The Impact Of Home Insurance Regulations For Washington State Residences

Homeowners insurance in Washington state is regulated by the Office of the Insurance Commissioner. Unlike some states such as Texas, which has chosen to mandate what each type of home insurance policy must contain, Washington state has taken a more relaxed approach. There are certain standards which insurers are expected to meet but most of the details and day-to-day functioning of home insurance coverage in Washington is handled at the private company level.

The greatest concern to consumers is how rates are determined and if they can increase without notice. Washington state law requires insurance companies to submit requests for rate increases directly to the Commissioner, and to provide financial data which justifies the proposed rate increase. If they cannot do so, the request will be turned down. If, however, the state can find no issue with their request and the data is sound, they are obligated to approve it. Although the state acts as a check against unreasonable premiums in this case, it cannot reject rate increases simply because they are unpopular.

Home insurance rates in Washington are based on a number of factors including the home's "territory rating", which takes into account natural disasters and crime rate in the area. As well, premiums are calculated based on the age of the home and what material it is built out of. Insurance companies also choose to use credit scores as a reason for high premiums, which they are allowed to do under the Fair Credit Reporting Act. However, in 2003, Washington passed its own legislation limiting how insurers could use this information to affect consumers. After January 1, 2003, insurers could no longer cancel or not renew a policy based on a customer's credit history. They were also prohibited from using the number of credit inquiries a customer made on their own accounts or the total credit available to a customer to deny coverage. After June 30, 2003, insurance companies were also required to retroactively alter premiums if the wrong credit information was used and also to notify clients of what types of credit data were being used to set their premiums.

While insurance companies still have the right to not renew policies after multiple home insurance claims or if the policy holder commits forgery or fraud, these laws helped to protect citizens of Washington from unfair premium requirements. As a result of the legislation in place in Washington, it enjoys lower overall costs for insurance than many other states. Washington also suffers from fewer natural disasters than many other states, with only a few counties mandated to have flood insurance on their policies. Overall, the policies in place in Washington result in fair rates for the services offered.

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