Underwriting Issues and Home Insurance

Over the last two weeks, I’ve written about two different underwriting issues that can pop up; trust ownership of a home and buying a home that was foreclosed on (see https://wiseinsurancegroup.com/trust-ownership-home-insurance/ and https://wiseinsurancegroup.com/foreclosures-home-insurance/). I thought I’d add one more post which examines three more issues that may give underwriters heartburn – lead paint, asbestos, and open foundations.

The issue with lead in paint is that it’s poisonous and can cause brain damage which is why it was outlawed. I never thought much of it until I talked with Larry Nix who’s a home builder, remodeler, and a friend of mine. Lead paint is a hazardous material which means before he starts a remodeling project on a home with lead paint, they must bring in a hazardous material unit to remove it all. The hazmat unit wears special suits equipped with air filters to protect their skin and lungs from exposure to lead paint dust.

The same issue applies to homes with asbestos shingles which was a popular material for siding in the 1940’s and 1950’s. Asbestos is carcinogenic and requires a hazmat unit to remove the siding before it can be replaced with something else. In both cases, home insurance companies may want to avoid adding the cost of a hazardous material clean up from the cost of a water or fire claim which is why some companies refuse to write insurance policies on homes with lead paint or asbestos shingle siding.

Open foundations can also present a problem for some home insurance companies. These are typically homes built on stilts, piers (not pier and beam foundations), or pilings which are more common along the coast, rivers, or very hilly areas such as Austin or the hill country. Companies that won’t write a home with an open foundation are concerned about the increased cost of a claim if one of the stilts or piers moves which will be much more costly than one for a home built on a traditional pier and beam or slab foundation.

This doesn’t mean all insurance companies will refuse to issue a policy on a home with lead paint, asbestos siding, or with an open foundation. There are a few who will write a policy and others who may or may not depending upon certain conditions being met. The key is if your own or are considering buying a home where one or more of these “features” is present, it’s important to share them with your agent before buying a policy. It’s much easier to find out if the underwriter will issue a home insurance policy before a claim can be denied or a policy is cancelled than it is to find coverage or come up with money to make repairs to a damaged home.

What do you think? Share your thoughts, questions, and experiences with me on my Facebook, Google +, or LinkedIn pages. I’d love to hear from you!

Evie Wise

Thanks!

Evie Wise
Evie Wise
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