Insurance "recommendations", hidden cost of property ownership!

[David Wolber]

So first we bought this 6 unit in New London, everything was going fine until the insurance company did their inspection. Got a letter in the mail of their “recommendations” that are mandatory that I complete. $10k later they are off my back.

Three months later…

We closed on this duplex in New London a month ago to house hack a bit and live mortgage free.Took me awhile to find an insurance company because of the age/size and style of the property (it’s 5600 sqft, Victorian built in 1900).We ended up going with State Farm.Usual thing happened; guy comes out and takes a look, gives a few things we should “look at”.Tells me about a tree that needs trimming and a set of stairs on the deck needs repaired; no big deal.Two weeks after closing we get a call from SF that we have been “randomly” selected for a 3rd party inspection.Two week after that we get a call from the agent saying we now have 4 things we must complete to include CUTTING said tree down, replacing windows, fixing the stairs and now I have to paint the CEDAR shingles on the garage because only half of it is painted.As you would expect, I took this news very well and only raised my voice with the guy a little.He told me I had 60 days to fix or start the repair and that a letter would be issued on the 20th of August.Silly me, I though this letter would outline what I needed to complete.NOPE, it was a letter from SF saying that my coverage was declined and was accompanied with a refund check for my premium.

Turns out that 60 days is from the date when the policy was issued, not the date of this letter.So we are now 30 days into the 60 days repair window and I’m just now getting the information… Oh and that 60 days also include a couple days to insure the agent has time to come out and re-inspect and send it to underwriting.So my 60 day window was actually only 20.

Additionally, every time I call them to ask a question, I get yet another list of things I should fix.Stop giving me your opinion about what you think I should do and tell the required recommendations you need me to do so I don’t lose my insurance policy!SF never once provided me a list of things in writing.

So the moral of my story here is don’t think since you’ve made it through closing you’re out of the financial woods yet.With these two properties alone, we have spent over $20k in repairs that were required within the first 60 days of ownership.Best part is the insurance agent told me I had to make the property looked lived in…how do you expect me to finish the interior renovations (we removed some walls and gutted the kitchen; started before our priorities were redirected for us) when you’ve got me dealing with a bunch of “recommendations!”

Anyone else have any terrific stories about insurance company hoops?I can’t be the only one hatting these guys right now…

[John Mocker]

David,

Sorry you've had a bad experience with my Profession.  Not all of us are bad but like every profession, there are those who fail due to lack of knowledge, lack of concern for the client, etc.  As with your contractors that estimate what it will take to renovate a property, the better they are, the more accurate the info. 

On the first property, were the problems that the inspection turned up things that were visable?   Did the agent do a walk through of the property with you?  If not, you should do that next time.

There are things that are not apparent from a walk through such as roof issues and other things that should have put up a red flag to the agent right away (knob & tube wiring, stairs without railings, broken walkways, etc.).  Some items, such as the overhanging trees may not have been an issue for a different company. 

On the 60 day notice for the repairs.  There are CT state laws governing what amounts of lead time are given on a cancellation.  If the law requires 60 day notice in your case, it is generally is from the date of the legal notice.  If a lesser amount of time is required (say 30 days), then, when the clock starts on the 60 days may be a company option.

On a note of caution, the comment of having to make it look lived in and you being in the process of renovating.  Find out what the Vacancy clause is in the policy.  Many policies have terms that lower the coverage if a property is vacant or unoccupied for a certain number of days (30, 60,...).  Often in a renovation/remodel you can get coverage under a Renovation Builders Risk policy that will not have that type of reduction. 

Hope that the project(s) go well and the future does not hold any more Insurance snags.