The “New” in Renew; Potential Changes to Insurance Policy Eligibility Requirements and Coverage Upon Renewal

While you might think that receiving a renewal notice from your insurance company means that you have the option to keep everything as it has been for another year, simply by paying the amount shown on the notice, that is not necessarily the case. To the contrary, your insurance company might have changed its criteria to be eligible for the type of policy that you have had in the past. Additionally, even if the eligibility requirements have not changed, your insurance company might have made changes to the specific terms of coverage under that type of policy.

Changes to the terms of coverage might be summarized on the renewal notice, or be detailed in the body of the policy, if a copy of the policy being offered is enclosed with the notice. However, eligibility requirements might not be described on either. I recently had a condominium association client find out that it was no longer eligible for a residential policy, but there was no way for the Association to know that based on the renewal notice that it received. Further, even though the renewal notice indicated that a copy of the new policy was enclosed, it was not.

Therefore, the Association had a decision to make. It could pay the renewal premium to prompt its insurance company to issue another less expensive residential policy, for which the Association knew it was not eligible. Alternatively, the Association could purchase a more expensive non-residential policy, for which it was eligible. If it chose not to disclose its ineligibility and simply renewed its residential policy, it faced a significant risk. Pursuant to Section 627.409(1), Fla. Stat., if the Association did not disclose its ineligibility, its insurance company could deny any claims that the Association submitted based on the Association’s failure to disclose. Luckily, the Association became aware of its ineligibility and was able to obtain an appropriate policy.

As the Association learned, it is important to have someone reevaluate your eligibility and coverage at renewal. Getting an insurance company to pay a claim is generally a difficult undertaking. Not confirming that you have an appropriate policy and adequate coverage, could make that task a losing battle.