homeowners; renters; insurance; cancellation; nonrenewal

SB1788 - 572R - I Ver

REFERENCE TITLE:
homeowners; renters; insurance; cancellation; nonrenewal

State of Arizona

Senate

Fifty-seventh Legislature

Second Regular Session

2026

SB 1788

Introduced by

Senators
Kuby: Hatathlie

AN
ACT

amending section 20-1510, arizona revised
statutes; amending title 20, chapter 6, article 7, arizona revised statutes, by
adding section 20-1511; amending sections 20-1652, 20-1654 and 20-2110, arizona
revised statutes; relating to property insurance.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 20-1510, Arizona Revised
Statutes, is amended to read:

START_STATUTE
20-1510.

Homeowner's or renter's insurance; disclosure; aerial or
satellite imagery; coverage reduction; premium increase; notice; dog breeds;
prohibitions; definitions

A. It is the policy of this state
that each consumer be afforded at least the minimum protections prescribed in
this section in connection with the purchase, coverage and claims process of
any policy of insurance that is offered, solicited or sold in this state.

B. Before an insurer may issue or
sell a policy of insurance, the insurer shall disclose to the applicant, or if
the policy of insurance is a renewal, on request of the insured, all of the
following:

1. All perils for which a loss is
excluded from coverage, including whether the policy covers loss due to
flooding, earthquake or mold.

2. All factors that were used by the
insurer to determine the premium, including at a minimum, if applicable:

(
a
) The
location of the property.

(
b
) The
features of the property.

(
c
) Any risk
scores that are associated with the property whether produced from a model or
otherwise.

(
d
) Images of
the property, including any aerial or satellite imagery.

(
e
) Any major
risks that the insurer identified on the property.

3. Any premium incentives or
discounts that are offered by the insurer for property improvements that reduce
the risk of loss to the property from natural disasters, including wildfires,
floods, mudslides, hail and high winds, and the impact any such improvements
have on the total premium.

C. If an insurer uses aerial or
satellite imagery to underwrite or determine the premium for a policy of
insurance, the insurer shall provide to the applicant, or if the policy is a
renewal, the insured on request, all images used by the insurer.� An insurer
may not use any aerial or satellite image that is older than one hundred eighty
days for any underwriting or rating purposes on a policy of insurance.

D. Before implementing any reduction
in coverage or imposing a premium increase greater than ten percent for a
policy of insurance, the insurer shall provide at least sixty days' written
notice to the insured and include an explanation for the reduction in coverage
or premium increase.

A.

E.
The
breed of a dog may not be the sole factor considered or used for any of the
following purposes:

1. Underwriting or actuarial processes for
determining risk, liability or actual or potential losses related to claims
involving dogs under a policy of insurance.

2. Questionnaires, surveys or other means of
gathering information regarding ownership or possession of a dog or the
presence of a dog on premises insured or to be insured under a policy of
insurance.

B.

F.
For
the purposes of this section:

1. "Breed" means the actual or perceived
breed or mixture of breeds of a dog.

2. "Policy of insurance" means a
homeowner's or renter's policy of insurance.
END_STATUTE

Sec. 2. Title 20, chapter 6, article 7, Arizona
Revised Statutes, is amended by adding section 20-1511, to read:

START_STATUTE
20-1511.

State of emergency; homeowner's or renter's insurance;
cancellation or nonrenewal prohibition; total and severe loss claims;
definition

A. If the governor declares a state
of emergency as prescribed in section 26-303 after a natural disaster or
wildfire, an insurer may not do either of the following:

1. For the next twelve months refuse
to renew a policy of insurance with an insured that resides or that is located
within the area designated in the state of emergency.

2. For the next sixty days cancel a
policy of insurance for nonpayment of a premium.

B. A policy of insurance may not
require an insured to provide to the insurer an itemized list of lost assets
before the insured is provided additional living expense coverage, if covered
by the policy, for total loss claims or for claims for which the loss renders
the property uninhabitable for a period of time.

C. For the purposes of this section,
"Policy of insurance" has the same meaning prescribed in section
20-1510.
END_STATUTE

Sec. 3. Section 20-1652, Arizona Revised
Statutes, is amended to read:

START_STATUTE
20-1652.

