230 R.I. Code R. 230-RICR-20-05-11.8

Current through December 3, 2024

Section 230-RICR-20-05-11.8 - Reasonable Underwriting Standards

A. In determining whether or not to accept the risk, the Association shall follow reasonable underwriting standards which shall include, but not be limited to, the following:

1. The right to decline or cancel insurance because of the physical condition of the property, such as its construction, heating, wiring, evidence of unrepaired damage or general deterioration (however, the mere fact that a property does not satisfy all current building code specifications would not, in itself, justify declining the risk);

2. The right to decline or cancel insurance because of the present use or housekeeping of the property, such as abandonment, vacancy, overcrowding, excessive rubbish or improper storage of flammable materials;

3. The right to decline or cancel insurance because of other specific characteristics of ownership, condition, occupancy, or maintenance which are violative of law or public policy and which result in unreasonable exposure to loss;

4. The right to decline or cancel insurance on buildings in which any one of the following exists:

a. Failure to pay real estate taxes on the property after the taxes have been delinquent for one (1) year or more (real estate taxes shall not be deemed to be delinquent for this purpose even if they are due and constitute a lien, so long as a grace period remains under local law during which such taxes may be paid without penalty);

b. Failure, within the insured's control, to furnish heat, water, sewer services or public lighting for thirty consecutive days or more;

c. Failure within a reasonable time to correct conditions dangerous to life, health or safety.

5. The right to decline or cancel insurance on property:

a. Where, because of physical conditions, there is an outstanding demolition order, outstanding order to vacate or which has been declared unsafe or uninhabitable in accordance with law;

b. Where fire damage exists and the owner has not taken reasonable steps to protect and secure the property;

c. Where, following a fire, permanent repairs have not commenced within sixty (60) days after satisfactory adjustment of loss; or

d. Where fire damage exists and the insured has stated or such time has elapsed as clearly indicates that the damage will not be repaired.

6. The right to decline or cancel insurance where the applicant is in arrears in the payment of insurance premiums to a licensed Producer or insurer for the types of coverage which are offered by the Association;

7. The right to decline or cancel insurance on any building where it is vacant or where sixty five percent (65%) of the building is unoccupied, unless the building is undergoing rehabilitation. Upon request, the Association must be provided with a schedule for such rehabilitation;

8. The right to decline or cancel insurance on any building which has been abandoned or where there has been removal of fixtures or salvageable material from the building and the owner can give no reasonable explanation for such removal;

9. The right to decline or cancel insurance where reliable information is secured indicating that the property will be burned for the purpose of collecting insurance on the property;

10. The right to decline or cancel insurance where the applicant, insured, mortgagee, loss payee, or any other person having a financial interest in the property is convicted or where an unresolved indictment for the crime of arson or for a crime involving a purpose to defraud an insurance company exists;

11. The right to decline or cancel insurance where the property has been subject to more than two (2) fires, each loss amounting to one percent (1%) of the insurance in force, in any twelve (12) month period; or more than three (3) such fires in any twenty four (24) month period, provided that the cause of such fires is due to conditions which are the responsibility of the owner-named insured;

12. The right to decline or cancel insurance in those instances where the Association has information which indicates that a moral hazard exists.

B. The Association shall not decline or cancel any risk for reasons of neighborhood or area location or any environmental hazard beyond the control of the property owner.

C. Reasonable underwriting standards with respect to any liability insurance policy form or endorsement offered by the Association and Section II of homeowners insurance shall include the general standards and, in addition, shall include, but not be limited to, the following:

1. Hazardous physical conditions including, but not limited to, unfenced swimming pools;

2. Presence of vicious animals;

3. Excessive loss frequency when the applicant has failed to take reasonable steps to correct any situation which has given rise to past losses.

D. The Association shall have the right to decline or cancel, non-renew or withdraw lead liability coverage of residential rental property owners who are ineligible for such coverage in accordance with §20-05-9.10 of this Title, as follows:

1. A residential rental property owner who fails to remediate lead violations which occur after June 30, 2004 on any property within ninety (90) days of the issuance of a notice of violation.

2. A residential rental property owner who owns only one (1) property and has more than one (1) unremediated dwelling unit at which a child was poisoned prior to July 1, 2004.

3. A residential rental property owner who owns two (2) or more properties and has more than two (2) unremediated dwelling units at which a child was poisoned prior to July 1, 2004.

E. The right on the part of the Association to apply by endorsement in accordance with the waiver provisions of the statutory standard fire insurance policy of the State of Rhode Island a "Modern Materials" provision which would permit repairs with modern materials, not necessarily those of like kind and quality, provided the structure's integrity, utility and value are not impaired, and that the policyholder declines to insure the risk to its replacement cost value or a percentage thereof as required to qualify for coverage under the special loss settlement endorsement.

230 R.I. Code R. 230-RICR-20-05-11.8