Key Takeaways
- Illinois uses standard ISO policy forms (HO-2, HO-3, HO-5) for homeowners insurance
- The Illinois FAIR Plan provides coverage for high-risk properties unable to obtain voluntary market coverage
- Illinois requires 60 days notice for cancellation and non-renewal of homeowners policies
- Insurers cannot cancel a policy after 60 days solely based on claims history or credit
- Illinois law prohibits unfair discrimination in property insurance underwriting
Illinois Homeowners Insurance Requirements
Illinois has specific property insurance regulations that producers must understand.
Illinois Homeowners Policy Forms
Illinois uses standard ISO policy forms:
Common Policy Forms
| Form | Coverage Type | Dwelling | Personal Property |
|---|---|---|---|
| HO-2 | Broad | Named perils | Named perils |
| HO-3 | Special | Open perils | Named perils |
| HO-4 | Renters | N/A | Named perils |
| HO-5 | Comprehensive | Open perils | Open perils |
| HO-6 | Condo | Named perils | Named perils |
| HO-8 | Modified | Named perils | Named perils |
Exam Tip: Illinois uses standard ISO forms. The HO-3 (Special Form) is the most common homeowners policy with open perils on the dwelling.
Coverage Requirements
- No state-mandated minimum coverage amounts
- Lenders typically require coverage equal to loan amount
- Replacement cost coverage available
- Extended replacement cost options
- Law and ordinance coverage often needed for older homes
Illinois FAIR Plan
The Illinois FAIR Plan provides coverage for high-risk properties:
FAIR Plan Overview
| Feature | Details |
|---|---|
| Full Name | Fair Access to Insurance Requirements |
| Purpose | Coverage for properties declined by voluntary market |
| Coverage | Basic fire and extended coverage |
| Territory | Statewide in Illinois |
| Eligibility | Must be declined by standard market |
| Administration | Pool of Illinois insurers |
FAIR Plan Coverage
- Fire and lightning
- Extended coverage (windstorm, hail, explosion, etc.)
- Vandalism and malicious mischief
- Limited theft coverage available
- NO liability coverage (must purchase separately)
Cancellation and Non-Renewal Requirements
Illinois has strict requirements for canceling or non-renewing property insurance:
Cancellation Notice Requirements
| Reason for Cancellation | Notice Required |
|---|---|
| Non-payment of premium | 10 days |
| First 60 days of policy | 30 days |
| After 60 days | 60 days |
| Fraud or misrepresentation | Immediate upon discovery |
Non-Renewal Notice Requirements
| Timeframe | Requirement |
|---|---|
| Standard Non-Renewal | 60 days before expiration |
| Reason Required | Must provide reason upon request |
| Method | Written notice to insured |
Exam Tip: Remember 60 days for cancellation (after first 60 days) and 60 days for non-renewal in Illinois.
Consumer Protections
Illinois provides important policyholder protections:
- Cannot cancel after 60 days solely for claims history
- Cannot cancel solely based on credit history after 60 days
- Must provide specific reason for non-renewal upon request
- Right to appeal cancellation to DOI
- Cannot non-renew based on single claim (with exceptions)
Illinois Consumer Protections
Claims Filing
- Must acknowledge claim within 15 days
- Must complete investigation within 45 days
- Extensions available with written notice
- Payment due promptly after settlement
Rate Factors
Illinois permits these rating factors with proper actuarial support:
- Construction type and age
- Location and fire protection class
- Claims history
- Credit-based insurance scores (with disclosures)
- Protective devices
Prohibited Practices
- Unfair discrimination based on race, religion, national origin
- Redlining (refusing coverage based on geography alone)
- Unfair claims settlement practices
How many days notice must an Illinois insurer provide for non-renewal of a homeowners policy?
What type of coverage does the Illinois FAIR Plan provide?