New auto-insurance rule protects gulf returnees


Maryland drivers who canceled their auto insurance when they were called up for duty in the Persian Gulf can't be refused new insurance upon their return under a regulation issued by Maryland Insurance Commissioner John A. Donaho.

The new regulation, which went into effect yesterday, also reinforces federal law by prohibiting life insurance companies licensed to operate in Maryland from terminating the life insurance policies of customers who are called to active duty in the military.

That federal law was strengthened Wednesday when Congress passed legislation assuring that reservists serving in Operation Desert Storm will receive their health benefits when they return to work from the gulf conflict.

Until now, employers were required only to use the same rules fora returning reservist as for an employee returning from a leave of absence or furlough.

Companies that issue auto insurance generally refuse to insure drivers who have not had coverage for the previous 30 days, said Thomas P. Raimondi, associate deputy commissioner of the Insurance Division of the Maryland Department of Licensing and Regulation.

When that happens, the only alternative for Maryland drivers is the Maryland Automobile Accident Insurance Fund, a state-supported insurance fund, Mr. Raimondi said. Insurance through MAIF is expensive, however.

The regulation, which applies to all active-duty military personnel, was issued because "we don't want to see in the state of Maryland 10,000 or 15,000 policyholders suddenly go to MAIF," he added.

If an insurer cancels an auto-insurance policy because the policyholder has violated underwriting guidelines -- by having too many speeding tickets, for example -- the new regulation would not apply, Mr. Raimondi said.

Insurers said they are already making every effort to help policyholders called to duty in the gulf.

"I can't imagine why insurance companies wouldn't want to renew these people's policies," said Tony Nicely, president of GEICO. "If they were overseas they wouldn't have been a problem. They just didn't need insurance.

"The regulation won't be any problem for us."

The part of the regulation relating to life insurance restates the provisions of the the Soldiers' and Sailors' Civil Relief Act of 1940, a federal law that prevents life insurance companies from canceling life insurance policies while the holders are on active duty with the military, said James O'C. Gentry, vice president and general counsel for Monumental Life Insurance Co.

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