

Inflation and severe weather events, like the heavy rainfall and flooding that Connecticut experienced in July 2023, have driven up insurance rates.

What’s next

“It is worth noting that we received complaints regarding non-renewal actions on several carriers, all based on the aerial images mentioned,” Quinn said.

“Connecticut consumers are always encouraged to file a complaint with the Consumer Affairs Division of the Connecticut Insurance Department,” she said. “Consumers can contact the Consumer Affairs team by phone at (860) 297-3900, by email at insurance@ct.gov, or by filing an online complaint form.”