Demanding Home Insurance Companies

[Handi]

I've heard of experiences from family & friends of retaining or obtaining home insurance for their properties here in Canada. Is the same true in the USA? Is it a trend?

When I bought my home I had to provide proof of the age and condition of the furnace oil tank before I could get an insurance policy. My mother was threatened twice by her home insurance company of cancellation if she didn't replace furnace oil tank and her roof.

I know they are trying to protect their losses but should they be able to threaten their customers like this?

Handi

[Edwin Pawlowski]

I've heard a couple of similar stories, but no first hand evidence. If you are talking outside underground tanks, it may even be a law as commercial tanks here had to be replaced after a certain time. Internal, sounds like overkill. Tanks can be tested with an ultrasonic device to check for weakness. They last for many decades so unless there is evidence of rust, there is no need to replace.

As for the roof, is it in need of repair or replacement? Did they inspect it? If there are problems with it I can understand they would not want to insure the house, but if it is just say, 10 years old, unless damaged there is not need. Some roofs can go 40 years.

[Rick Shaw]

Have never heard of this type of conduct by insurance companies. I have owned houses since 1966 and have never had anything like that happen. There are lots of house insurance companies so if one is hassling you, try another.

Rick

[buffalobill]

asphalt shingle roofs in buffalo ny are now limited to one layer only. maybe the weight and maybe too much tar up there for the firemen?

[Mortimer Schnerd, RN]

Snow?

[Bob]

I've never heard of an insurance company requiring things like that, but it's common for a mortgage company to do it. Some mortgage companies even have written into their contract that a heater must be inspected yearly.

[Handi]

Just as a follow-up to the replies to my original posting.

We've seen my mother experience the worst time with her insurance company. They seem to be acting like bullies maybe because she's a senior citizen who lives on her own. They probably wouldn't have treated a man the same.

First they told her to replace her indoor home heating fuel tank because of its age. That was no easy task, the old tank was in the basement behind a finished wall. Somehow she found the money and had all the work done.

Second they told her to have her roof replaced or her policy would be not be renewed. The decision was made by the age of the roof (aprox. twenty years), not by an actual inspection.

In all fairness though, her roof really did need replacement. Before the deadline to have the roof replaced it developed serious leaks. Luckily her son's came through this time with the money and she was able to find a competent friendly roofing contractor.

I'm getting the impression that there seems to be an increasing problem with home heating fuel tanks. Indoor tanks are developing small leaks resulting in costly leaks in basements and outdoor tanks are being damaged from falling ice or vandals. I've recently seen a story on TV where vandals broke off the valve off of an outdoor tank resulting in a costly enviromental cleanup. The soil surounding the tank had to be removed and properly disposed of.

A popular solution has been the introduction of fiberglass tanks. Oddly enough I understand that when the typical steel tank rusts its from the inside, imagine!

anyways, that's my two cents..

Handi

[hallerb]

insurance hassles are on the rise. a couple friends had these troubles. one required his outdoor steps repaired and add a railing, his porches rebuilt, wood rotted, and his knob and tube wiring replaced.

another friend lost their insurance because the roof was bad. their mortage company put in forced place insurance at 4 times the cost, 1500 bucks for structure only. unfortunately they had a fire and no coverage for their possesions, most of which were ruined, and no coverage for a place to live during repairs. the fire did over a $100,000 damage.

indoor fiberglass oil tanks must be inside a steel shell to prevent punctures...

oil leaks are serious and can lead to fires and environmental damage, costing big bucks.

insurance companies have the right, written into the policy to inspect your home at any time. I guess its in our best interest but sometimes you dont have the bucks:(

[trader4]

The concern about oil tanks is common here in NJ. Insurance companies are either no longer covering losses due to leaking tanks, severly capping amounts they will pay for these claims and/or insisting on proof that the tank is only a certain age, etc. Seems reasonable to me, considering the huge amounts some of these remediations can cost.

Also, since the OP says the house in question needs a new roof, it seems very reasonable for the insurance company to make that a condition of coverage. Why should the insurance company have to charge everyone that has a well maintained roof more for insurance to cover losses that are bound to occur from houses that need a new roof?

[robson]

I don't know if threaten is a term they should use - cancellation of policy - for sure. Oil tanks in this province are regulated and registered by the gov't and must be of a certain age and csa approved or they won't be covered. Neighbour had hers leak and the clean up cost was roughly 250,000 dollars - actually had to dig up the inside basement of the home next to hers - so I guess the insurance companies have a right to be worried. There was another case where the clean up crew stopped at 700,000 dollars. As for the roof - around here, if you don't bring your roof up to standards you could either get cancelled or sign a waiver with the insurance coverage to exclude any damage caused on the interior of the home due to a leaking roof.

