Cousin's house collapsed! Question!

Thats what my agent said.If the water comes through the roof,Im covered.If its ground water that washes away the house,not covered,flood insurance covers that.

BooBoo

Thank you Jack! You are absolutely right.

It should be a New Year's resolution to drag your homeowners policy out and review it. People forget that adding on to their house, purchasing that big ticket item, or starting a home based business can change their coverage. And all it takes is one major loss to show you how inadequately covered you really are!

The definition of a flood has always been water rolling over the top of the ground.

A basement wall caving in would be from ground pressure, with water saturating the ground & pushing on the underground walls - not water on the surface.

Whole thing seems to be a non-issue, this was not a flood?

But, that is insurance, they are happy to take your checks every year, but since they write the policies they make a book of whereas's that no average human can understand and exclude anything that would actually happen. And agents do not explain anything around here, just as crooked as the insurance company. Their words are not binding, so they can explain anything they want any way they want. "Oh sure you are covered just fine..."

One buys insurance to protect for loss. If the house falls over, well duh that is something I want to be protected from. But oh wait, there are exclusions... Perhaps if you were jugling phone books while standing on one foot in the kitchen while the house collapsed, we woulda covered it - so sorry for your loss, but we had that juggling clause right there in your policy, page 47.... Why, no, we won't refund your policy payments for the last 20 years, so sorry but it was a contract, we were willing to pay out if only the house had fallen to the north wehen it collapsed, not the west like it did.

To be sure, a lot of people trying to make claims are crooks too. Guess it is just human nature.

I see a lot of people in the insurance business here. I do not mean to bash people individually. I'm sorry for my rudeness to you individually, but insurance policies are quite a load. It is a real hoot for one to tell us we should read & understand the policy. They are specifically designed _not_ to be understood (this is a perfect example - there was no normally defined flooding here, but oh so sorry the damage isn't covered...) and agents typically don't understand the policy any better than I do. While they are taking the check from my hand I'm told I'm covered for _anything_...... Whole different story if one tries to make a claim.

That is just how it is in the real world. Yes I have a very dim view of the insurance industry, but it has been earned. Sorry.

This is a perfect example.

--->Paul

Paul,
I'm sorry you feel that way about insurance companies.
You are incorrect to say that agents cannot be held to what they say. Oh yes they can. That is why you have state insurance department. If an agent has purposely misled you, saying something was covered when it actually wasn't, they can be fined, sanctioned, and have their license revoked. We are held to a code of ethics. Perhaps some agents don't take it seriously, but thats where the state department comes in.
On the other hand, to not know what is covered in a policy, is ignorance. When we buy a car, we ask about it, maybe even read up on the model. When we buy a TV, we try to get the features we want, usually by talking to the salesperson to get the details. When we buy a house, we usually have it inspected, walk through it, and find out as much as we can. Same with insurance. Do the research, kick the tires, ask questions. If an agent tells you something is covered, ask him to show you where, in the policy. Exactly what does it say? What are the exclusions? Its a lot of money, and its YOUR money. Get what you pay for!

Paul,

I am reading a Chubb homeowners policy right here in front of me. It says:

"We do not cover any loss caused by water in the ground, or by its pressure, leaking or seepage." Also, "We do not cover any loss caused by flood, surface water, waves, tidal water, overflow of a body of water, or spray from any of these, even if it is driven by wind."

I'm not sure how it could possibly be any more plain that that. This is not confusing legalese. In fact, there's not a word in it that is more than 2 syllables. Policies are not designed to be misunderstood. I've written policy language myself and we go out of our way to make them clear. If it is too confusing, many judges will throw the exclusion out in court.

The most common causes of total or near total loss to homes are wind and fire. Those are always covered. At worst, you might have a seperate wind deductible of a few thousand dollars. 98% of the claims that I see submitted are fully covered and paid in full. I have had settlement checks for hundreds of thousands of dollars appear in my office within a week of the loss. Also note that most insurance companies lose money on the actual insurance. They tend to scrape a profit together from the interest that they earn on the reserve funds that are held to pay the claims with. That's why most of the big banking/insurance mergers went sour.

My loss ratio for 2004 on homeowners was about 105%. That means that for every $100k we took in, we paid out $105k in claims to fix people's houses and replace their belongings. The math says it all. Our clients are getting a very sweet deal right now.

