Insurance for House Needing Repairs

Discussion in 'P&C Insurance Forum' started by smokinleroy, Feb 8, 2011.

  1. smokinleroy
    Offline

    smokinleroy New Member

    Posts:
    1
    Likes Received:
    0
    State:
     
    I have a 100+ year old Victorian house that needs a lot of exterior renovation. A porch with balcony needs to be reconstructed from the ground up, much of the siding needs replaced, and the whole body needs paint. I have estimates of $50K - $80K to complete.

    I had been covered by a major carrier, but when we filed a claim for wind damage to an expensive window, (which they covered), they did a property evaluation and found issues they said needed to be addressed or they would cancel coverage. There simply was not time to get them corrected in time, so they dropped us. I found a local agent that said they specialize in properties such as mine and said there would be no problem. The issued a policy, but after the underwriting company saw photos, they declined coverage. I found another agent that said the same thing who issued a policy without taking photos which has now been in effect for about a year. I intend to do the renovations as time and funds permit, but am nervous that this policy may also be dropped.

    Is there a type of coverage available for such properties in rather rough shape under long-term renovation?
     
  2. Josh
    Offline

    Josh Well-Known Member

    Posts:
    11,794
    Likes Received:
    2
    State:
    Virginia
    Most likely you can get a policy to cover it during renovations, but usually everything will need to be completed in less than a year. Also, when the carriers send out the letters demanding x, y, and z be fixed or coverage will be termed they will sometimes be ok with simply giving them an estimated date of completion, even if it isn't until some time after the deadline they provided. Even at that they won't go for "as time and funds permit". It's too bad you filed that wind claim that triggered the property evaluation.
     
  3. superfly33
    Offline

    superfly33 Well-Known Member

    Posts:
    195
    Likes Received:
    0
    State:
     
    Your risk can be insured and I think the problem lies in how competent is your agent. For your situation, I would talk to a broker and not a captive agent. Captive Agents like a State Farm or a Farmers agent will have less choices available. Therefore they would be more likely to try to jam a square peg into a circular hole.
     
  4. joshb
    Offline

    joshb Well-Known Member

    Posts:
    336
    Likes Received:
    0
    State:
    Florida
    There are carriers that will insure homes under construction/renovation. However in your case it seems as if the home is not under renovation. It seems that the home is in disrepair and you will fix it in the future when the opportunity arises. If that is correct, out of all of the carriers I represent (29 different carriers) every one would decline coverage, including the state's program. I don't know of any carriers that will insure a home with existing damage. I'm in Florida which is different than every other state, so it might be different where you are.

    EDIT: Just to add a little bit more, Florida really is quite a bit different, so it may not be that difficult elsewhere, but in Florida, we don't have too many options for home policies anyway. Most (if not all) of the carriers I represent, will ask on the application, if there is existing damage. If the answer is yes, the underwriters, will want to know what and when will it be fixed. In your case, if your numbers are correct, 50k-80k, you would be declined.
     
    Last edited: Mar 26, 2011
  5. FEX Quotes
    Offline

    FEX Quotes Well-Known Member

    Posts:
    1,101
    Likes Received:
    1
    State:
    New Jersey
    I'm not sure what state you are in, but talk to a Farmers agent about their Distinct Choice policy. I believe it covers properties such as yours while undergoing renovations. Foremost also has a similar program
     
  6. DALwrites
    Offline

    DALwrites Member

    Posts:
    11
    Likes Received:
    0
    State:
    Texas
    Hi smokinleroy,

    I think joshb hit the nail on the head - most carriers will not view your home as "under construction" (i.e. actively working to repair conditions, will be completed within a certain time period, etc.), it is simply in a state of disrepair.

    Many carriers offer dwelling under construction coverage, either as an endorsement off your homeowner's policy or as a standlone policy altogether, but the vast majority will want to know a date that the construction will be complete. Since this coverage typically lasts 12 months, they will often inspect the home at new business to gauge where you're at, and then conduct another closer to the time the coverage will expire to make sure everything is complete. If everything is not "up to snuff" at that time, your policy would be non-renewed.

    There may be some (likely non-standard) carriers that would accept a home in poor condition, but your rates will reflect this.
     
  7. Guest
    Offline

    Guest Guest

    The policy will have a provision pertaining to non renewal. If the carrier fails to notify you of non renewal within the specified time period they are prohibited from non renewing the policy.

    The current carrier may have issued the policy without taking photos due to a couple of changes to your property coverage.

    One change could be the covered causes of loss. The original policy could have been a special or "all risk" form. This requires the insurance company to prove that the damage to the dwelling is not covered. The current policy may be a named peril form. This requires you to prove to the insurance company that the damage to the dwelling is covered.
    The other change could be how the loss is settled. It is highly likely that the original policy settled losses on a replacement cost basis because the damaged window was replaced. The current policy may settle losses on a actual cash value basis. This means replacement cost less depreciation. Since you have a 100+ year old dwelling the deduction for depreciation will be significant. Therefore, you will have a significant out of pocket expense for partial losses and in the event of total loss the company's loss settlement will be less than the amount to rebuild.

    It is recommended that you have a meeting with the insurance agent to determine whether or not there were any changes in coverage and loss settlement between the original policy and the existing policy. Also you may want to review the cancellation/non renewal provision with the insurance agent. :idea:
     
  8. DALwrites
    Offline

    DALwrites Member

    Posts:
    11
    Likes Received:
    0
    State:
    Texas
    I'm not completely sure I understand what is trying to be conveyed here, but if I'm reading it correctly, it doesn't appear entirely accurate.

    The burden of proof does not immediately fall on the insured to prove anything, unless specifically requested by the claims adjuster (after their initial investigation). In other words, the adjuster will visit the property, see fresh/new damage to a window, check that a recent wind storm blew through (maybe a CAT event), and put the pieces of the puzzle together to conclude the insured's version of the story is accurate. If the insured's version of the story does not hold up, they may ask for additional evidence (receipts, completed installation work orders, and so forth).

    The only difference between an all risk and named perils policy is what is specifically covered - all risk means a loss is likely covered unless specifically excluded by the policy jacket, and named perils signifies exactly what causes of loss would be covered (i.e. if not listed it would be excluded).

    So, using the above example, unless the carrier can definitively prove the loss would not be covered under the policy (whether by excluded coverage or intentional misrepresentation by the insured), a payout would ensue, regardless if the policy is named perils or all risk.
     
  9. chohstadt
    Offline

    chohstadt New Member

    Posts:
    1
    Likes Received:
    0
    Smokinleroy, I have a very similar situation. Would like to know which insurance company you used that doesn't takes photos. Of note, during my research, have learned there is HO8 insurance for older homes, not as comprehensive coverage as regular HO3 insurance, which I may be checking into as well, but hoping you will share name of your current insurance carrier with me.
     

Share This Page