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Attorney Van O'Steen

Law Ensures Homeowner's and Renter's Insurance Coverage

Van O'Steen

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A little-known Arizona law limits the ability of insurance companies to cancel or refuse to renew a homeowner's or renter's insurance policy. The law is intended to protect policyholders from arbitrary cancellations.

After a homeowner or renter's policy on a residence has been in effect for 60 days, the insurer may not cancel or fail to renew it except under one of the following circumstances:

  • Failure to pay the premium.
  • The insured is convicted of a crime that would increase the hazard insured against (for example, arson).
  • Fraud or misrepresentation in obtaining the policy, continuing the policy or making a claim under it.
  • Discovery by the insurance company of extremely careless acts or omissions by the insured that would greatly increase any of the hazards insured against.
  • A great unforeseen change in the risk assumed by the insurance company after the policy was issued.
  • A determination by the Arizona Director of Insurance that continuing the policy would place the insurance company in violation of state law.
  • The insured's failure to take reasonable steps to eliminate or reduce any condition on the property that contributed to a loss in the past or that will increase the likelihood of future losses, especially personal injury.

Although submitting claims under your policy is not a basis for cancellation or failure to renew, the list of cancellation conditions creates some opportunity for an insurance company to act unreasonably. Additional provisions of the law, however, give some protection to homeowners and renters against arbitrary cancellation or refusal to renew a policy.

If nonrenewal is based on property condition, the insured first must be given notice by the insurance company to correct the condition. He or she has at least 30 days to do so. If the renewal premium is paid, 30 days more is allowed to cure the problem.

All cancellation and nonrenewal notices must be in writing and mailed to the insured. The notice must state the legal basis for the insurance company's action and offer, on written request, to furnish a detailed statement regarding the reason for cancellation or nonrenewal.

A policyholder who believes an insurance company has acted improperly in canceling or refusing to renew a homeowner's or renter's policy may appeal to the Department of Insurance. A written objection must be filed within seven days of receipt of the company's notice.