This is how it is in the real world, at least with reputable insurance companies and serious professionals. We write the policies and pay out huge sums of money as we are bound to. If you have had a lot of bad experiences, I strongly suggest that you find a new independent agent who knows his business and only works with companies that pay their claims.

-Jack

"By the way, the National Flood Insurance program is actually waaay underpriced and is a pretty good deal for those who buy it, as evidenced by the fact that the program loses money almost every year and taxpayers have to bail it out."

That's not what I was told by our state coordinator, Jack_c-ville. By law the NFIP is required to be self financed. They do have the ability to borrow from the treasury but the money has to be repaid which mean premuims will increase if necessary to pay any losses. Taxpayers unless they have flood insurance do not support the system.

Purchasing flood insurance does not require state permission. It's available to anyone in a county or incorporated city that enrolled in the program by passing the required flood plain management ordinance. You can look on FEMA's website and see how many policies are in force for any county or city that met the requirements in any state. If someone has a policy in your incorporated city or county, you can also purchase flood insurance. Keep in mind that not all insurance agents might have a source for the coverage. Your state NFIP coordinator can help you locate an agent that does.

That is clear.

It still is not a flooding issue. Those are 2 seperate sentences. Everyone including the insurance people are discussing this as a flooding issue. I guess that was what puzzles me. Flooding & ground water pressure are 2 seprate things.

As to comparing buying a car to buying insurance, you _can_ kick the tires, inspect the hardware, and you get to drive it for a year or more with some backing (warrenty) from the manufaturer while seeing if it works.

With insurance you are buying an idea, not a tangible thing. There is no way to test the idea until something goes wrong, and then either the idea works or it does not.

As to decsribing & understanding the 'idea':

On my side, there is - me.

On the insurance company's side there is - many decades of policy writing, legal precidence, gifted legal consultants & research.

I just don't think it's the same thing...... Sorry.

As to paying out 105% - that is how insurance works. You are not supposed to make money off the premiums, you are supposed to make the money off investments. This past year, you should have some profit left after paying out 105%. I'm not totally stupid.

Here's a non-homeowners thing that happened to me:

Govt forced me to buy crop insurance one year. They would pay me $30 an acre in govt programs, but only if I had crop insurance. Agent laid out 3 policy levels, one insured 60% of the crop, 70%, & 80%. Was something like $5, $8, & $10 an acre premium.

I only wanted to qualify for the govt programs - had to really no choice. Agent said the low level was worthless, I would never get anything back, at least take the mid-level policy. He drew up all sorts of examples on how I could get paid out from the mid or upper level policy. As per his example, if I got 50% of my crop destroyed, I would get a check for 30% of my normal crop - actual yield 50%, insured for 80% level.

So I went for the mid level.

Turns out we had horrid rains (one of those 3 years of 100 year flood...) that year. Mid summer I visited the agent & said my small grains are only going to yield 30-40% of normal, how do we go about this.

He rotated in his swivel chair, pulls out a pinkish pamphlet, and says it probably won't amount to a claim this year. Since I started in the program, there was a 30% deduction for a first year in the program, and there was some other automatic 10% deduction this special year as well. These percentages were accumulative, they were applied so as to totally invalidate any chance of a pay-out.

He went back to whatever he was doing.

I took the pamphlet home & crunched the numbers. Several times.

Going by that pamphlet, if my crop was totally, 100% destroyed, the absolute total pay-out they would have given me was $14.10 an acre. My normal gross revenue from an acre those days was $160-200 an acre. If I grossed $15 an acre, no payout. Even tho that would be less than 10% of my normal revenue.

But, he talked me into this great 70% coverage, which cost me $8 an acre. (The $5 policy would have paid out $9 an acre max, so was actually a 'better return' policy than what he talked me into....) It is unlikely you can get a zero crop value, the straw would at least be there. So he knew, from the very beginning, that any amount I wrote my check for was total gravy to the insurance company.

I was never, ever shown that pamphlet, no mention was made of a 30% reduction for people with less than 3 years in the program, no mention was made of a 10% overall reduction.

Now, how do we prove the sales conversation beween me & the agent? It was in his office, you think any of his partners or employees remember the conversation? Yea. Well.

This is, basically, how all insurance agents have treated me over the years.

Sorry for my negative attitude, I'm sure there are some good ones out there - somewhere. I'd rather take my chances with a used car salesman if it's all the same.

