New York Insurance Superintendent Eric Dinallo announced he hasissued an advisory to insurance companies notifying them thatcanceling a homeowners policy only on the basis that a dwelling isunoccupied is an illegal mid-term cancellation.

The announcement said the "circular letter" advisory was issuedto cover incidents such as cancellations while owners are in themiddle of selling their house to relocate, or situations where apolicyholder's job requires them to be away frequently on travelassignments and the insurer cancels saying the home is"unoccupied."

Mr. Dinallo urged consumers encountering this issue to contactthe Insurance Department. He said insurance companies mustreinstate the policies of affected consumers. The action couldpotentially affect financially-pressed consumers involved inforfeitures, he noted.

"Consumers should know that the Insurance Department will actvigorously to protect homeowners. This includes homeowners who maybe involved in forfeiture proceedings, which have increased becauseof the troubled economy.

"Insurance companies need to understand that the Insurance Lawprotects all homeowners from improper non-occupancy cancellations,"Mr. Dinallo said.

"The fact that an insured individual is not occupying a home isnot a legitimate reason, in and of itself, for canceling ahomeowners policy. It is improper to cancel a homeowners policysimply because a property owner may be away from home because of asituation like an illness," he said.

The announcement said the advisory, Circular Letter # 23 (2008),was issued after the department received numerous consumercomplaints from across the state.

The department cited the case of an unidentified Suffolk Countywoman, whose insurance company, it said, had advised that herpolicy was being canceled because her home was unoccupied.

She explained that she was in the middle of trying to sell herhome and relocate to the Albany area to take a new job. She saidthat either she or her parents were at the home every weekend andthat a neighbor also looked after the property. The home wasfurnished and the utilities were still connected. Her case istypical of the complaints, the department said.

Other consumers who registered complaints, the department said,included a Syracuse couple confined to a nursing home, a flightattendant whose job required frequent travel, and a Plattsburgh manwho was forced out of his home after it was extensively damagedwhen a neighbor's tree fell onto it.

In each of these cases, the department said, insurers wronglyadvised consumers that their policies were being canceled becausetheir homes were unoccupied, therefore increasing the risk to theirhomes.

The department said insurers may consider non-occupancy if it isamong other factors that increase the risk to a property. It maynot be considered as the sole factor in a mid-termcancellation.

Under New York law, a homeowner's policy must remain in effect,or be renewed, for three years from the date the policy firstbecomes effective.

Cancellations or non-renewals during the three years are onlypermitted for certain specific reasons, according to thedepartment. These include non-payment of premium, as well as fraudor misrepresentations in obtaining policies or filing claims.Cancellations or non-renewals are also permitted when policyholdersrecklessly increase hazards to property or make physical changesthat result in a property becoming uninsurable.

Insurers that have improperly canceled or non-renewed policiesmust offer to reinstate them, effective from the dates oftermination. These offers must maintain the premium rates in effectat the time of the cancellations or non-renewals, the departmentsaid.

Consumers who believe their homeowners policies have beenimproperly canceled based on non-occupancy were urged to contactthe Insurance Department through the toll-free number1-800-342-3736, between 9 a.m. and 5 p.m., Monday through Friday.Complaints may also be filed online at anytime atwww.ins.state.ny.us. The advisory is online athttp://www.ins.state.ny.us/circltr/2008/cl08_23.pdf .