Liberty Mutual and Allstate confirmed they were the two companies the department has told to stop issuing such nonrenewals. Liberty Mutual said it will restore policyholders they had dropped.

Tying one type of coverage to another is prohibited by New York's Insurance Law in order to safeguard consumer choice, he noted. "Insurance companies have the right to reduce their exposure to risks, such as hurricanes. But there are rules they must follow when they choose not to renew some of their policies," Mr. Dinallo said.

Mr. Dinallo announced that any company that has issued a notice of nonrenewal on this basis must immediately rescind the notice if it has not yet taken effect.

Glenn Greenberg, senior public relations consultant for Liberty Mutual, said the company will meet with the department to discuss its plans going forward with respect to its high exposure in the downstate homeowners market. He noted that the company had already met with the department before implementing the strategy to which the department now takes exception.

"Our nonrenewal program did not require any formal review or approval from the Department of Insurance," Mr. Greenberg said. "Nonetheless, we voluntarily approached the department in August 2006 with a plan to address our disproportionate coastal exposure downstate.

"The details of this plan were presented, including all of the criteria we would consider in identifying customers that would be affected, and we were not given any direction to change that plan."

In 2006 the department was headed by Howard Mills, an appointee of the Republican administration of Gov. George Pataki. Mr. Dinallo took over this year after the inauguration of Democratic Gov. Eliot Spitzer.

Mr. Greenberg added, "In response to the recent notification, we have immediately ceased using an auto policy as one of the three criteria that must be collectively met to qualify for homeowners renewal, and we, today, are beginning the process of re-instating approximately 640 downstate policies."

Allstate had also informed the department of its intentions and had received no objections, according to a statement by Krista Conte, the company's senior corporate relations manager, New York region. Ms. Conte added that Allstate will meet with the department to discuss future plans.

Mr. Dinallo in a statement acknowledged the two insurers had notified the department of their plans to tie homeowners policy renewals with other lines, but he said those meetings occurred during the prior administration, and the department, at that time, had not made a formal determination on the matter.

After receiving consumer complaints, Mr. Dinallo said he ordered a "full regulatory and legal review," which led to the decision announced today.

Ms. Conte, though, said Allstate had been in constant communication with both the current and prior administrations about its strategies, and the company had met with Mr. Dinallo "as recently as several weeks ago." She said "the department has been fully aware of the details behind our actions to manage exposure, and it is our firm belief that our methodologies for selecting the policies that will not be offered renewal are in full compliance with the law."

The Professional Insurance Agents of New York State Inc. said the action by the New York State Insurance Department was "an important step to protect the state's homeowners."

"In the middle of hurricane season, what we need is market stability," said David Dickson, PIANY president, "On behalf of our members and their customers, we commend the insurance department's actions. Superintendent Dinallo has identified the lack of underwriting logic in these nonrenewals, as well as the unfair leverage they exert on the consumer."

The Independent Insurance Agents & Brokers of New York, Inc. said it applauded Mr. Dinallo's decision to help ease market conditions.

Stephen R. Zogby, IIABNY chairman, said, "The Department and the association have worked together to protect homeowners whose only fault was their geographic proximity to the coast. Hopefully, this action will be a first step in helping to restore a stable insurance market."

This article updated Aug.29, 9:05 a.m.