The department has issued a bulletin to advise all property and casualty insurers of legal requirements regarding cancellation, nonrenewal and claim settlement actions based on information discovered through satellite or aerial imagery.
It is considered an unfair claim settlement practice for an insurer to misrepresent pertinent facts that relate to a claim or coverage at issue, or to refuse to pay a claim without conducting a reasonable investigation based on all available information.
The department states that satellite imagery by itself cannot generally provide a clear, up-to-date representation of insured property, and therefore, if used alone, is not sufficient to justify a cancellation or nonrenewal without further investigation. Insurers may not rely on satellite imagery as the sole basis for cancellation, nonrenewal, or claim denial.
Insurers may use images from a drone or aircraft for cancellation, nonrenewal or claim denial if the following conditions are met:
1. The images are sufficiently clear to allow a person to visualize the specific property conditions that do not meet underwriting guidelines
2. The images are accompanied by a written summary that identifies the conditions that do not comply with underwriting guidelines
3. The images contain a date stamp within the last twelve months.
Any images that are out of focus, low resolution, blurry, or dated cannot be used to justify a denial, cancellation or nonrenewal. Satellite or aerial images that show streaking or discoloring are not sufficient to independently support a denial, cancellation or nonrewnal based on roof degradation.
Insureds are entitled to review all imagery upon request, and in event of a complaint, an insurer may be required to show independent confirmation of any issues discovered through the imagery in question. Insurers using artificial intelligence programs to enhance, interpret, or review satellite or aerial imagery should review the requirements set forth in Bulletin 2024-02 regarding the use of artificial intelligence systems in insurance.
A full copy of the bulletin may be found here.