State loses bid to curb ‘use it and lose it’

A state appeals court on Monday rejected emergency regulations that attempted to prevent homeowners’ insurance companies from canceling the policies of those who filed a claim or just inquired about their coverage.

The 3rd District Court of Appeal said state Insurance Commissioner John Garamendi didn’t have the authority to issue rules to try to prevent insurers from taking a so-called use-it-and-lose-it approach to renewals.

Homeowners had complained that their coverage had been canceled or a renewal denied for filing just one claim or simply asking about whether a particular type of damage was covered by their policies.

“The Insurance Code provides no express authority for regulating the underwriting of homeowners insurance, nor can such expansive authority be implied,” a three-judge panel said in a unanimous decision that upheld a lower court ruling.

Garamendi said in a statement that his department attorneys were reviewing the decision.