Grounds for valid notice of cancellation; inquiries; definitions

A. After a policy has been in effect for sixty days
or, if the policy is a renewal, effective immediately, a notice of cancellation
is not effective unless it is based on the occurrence, after the effective date
of the policy, of one or more of the following:

1. Nonpayment of premium
, except as
prescribed in section 20-1511
.

2. Conviction of the named insured of a crime
arising out of acts increasing the hazard insured against.

3. Acts or omissions
by the insured or the insured's representative constituting fraud or material
misrepresentation in obtaining the policy, continuing the policy or presenting
a claim under the policy.

4. Discovery of
grossly negligent acts or omissions by the insured substantially increasing any
of the hazards insured against.

5. Substantial change in the risk assumed by the
insurer, since the policy was issued, except to the extent that the insurer
should reasonably have foreseen the change or contemplated the risk in writing
the contract.

6. A determination by the director that the
continuation of the policy would place the insurer in violation of the
insurance laws of this state.

7. Failure of the insured to take reasonable steps
to eliminate or reduce any conditions in or on the insured premises that
contributed to a loss in the past or will increase the probability of future
losses.

B. If nonrenewal is based on the condition of the
premises, the insured shall be given thirty days' notice to remedy the
identified conditions.� If the identified conditions are remedied, coverage
shall be renewed.� If the identified conditions are not satisfactorily
remedied, the insured shall be given an additional
thirty

sixty
days, on payment of premium, to cure the defective
condition. Any insured who believes nonrenewal under this subsection
is arbitrary or capricious may use the appeal procedures set forth in section
20-1633.

C. If an insurer uses for underwriting purposes
information from a report provided by, or database maintained by, an insurance
support organization or consumer reporting agency related to the premises that
is the subject of the application or to the person applying for insurance, the
insurer shall obtain that information as soon as practicable on application by
a person for insurance coverage and before the issuance of a binder of
insurance coverage. Failure of the insurer to timely obtain the
information required by this subsection precludes the insurer from declining
insurance coverage or terminating a binder of insurance coverage based on the
information. This subsection does not apply to a policy renewal.

D. This section does not affect the provisions of
section 20-1120.

E. After thirty days from the application by an
insured for insurance coverage, no declination of insurance coverage or
termination of a binder shall be based on information from a consumer report,
including a consumer report provided by, or database maintained by, an
insurance support organization or consumer reporting agency related to the
premises that is the subject of the application or to the person applying for
insurance. Notwithstanding any other law, an insurer may decline or
terminate insurance coverage based on the condition of the premises as
determined through a physical inspection of the premises.

F. An insurer shall
not consider as a claim any inquiry by an insured into whether a policy will
cover a loss or about the type or level of coverage.� An insurer shall not use
such an inquiry, regardless of the source of the information that an inquiry
was made, as a basis for declining, nonrenewing or canceling insurance coverage
or a binder of insurance coverage.� An insurer shall not submit to any
insurance support organization or consumer reporting agency that a mere inquiry
was made to the insurer as to the terms or coverage of a policy of insurance.�
An inquiry into coverage on a property insurance policy is not a claim activity
unless an actual claim is filed by the insured that results in an investigation
of the claim by the insurer.

G. For the purposes of this section, nonrenewal does
not include the issuance and delivery of a new policy within the same insurer
or an insurer under the same ownership or management as the original insurer as
provided in this subsection. An insurer may transfer any of its
policies to an affiliated insurer. An insurer may not transfer a
policyholder because of the policyholder's location of residence, age, race,
color, religion, sex, national origin or ancestry. A transfer by an
insurer pursuant to this subsection does not allow the insurer to apply a new
unrestricted sixty-day period for cancellation or nonrenewal.

H. For the purposes of this section:

1. "Consumer reporting agency" has the
same meaning prescribed in section 20-2102.

2. "Insurance support organization" has
the same meaning prescribed in section 20-2102.
END_STATUTE

Sec. 4. Section 20-1654, Arizona Revised
Statutes, is amended to read:

START_STATUTE
20-1654.

Sending notice of intention not to renew to insured; time; term
of policy

A. Unless the insurer, at least
thirty

sixty
days before the end of the policy period, sends to
the named insured notice of its intention not to renew the policy or to
condition its renewal on reduction of limits or elimination of coverages, the
insurer shall not fail to renew the policy on payment of the premium due on the
effective date of the renewal, in accordance with the then existing rating
manual of the insurer.

B. For the purposes of this section:

1. Any policy written for a term of less than one
year may be renewed for a term of one year if the notice is not given as
required by subsection A of this section. For the purposes of
subsection A of this section, a policy with no fixed expiration date is deemed
written for successive policy periods of one year.