[SQLit]

I live in Arizona. When I sold my last home about a year ago. I was required by (I believe federal law) to provide my insurance company, and agent contact information. I was required to disclose all insurance claims on the property, none thankfully. These forms were new to me and my agent. I was told that the insurance companies had gotten the government to pass a law to protect them from people making a claim and not fixing the property. Happens all of the time with autos.

In the 1970's I had an insurance company send me a "notice of non renewal" because of the age of the home. It was built in the 1950's and still standing today.

Now days with MBA's trying to manage companies bottom lines through finance there will be more and more of this.

As for the oil tank, any volume of oil now days is a risk. Some MBA made a mark on a piece of paper and your moms home was on the wrong side of the line. I inspected a new electrical transformer last week. It held about

400 gallons of oil. When I turned down the installation everyone was upset. Our electric code that I am to enforce now requires a containment field for the oil. The contractor installed the unit exactly like the plans called for. Sure do not understand how plan review missed something like this. But they did. Now the architect and owner are having a pissing match and the transformer sits their not running. They will install a containment field or they will remove the transformer, which is unlikely.

There are other options for you mom other than replacing the tank. Those options may be more money. It is just another way government needs to help us from ourselves.

[Banty]

What is her claims history? Had she had any claims involving water leaks from the roof, for example?

Banty

[Not]

For a number of reasons, homeowner's insurance has become less profitable than it was, so the companies now are not as eager to write these policies as they once were.

I doubt they are threatening to cancel the policy; I think it is likely that they have advised that they will not renew the policy on expiration unless those conditions are met. This has become a very common position in the US insurance industry. Also, claims experience is now an important factor in deciding whether to write or renew a policy, to the extent that some people now will fix some things at their own expense, rather than making a claim under their policy.

So before tell> I've heard of experiences from family & friends of retaining or

[Joshua Putnam]

The only threat they have is to decline to do business with someone who won't properly maintain their property. If the insurance company is being picky about something unimportant, it shouldn't be hard to find other insurance. If it isn't easy to find other insurance, that should be a clue that the company isn't being unreasonable.

In my experience, it isn't hard to insure a house with a bad roof, you just have to pay twice as much and accept a policy that excludes any damage related to the bad roof. Myself, I'd rather fix the roof.

[Joshua Putnam]

Not a federal law, or I'd be getting that request from all my clients who sell their homes.

Some customers do request an official loss history on the property, so that buyers are able to find insurance the first time, but most don't bother even asking.

It does happen a lot -- especially on older homes that aren't in great shape to begin with, and therefore have cash-value insurance policies instead of replacement cost. Small fire, insurance only covers a small fraction of replacement cost because they're only paying the depreciated value of the damage, so the owner can't afford to repair it. They end up selling with unrepaired damage the new owner has to take care of.

While this can be a huge hassle at the time, the owner and architect should, after they think about it, be glad you caught it, rather than having 400 gallons of oil waiting to cause an environmental claim against them both some time in the future.

[Handi]

That's a very interesting point you've brought up Joshua. I wasn't aware that one could request an official loss history on the property they're buying. Smart idea.

I found out completely by accident through a house inspection of a property I bought that the house had been damaged extensively by a fire. The repairs were complete and there was no sign of damage.

And in response to all of the other reply postings to my original post, thank you. It is common sense what the insurance company was trying to do. Considering the rising costs of home insurance claims its wise that the insurance companies try to minimize their costs.

Handi

[Anonymous]

When we bought our last house, our ( State Farm ) Insurance Agent came over, went through the house, and made suggestions regarding possible safety issues, modern safety enhancements, ( GFI' outlets, fire extinguishers, etc )

We welcomed his advice. What a great service.!

[Joshua Putnam]

It's especially useful if the seller has claims they don't even know about -- some insurance companies have a habit of recording even a hypothetical inquiry as a claim. I've seen properties with multiple "claims" that never happened -- somebody sees flooding in their neighborhood, calls to ask if the damage would be covered if their house flooded. The answer is no, because that would be flood insurance, but the company records a water damage claim with zero paid out.

Word to the wise -- when you have a question, call your agent. Save the claims number for when you actually want to file a claim.

[Banty]

Yes, I had that experience too concerning a hypothetical question about some water damage (I fixed, had planned to anyway).

Don't ask hypothetical questions to the claims number!

Banty

[Calvin Henry-Cotnam]

Here in Canada, mortgage lenders want proof of insurance, leaving the onus on the insurance companies to make their own demands.

My sister and her husband received notice from their insurance company a few years ago that their house had to be rewired. The house was build in the 1930s or 1940s and was wired with knob and tube (K&T) wiring and the insurance company gave them a year's notice to have the rewiring done.

K&T is "legal non-conforming" under our electrical code. That means you can't put it in new, but if you change your electric panel, you don't have to replace it, there are code rules for interfacing it to the new panel.

I have heard of other things that insurance companies have a hissy fit over. One is a product known as "insul-brick". It is a material like asphalt shingles that has the pattern of bricks on it. It used to be used as a siding-like material to cover sheathing.