Topic:
ANIMALS; HOMEOWNER INSURANCE;
Location:
ANIMALS - LEGISLATION; INSURANCE - HOMEOWNERS';

OLR Research Report


April 29, 2005

 

2005-R-0446

MICHIGAN INSURANCE DEPARTMENT'S POSITION ON BREED OF DOG EXCLUSIONS

By: Janet L. Kaminski, Associate Legislative Attorney

You asked for the Michigan Office of Financial and Insurance Services' position on specific breed of dog restrictions in home insurance policies.

SUMMARY

Michigan's Office of Financial and Insurance Services outlines its position on coverage exclusions in home insurance policies based on the insured's possession of a particular breed of dog in Bulletin 2003-07-INS. According to the bulletin, insurers cannot deny, cancel, or not renew a policy based on the insured's dog's breed. The office bases its conclusion on its interpretation of certain Michigan laws regarding home insurance underwriting rules and the definition of an “eligible person” for such insurance. Insurers can deny coverage or not renew a policy if, after receiving written notice from the insurer, (1) the dog bites a person or attacks another animal and (2) causes a claim to be paid under the policy. But, this underwriting rule can only be used if the insurer files it with the insurance services office. (A copy of the Bulletin and relevant laws are enclosed.) The bulletin and laws do not prohibit setting premium rates to reflect the risk the dog presents.

OLR's on-line search of other state's statutes relating to breed of dog restrictions and underwriting in home insurance found laws in Pennsylvania and Virginia. These are described in OLR Report 2005-R-0399 (enclosed).

MICHIGAN BULLETIN 2003-07-INS

Policy Exclusions

Michigan's insurance commissioner takes the position that specific breed of dog exclusions violate Michigan's law regarding coverage exclusions (Bulletin 2003-07-INS). Under the law, the commissioner can disapprove, withdraw his prior approval, or prohibit the use of any policy form if it “contains exceptions and conditions that unreasonably or deceptively affect the risk purported to be assumed in the general coverage of the policy” (M.C.L.A. 500.2236).

Underwriting Rules

Michigan's insurance commissioner takes the position that an insurer may deny coverage or not renew a home insurance policy if the insured's dog (1) has bitten a person or attacked another animal and (2) caused a liability claim to be paid under the policy (Bulletin 2003-07-INS). The bulletin further states that coverage should not be conditioned on the dog's breed but on its bite history related to paid claims after written notice to the policyholder, as long as this underwriting rule is filed with the Office of Financial and Insurance Services. He bases this position on Michigan's laws regarding underwriting rules.

Under Michigan law, underwriting rules for home insurance must be in writing and filed with the insurance commissioner for informational purposes. The filed rules are available to the public. If the commissioner finds that any rule violates the insurance statutes, he can order the company to stop using it (M.C.L.A. 500.2119(1) and (6)). Further, for the renewal of a home insurance policy, the insurer can establish underwriting rules based on the insured's claim history during the three years before the policy renewal date if that history is based on (1) claims caused by the insured's negligence; (2) the insured's failure, after receiving written notice from the insurer, to “correct a physical condition that is directly related to a paid claim or that presents a clear risk of a significant loss under the property or liability portions of a homeowners policy,” or (3) both (M.C.L.A. 500.2117(2)(c)).

Eligible Person for Home Insurance

Michigan's insurance commissioner takes the position that the presence of a particular breed of dog does not make a person ineligible for home insurance based on Michigan's law defining an eligible person for home insurance (Bulletin 2003-07-INS).

An “eligible person” for home insurance means a person who is the (1) owner-occupant or tenant of a house, condominium unit, cooperative unit, room, or apartment or (2) owner-occupant of a multiple family dwelling of not more than four residential units (M.C.L.A. 500.2103(2)). “Eligible person” excludes, among others, “a person who insures or seeks to insure a dwelling that has a physical condition that clearly present an extreme likelihood of a significant loss under a home insurance policy” (M.C.L.A. 500.2103(2)(i)).

It is the commissioner's position that these eligibility rules (1) function as underwriting rules that must be filed with his office and (2) prevent insurers from denying, canceling, or not renewing coverage based on the insured's possession of a particular breed of dog (Bulletin 2003-07-INS).

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