Can they refuse to insure you?
Homeowners Insurance Cancelled
by Gary Foreman
We live in the country in a home over a century year old that we have been slowly remodeling. It has been in my husband's family for four generations. We purchased it knowing that there was a great deal of repairs that needed to be done. We felt because we had remodeled homes in the past that we would be able to accomplish this task. We did not allow for health issues, which was a big mistake. They hit my husband first and myself about two years ago now.
We had accomplished a new roof, new wood burner, new chimney, new electric, new plumbing, new windows and doors, more insulation, new garage, barn repairs, new kitchen, and a new bath. The outside of the house still needs some boards replaced and painted.
The issue is that we have little income now. We pay our bills on time and manage to save on everything, everywhere possible. My husband has most skills to do what we need to do, but the remodeling is going very slowly because of his health. This home means a great deal to us because it has 30 acres and it has been in the family forever.
Here's the problem. We have been with the same insurance company for 17 years (State Farm). We have never had to make a claim. We have also paid our premiums on time. In early October, we received a letter from the insurance company that if we didn't make immediate repairs to the outside (namely repairing the wood, painting, and adding a railing to the front steps) by May, they would cancel our insurance. We also have to remove a wood burner that is CL approved with correct stacking in the garage.
Is this legal? Can they force us to do these repairs on their timetable? Can they make us remove the wood burner? Our bank thinks our home is worth over $200,000. They can see the repairs being done. We don't understand what caused this issue and neither does our agent. Can we do anything? It is such a financial hardship right now that if forced to do this, we will need to sell our beloved home. Any suggestions?
I'm sorry to hear about your predicament. Like you and your husband, I'm partial to old homes, but as you correctly say, they can require a lot of maintenance and repair. Even if you do most of the work yourself, there's still the cost of raw materials to consider.
Can the insurance company cancel you? That probably depends on your state law. My guess is that, yes, they probably can. I'd be surprised if the law forced them to do business with you if they didn't want to. That's not to say that your arguments are not good. They are, but that might not be enough.
Why not contact your state's insurance commissioner (or their office) and ask them what's legal. They'd be in the best position to give you an answer on what is legal in your state. Then you'd have an answer you can depend on.
But, even if State Farm cancels, you still have a number of options short of selling the old family homestead.
Take this opportunity to get some other quotes on insurance. Might even find another company that could save you some money. It wouldn't cost anything but a little time to try.
I'm not familiar with that market, but you might also check for insurers that specialize in really old homes. A search for "antique home insurance" turned up a number of companies that claim to specialize in that area. Presumably they'll be more willing to work with a restoration project.
You might also ask about a special rider to cover the wood burner in the garage. Most insurance companies probably consider a wood burner to be an extra factor for fire even if it is properly permitted and installed, but if they're compensated for the extra risk, they may be willing to cover it.
And, don't let a lack of funds put you out of your home. Your bank may be willing to loan you money for home repairs with an affordable repayment plan. Also, not many, but some contractors are willing to finance their work. It can't hurt to ask.
One other possibility would be to rent some of those 30 acres to raise money for repairs.
Also check on the historic status of your home. If there's a local or state preservation society, contact them. They may have resources that are only available for homes like your home.
Another possibility goes back to when the home was built. A hundred years ago, if a family was in your situation, their neighbors would come together to perform the repairs. Yes, it is humbling to admit to needing help. But, a "barn raising" might be a real catalyst for the neighborhood.
Finally, you might want to ask your kids/grandkids to help on the repairs. If the homestead is meant for them, it would seem that they would want to help. It might be a good way for them to learn from your husband what type of maintenance the house will require once they're responsible for it. Also give them a chance to learn more about the family history.
Hopefully, you'll be able to get the insurance and repair issues resolved and have many years to enjoy the family homestead.
Reviewed December 2017
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Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's the author of How to Conquer Debt No Matter How Much You Have and he's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. Gary shares his philosophy of money here. Gary is available for audio, video or print interviews. For more info see his media page.
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