A Lanham, Md., family recently lost its appeal of a decision by Standard Fire Insurance Co. to not renew its homeowners coverage after three claims were filed on the policy.

Karen Stakem Hornig, then associate deputy commissioner, ruled that Standard’s decision to cancel the policy and to increase the family’s annual premium by 27% in 2008 were legal, according to her June 18 ruling, which affirmed an initial MIA ruling for Standard.

The couple filed a complaint against Standard in March 2008, alleging that the insurer illegally cancelled the homeowners policy after the family reported three incidents between 2004 and 2007. In 2004, the year the family obtained the policy, it made a claim for damage to a bedroom ceiling, causing its collapse from a water pipe leak in the attic. In June 2007, the family claimed ceiling damage in the same place, which Standard found was caused by a leak in the attic condensate line. Two months later, the family claimed damage to the basement from water overflow, caused by a blocked condensate line.

In March 2008, the family received a notice of nonrenewal, terminating the policy April 27, 2008. Standard officials later told investigators that the cancellation was based on underwriting guidelines, which say that if a homeowner has two, non-weather related claims within a three-year period the policy will not be renewed.

Stakem Hornig concurred, disagreeing with the family’s assertion that the two 2007 claims were related, and thus should be deemed one claim.

Stakem Hornig also found the $444 premium increase for April 2008 to April 2009, to $2,087, appropriate, agreeing with Standard’s assertion that loss surcharge, increased coverage limits and the reduction of the new home credit were appropriate reasons for the increase.

This story originally appeared in the November 2009 print edition of Insurance & Financial Advisor.