Insurance Discrimination
Act 78 of 2006 Signed into Law by Govenror Rendell July 7, 2006
Provisions:
- Expansion of the definition of abuse
in the Unfair Insurance Practices statute to include property damage and establish
a statutory prohibition against an insurance company’s refusal to pay automobile
and homeowners’ claims arising out of abuse to an innocent claimant when
an abusive partner intentionally causes the property damage.
- Requires that insurers investigating
a claim for losses must notify a victim of abuse that the investigation could
result in contact with other “insureds,” which could include the
batterer and that, if requested, the insurer will not disclose the location of
the “insured” (victim of domestic violence).
- Requires insurers to notify the victim
of abuse at least 14 days prior to instituting any legal action against the insured
alleged to have caused the loss.
- Will allow insurers to not renew coverage
or impose a surcharge on the insured that caused the loss but not until six months
following payment of the claim or the policy’s renewal date.
- Requires insurers to provide the innocent
co-insured with the national domestic violence hotline number.
- That payment of a claim to a the victim
of abuse will constitute payment as to all other insureds under the policy as
directed by the statute.
Background
Prior to Passage of Act 78, property and casualty insurance policies typically
denied claims resulting from an “intentional act” by a named insured. This
exclusion was developed to prohibit insureds from intentionally damaging their
own property in order to receive a financial gain. However, victims of
domestic violence faced severe hardship due to this exclusion when batterers
damaged property.
In 1997, the Superior Court of Pennsylvania addressed this issue in Kundahl
v. Erie Insurance Group, 703 A2d. 542. In this case, Mr. Kundahl intentionally
set fire to the home jointly owned and insured by his spouse and him. The
Court denied insurance benefits to Mrs. Kundahl based on the exclusionary clauses
in the insurance policies (homeowners and auto). However, the Court ended
their decision by stating:
We do sympathize with Mrs. Kundahl’s plight. Her home
and her car are lost without the possibility of recovery. However, we cannot
permit our sympathy to cloud the plain language of both policies. Nor
can we force insurance companies to insert language in every policy they write
to provide coverage for all innocent insureds. Such action is more properly
left to our legislature. We, therefore, call upon the legislature to address
this problem so that victimized spouses are no longer faced with the twin evils
of destruction and destitution.
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