2. Nonrenewal does not include the issuance and
delivery of a new policy within the same insurer or an insurer under the same
ownership or management as the original insurer as provided in this
paragraph. An insurer may transfer any of its policies to an
affiliated insurer. An insurer may not transfer a policyholder
because of the policyholder's location of residence, age, race, color,
religion, sex, national origin or ancestry. A transfer by an insurer
pursuant to this paragraph does not allow the insurer to apply a new
unrestricted sixty-day period for cancellation or nonrenewal.

C. This section does not apply if the insured has
accepted replacement coverage or has agreed to nonrenewal.
END_STATUTE

Sec. 5. Section 20-2110, Arizona Revised
Statutes, is amended to read:

START_STATUTE
20-2110.

Reasons for adverse underwriting decisions

A. In the event of an adverse underwriting decision
the insurance institution or insurance producer responsible for the decision
shall either provide the applicant, policyholder or individual proposed for
coverage with the specific reason for the adverse underwriting decision in
writing or advise the person, in writing, that on written request the person
may receive the specific reason in writing and provide the applicant,
policyholder or individual proposed for coverage with a summary of the rights
established under subsection B of this section and sections 20-2108 and
20-2109.

B. On receipt of a written request within ninety
business days after the date the notice or other communication of an adverse
underwriting decision is sent to an applicant, policyholder or individual
proposed for coverage, the insurance institution or insurance producer shall
send to the person within twenty-one business days after the date of
receipt of the written request:

1. The specific reason for the adverse underwriting
decision, in writing, if the information was not initially furnished in writing
pursuant to subsection A of this section.

2. The specific items of personal and privileged
information that support those reasons except that:

(a) The insurance institution or insurance producer
is not required to furnish specific items of privileged information if it has a
reasonable suspicion, based on specific information available for review by the
director, that the applicant, policyholder or individual proposed for coverage
has engaged in criminal activity, fraud, material misrepresentation or material
nondisclosure.

(b) Specific items of medical record information
supplied by a medical care institution or medical professional shall be
disclosed either directly to the individual about whom the information relates
or to a medical professional designated by the individual and licensed to
provide medical care with respect to the condition to which the information
relates, at the option of the insurance institution or insurance producer.

3. The names and addresses of the institutional
sources that supplied the specific items of information pursuant to paragraph 2
of this subsection, except that the identity of any medical professional or
medical care institution shall be disclosed either directly to the individual
or to the designated medical professional, whichever the insurance institution
or insurance producer prefers.

C. The obligations imposed by this section on an
insurance institution or insurance producer may be satisfied by another
insurance institution or insurance producer authorized to act on its behalf.

D. If an adverse underwriting decision results
solely from an oral request or inquiry, the explanation of the specific reasons
and summary of rights required by subsection A of this section may be given
orally.

E. In providing the specific reason for an adverse
underwriting decision based on credit related information contained or not
contained in an individual's consumer report, the insurance institution or
agent shall provide at least the following information:

1. That the decision was based in part on a consumer
report or the absence of credit history.

2. The source of the consumer report and how the
individual may obtain a copy of the consumer report.

3. A description of up to four factors that were the
primary cause for the adverse action that resulted from the insurance score.

F. An insurer shall not use
the
following

any
types of credit history to calculate
an insurance score to determine property or casualty premiums for insurance
transactions that are subject to this article and shall not knowingly use an
insurance score developed by a third party if the score is calculated using any

of the following
types of credit history
.
:

1. The absence of credit history or
the inability to determine the consumer's credit history unless the insurer's
action is actuarially justified or the insurer treats the consumer as if the
consumer had neutral credit information, as defined by the insurer.

2. Credit history or an insurance
score based on collection accounts identified with a medical industry code.

3. A bankruptcy or a lien satisfaction
that is more than seven years old.

4. The consumer's use of a particular
type of credit card, charge card or debit card unless actuarially justified.

5. The consumer's total available line
of credit, except that an insurer may consider the total amount of outstanding
debt in relation to the total available line of credit.

6. An insurance score that is
calculated using the income, gender, address, zip code, ethnic group, religion,
marital status or nationality of the consumer as a factor.� This paragraph does
not prohibit an insurer from using zip code, address, gender and marital status
information for underwriting purposes.

END_STATUTE

Sec. 6.
Applicability

This
act applies to all contracts that are entered into, renewed, extended or
modified from and after December 31, 2026.

Sec. 7.
Short title

This act may be cited as the
"Arizona Homeowners Insurance Bill of Rights".