Often
when a property and casualty policy is renewed, coverage is reduced or
eliminated or deductibles are increased. There may also be automatic increases
in policy limits pursuant to construction or inflation indices. The purpose of
this chapter is to require all property and casualty insurers who intend to
reduce or eliminate coverage, change a deductible or increase policy limits to
clearly notify the policyholder of the action that has been taken.
A. After
July 30, 1981, if any insurer upon renewal or by endorsement initiates any
change in any primary property or casualty policy, which is not at the request
of the insured (except for motor vehicle liability insurance to which
Insurance Article, §27-605, Annotated Code of Maryland, is applicable), which
effects an elimination of or reduction in benefits including any increase in
deductible, the insurer shall give the insured, in general terms, written notice
of the change in the policy. The notice may be mailed or delivered to the
insured by the insurer or its authorized representative, in which case the
insurer shall provide its authorized representative with the appropriate notice.
This notice can be by way of the following phrase or its equivalent:
Notice:
Certain coverage in this policy has been eliminated or reduced, or a change has
been made in the deductible. The description of the change in coverage or
deductible is as follows:
B. After
July 30, 1981, if any coverage is automatically added at renewal pursuant to
policy terms which allows for any inflation or construction increases, the
insured shall be, in general terms, informed that the coverage has been
increased.
C. This regulation is not applicable to commercial risks who use the services of a risk manager, broker, or insurance adviser.
If any insurer issues a policy in this State in which a change in coverage or deductible pursuant to Regulation .02A of this chapter occurs and no notice as required above is given to the policyholder, then the policy with adjustment in premium shall be treated as being in effect without the change or reduction in coverage or deductible when a claim occurs which is affected by the change.