SB 157-CANCEL INSUR. ON CERTAIN VACANT PROPERTY  2:36:39 PM CHAIR EGAN announced the consideration of SB 157. SENATOR PASKVAN moved to bring CSSB 157( ), 27-LS0928\E, before the committee. CHAIR EGAN objected for discussion purposes. 2:37:12 PM DANA OWEN, staff to Senator Egan and aide to the Senate Labor and Commerce Standing Committee, said the last time they talked about this bill the committee found a problem because of the concept that insurance companies could cancel policies on property that appeared to be unoccupied. Committee members expressed a great deal of reluctance to grant insurance companies the ability to do that, because Alaskans typically have homes which they leave for long periods of time, even though they certainly intend to come back and reoccupy them. So, language common to case law was suggested by industry on page 2, lines 6-7 removing "Un-occupancy or vacancy of the insured property that increases a hazard." and replacing it with: vacancy of the insured property that increases a hazard insured against in this paragraph. In this paragraph vacancy means entire abandonment of the property by the insured and the property does not contain contents with substantial utility. MR. OWEN said this goes back to the idea of vacancy, which from testimony seemed was something people understood and could be defined in the statute. The idea of unoccupied homes being available for insurance cancelation was removed. 2:41:38 PM SENATOR MENARD asked him to flesh out what was meant by "vacancy." MR. OWEN said Sheldon Winters could explain it from the insurance company's point of view, but this terminology is commonly used in the industry, so people recognize vacant property as being property that doesn't have any substantially valuable material left behind. CHAIR EGAN said there were concerns that the definition of "vacancy" wasn't in statute. Now it is. SENATOR GIESSEL asked where it says "primary residence." MR. OWEN said he understood that it didn't apply to a primary residence. SENATOR MENARD said she wrote it in her notes. MR. OWEN said it's his understanding that it would apply to any residence. 2:44:49 PM SHELDON WINTERS, State Farm Insurance, Juneau, said the industry took the committee's concerns to heart; thus the CS. They took out the un-occupancy piece and looked for a definition of "vacancy" which was problematic, because no other state defines it. However they found case law that talked about it and tied it into abandonment, which was one of Senator Paskvan's ideas. Now, if enacted, the property must be entirely abandoned by the insured, devoid of contents of substantial utility; and those two things must increase the hazard that was insured against. He reminded the committee that insurance companies want to insure property, and in all cases they either issue a brand new policy or renew a policy within 12 months. Remember, if the property is determined to be "vacant" the owner must send a cancelation notice to the insured, but if the insured is going to get their mail and did not abandon the property and does intend to insure it, he would bring the letter to his insurance agent and work out the solution. Finally, he said, this is all subject to the oversight of the Division of Insurance. MR. SHELDON said the statute does not distinguish between primary residences and it all goes back to the amount of risk insured against. A cabin would have a different kind of insurance, but it would still have to be abandoned and devoid of property. His reading of case law is that "devoid of substantial utility" is designed to address a situation in which someone leaves something like a chair or a microwave. You don't want to be really specific. 2:49:20 PM SENATOR PASKVAN said these are significant improvements. His concern was if a homeowner takes a job in Texas, for example, and they put their home on the market and take all of their furniture out, but they are still paying the mortgage and the electric and fuel bills. Now he understands that the vacancy endorsement for $30 would fix that. MR. WINTERS agreed that the definition is so limited now that it would be difficult to ever cancel a policy. 2:50:55 PM LINDA HALL, Director, Division of Insurance, said she was fine with the changes to SB 157. She contended that there was another step; if you have a consumer who feels that his insurance has been wrongly canceled, they are welcome to come to her division and the Consumer Protection Division would investigate the circumstances. Seeing how these statutes are applied in the real world is part of their general oversight authority. The division determines whether there is a violation. 2:52:36 PM SENATOR PASKVAN moved to report CSSB 157( ), version E, from committee with individual recommendations and attached fiscal note. There being no objection, the motion carried. 2:52:55 PM At ease from 2:52 to 2:54 p.m.