Rutgers Law School Report Recommends Improvements to State Homeowners Insurance Protections

Jay Feinman

By Jeanne Leong

When a homeowner suffers a loss and files a claim with their insurance company,  many times the company responds by raising the homeowner’s premium or refusing to renew the policy.  A report by the Rutgers Center for Risk and Responsibility at Rutgers Law School in Camden offers recommendations to state lawmakers to ban the practice known as “Use It and Lose It.”

“It’s wrong, and states need to prohibit it,” says Jay Feinman, co-director of the Rutgers center and a distinguished professor at the law school. “Homeowners shouldn’t be penalized by their insurance companies because they actually use their insurance.”

The report, “State Rankings of Homeowners Insurance Protections: ‘Use It and Lose It,’” is part of the Essential Protections for Policyholders project, an initiative of the Rutgers Center for Risk and Responsibility in cooperation with United Policyholders, an advocacy organization and information resource for insurance consumers.

As part of the project, Feinman studied how states address the practice of “Use It and Lose It.”

The key findings of the report show that 18 states have no explicit protection against “Use It and Lose It.” The report ranks each state by the level of protections it provides for policyholders, with one star for offering little protection, up to five stars for strong protections.

Rhode Island and Texas received a five-star ranking for providing the best protection for consumers from improper rate increases and non-renewals for inquiries, claims closed without payment, and a single claim.

New Jersey earned a three-star rating for providing protection against non-renewal because of inquiries and weather-related claims but not for other kinds of claims such as when a pipe bursts, causing water damage. In addition, says Feinman, New Jersey laws don’t adequately protect against premium increases.

Pennsylvania and Delaware each received four stars out of five. Both states have strong protections against an insurance company not renewing a policy because of an inquiry or claim, but Feinman says they could do better in preventing premium increases because of claims.

New York received a one-star rating for having no statutory prohibition on using an inquiry or a single claim as a basis for premium increase or non-renewal.

The Essential Protections report recommends ways that states can protect consumers. It suggests enacting laws that prohibit insurance companies from imposing a surcharge or a premium increase or not renewing a policy based on a single claim within three years, a claim that results in no payment by the company, an inquiry by a policyholder that does not result in a claim, or a single claim for loss caused by weather or a natural disaster.

“Consumer protection laws need to keep pace with changes in the marketplace,” says Amy Bach, executive director of United Policyholders. “Data mining and information sharing by insurance companies has put consumers at a costly disadvantage that needs to be remedied. State regulators and lawmakers don’t have to reinvent the wheel to fix this problem. A number of states have it right.  Others can easily follow.”

The report has been distributed to insurance commissioners in every state.

The entire report is available at

Future reports from the Essential Protections project will evaluate states on how much information they provide to consumers shopping for insurance and what remedies are available when insurance companies unreasonably deny claims.


Posted in: Research Highlights

Comments are closed.