Home Insurers Canceling in East

It is 1,200 miles from the coastline where Hurricane Katrina touched land two years ago to the neat colonial-style home here where James Gray, a retired public relations consultant, and his wife, Ann, live. But this summer, Katrina reached them, too, in the form of a cancellation letter from their home-insurance company.

The letter said that “hurricane events over the past two years” had forced the company to limit its exposure to further losses; and that because the Grays’ home was near the Atlantic Ocean — it is 12 miles from the coast and has been touched by rampaging waters only once, when the upstairs bathtub overflowed — their 30-year-old policy was “nonrenewed,” or canceled.

The Grays signed with a new company, but their case attracted the attention of consumer advocates and, in turn, the New York insurance commissioner, Eric R. Dinallo.

Mr. Dinallo’s sharp rebuke last month of the Grays’ company, Liberty Mutual Fire Insurance Company, reflected a shift in how public officials view a new reality in the homeowners’ insurance business, advocates say.

In the last three years, more than three million homeowners have received letters like the Grays’ as insurance companies, determined to avoid another $40 billion Katrina bill, have essentially begun to redraw the outline of the eastern United States somewhere west of the Appalachian Trail.

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