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Will West Virginians get the insurance they need?

November 06, 2003

This week the Associated Press reported that many West Virginians are losing their homeowners' insurance just for filing what are apparently legitimate claims. Is this the work of a heartless, money-grubbing insurer?

Apparently not. State Farm Fire & Casualty Company, which pays one of every three homeowners' claims in the state, reports that it hasn't had a profitable year on home policies in more than 10 years.

It's also lost big dollars on auto insurance and stopped writing policies in both those categories in 2002.

So what's the answer? Tightening up state law, insurers say, adding that what was designed as protection for consumers has made insuring them unprofitable.

Last month a legislative committee that deals with insurance availability and malpractice insurance got input about three specific areas insurance companies feel are problems. They include:

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- A law that limits when insurers can refuse to renew auto or home policies.

- A law that forces the insurer to provide payment based on the face value of a policy, rather than the replacement value of the item or dwelling in question, and

- A law that allows people to sue insurance companies on the grounds that the company failed to deal with them fairly in regard to claims.

Without some changes, homeowners will continue to experience the shock of having one policy cancelled, then finding that a new one is available only at a rate triple that of the original.

That's no good for the state's small businesses. Lawmakers have to look at what factors are causing claims to exceed premiums on a regular basis.

A two-tiered system for coverage may be necessary, so that while a rug ruined by a leaking water heater wouldn't be covered, major structural damage would be.

A special fraud unit, suggested recently for the workers' comp system, might also help.

But analysis of the situation may show that the culprit is the expectation that once the premium is paid, every problem - great or small - is covered.

Something's not working, and this is one problem that won't be cured without some legislative intervention.

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