--->Paul

Paul,

Your 'negative attitude' is perfectly understandable, given your experience. I don't know a whole lot about crop insurance (that's specialize stuff right there), but the situation that you were put in is probably the most common route to bad experiences with insurers. I'll let you in on a subtle little secret in this industry.

When I see someone who is required to get insurance for something that they don't really want it for, your situation is often the result. Like with general contractors who just need it to get a big new contract. When people are in this situation they are usually in a hurry to get coverage, aren't too interested in the details and are shopping solely for price. I don't blame them!

But these traits naturally tend to steer them towards sloppy agents with poor companies. There's a reason why that policy is less expensive than what the other guy could offer. And the agent who is so accomadating and gets things done fast by telling you to just 'sign here and worry about the details later?' Those kinds of sloppy habits make everything he does a disaster waiting to happen. The kind of guy who doesn't worry about the details isn't worrying much about how good his company is at paying claims. It all adds up to the client getting screwed when he has a loss.

Clients who get insurance when they aren't under the gun and are doing it voluntarily tend to get a better deal in the long run. Saving $50 on something they didn't want isn't their goal, so they are looking at the details more. They tend to gravitate towards agents (and other business people in general) who have the same kinds of cautious behavior and priorities. So they wind up being covered by better policies written by better insurers. When they have a loss everything seems to go their way.

With homeowners, everybody's got to have it to keep their mortgage company happier. But I've noticed that the higher the value of the home, the more likely it is that the customer is getting it because he *wants* it, not just because he has to get it. Every million dollar home that I write comes with a list of questions about whether X, Y & Z are covered and how to get them covered if they aren't. These people know what is in their financial best interest - that's how they came to afford to live in a million dollar house. The size of the premiums they pay are roughly proportionate to their means and are just as painful to them as my $500 premium is to me. But they pay it and they do it willingly. So when a millionaire has a loss, he doesn't have to worry. It's paid. When someone in a $100k house has a loss, it may or may not be. This isn't because of some kind of insurance company favortism to rich clients - it's because the millionaire had a cautious, conservative way of looking at business that led him down the right path when he went to buy insurance. Someone of ordinary means can get just as good a deal as the millionaire.

-Jack

Rambler,
Unfortunately, you had a lousy insurance agent. And the agent should have provided the pamphlet at the time of your application. In some states, thats the law.
And most policies are written with the consumer in mind as far as reading ease, believe it or not. In order for a policy to get approved for sale in each state, it has to pass a readability test called a Flesch score. The score varies in each state but the standard is 40, I believe. The higher the number, the easier it is to read. Anything that scores below the state required score, won't be approved for use. Which means it can't be sold.
Heres something to do: if you have Microsoft Word, go into the Tools menu, and under Options, go into the Spelling and grammar tab. Somewhere is a checkbox for readability. Check it and enter something in Word. Copy and paste this entry, then run spellcheck. You will get the readability and the approx. grade level of the paragraph. This is what an insurance company uses to see how readable their policy is. There are of course variables that a company can use to raise the score, but nothing that would be considered cheating. For example, in health policies, the definitions of diseases can be removed, mainly because they are medical terms.

So since you had a loss, I can now assume you read your insurance policies carefully and ask about anything you don't understand?

it depends on what the homeowners ins covers. it may not cover stuff like landslides and mine subsidace, subterrainain water erruptions or stuff like that. If there was no flood in progress then the collapse was either from a long in coming deterioration or what they would consider "landslide", if the water saturated ground collapsed a sound wall. Some compani=es will assess it and tell you "sorry charlie" for reasons like no french drainage, improper construction, owner neglect, ect.

my ins wont cover water dammage, form say, a leaky roof in a heavy downpour. now if a tree falls, even a smal one and hits that area, then they consider it accidental dammage. some goofy stuff they wont cover like if the tree hits your car you are out of liuck but if a tree crushes ornimantal trees and bushes, bingo your in. Atree recently crushed a truck cap i have, no luck with ins. but a few yrs ago a large tree feel in my yard and hit 3 spruce trees, which they paid me 500 each to "replace" (oh yeah I ran right out to do that).

if it was just a normal rain, and the subsoil wasnt saturated, and the structure was sound, I bet the details of the covverage says somewhere why it isnt covered... some dont cover leaky basements.

crime is in the details....

Coverage for collapse under a homeowners policy is an Endorsement there is No coverage under a basic policy.