Property misdescribed on homeowner's insurance-a big risk or not?
September 3, 2019 2:50 PM
Over a decade ago, our insurance agent misrepresented the details of our home (age, multi-unit vs. single family) in order to help us get a homeowner's insurance policy. There haven't been any problems, but is there a large risk of a future potential claim being denied? (Details below the fold)
My wife and I bought a multi family home over a decade ago. At the time, we had trouble getting a homeowner's insurance policy for it at any price, as it was an old multi family building, close to a neighbors house, had a prior insurance claim, etc. We were desperate to close on the house. We eventually found an insurance agent who steered us to an insurance company which is lax about inspections and he mis-described the property to them to get a policy. (It's recorded as a single family home that's newer than it really is, etc.)
My concern is that in the event of the worst happening, the insurance company is going to have grounds for denying a claim. Part A.) Is this a realistic concern? We didn't misrepresent anything ourselves, but we'd have a hard time pleading ignorance given that the misinformation is right on the policy. Part B.) What's the best course of action? Ask the insurance agency to correct the errors? (Risk of being dropped by current insurer?) Get quotes from different insurance agents with the property accurately described and switch carriers? Hope for a continued lack of tornadoes, fire and flooding?
My wife and I bought a multi family home over a decade ago. At the time, we had trouble getting a homeowner's insurance policy for it at any price, as it was an old multi family building, close to a neighbors house, had a prior insurance claim, etc. We were desperate to close on the house. We eventually found an insurance agent who steered us to an insurance company which is lax about inspections and he mis-described the property to them to get a policy. (It's recorded as a single family home that's newer than it really is, etc.)
My concern is that in the event of the worst happening, the insurance company is going to have grounds for denying a claim. Part A.) Is this a realistic concern? We didn't misrepresent anything ourselves, but we'd have a hard time pleading ignorance given that the misinformation is right on the policy. Part B.) What's the best course of action? Ask the insurance agency to correct the errors? (Risk of being dropped by current insurer?) Get quotes from different insurance agents with the property accurately described and switch carriers? Hope for a continued lack of tornadoes, fire and flooding?
Oh gosh yes your concerns are realistic and you should do something! Like, if you have a mortgage you are probably defrauding your mortgage company, legally-speaking, and even if you don't have a mortgage you're wasting your money paying for an insurance policy that would very likely be rescinded if you ever made a claim (they could rescind right now, but they have no incentive to do it until you make a claim).
I would start by asking for quotes based on the actual facts of your house. The house has now gone 10 years without claims, apparently, so that's probably a point in your favor. Maybe you've made updates or the neighborhood has changed and it will be easier to insure for those reasons. Maybe you're going to need to pay a lot more in premiums than you're paying now. Get a new (non-fraud-committing, ideally) insurance agent and also shop for quotes online.
There's a decent chance you are effectively uninsured right now.
posted by mskyle at 3:09 PM on September 3, 2019
I would start by asking for quotes based on the actual facts of your house. The house has now gone 10 years without claims, apparently, so that's probably a point in your favor. Maybe you've made updates or the neighborhood has changed and it will be easier to insure for those reasons. Maybe you're going to need to pay a lot more in premiums than you're paying now. Get a new (non-fraud-committing, ideally) insurance agent and also shop for quotes online.
There's a decent chance you are effectively uninsured right now.
posted by mskyle at 3:09 PM on September 3, 2019
Get quotes from different carriers with an accurate description of the property. Get actually covered by one of those carriers--you're effectively not right now. Consider the life choices that led you to insurance fraud, for which, whether or not you think it's immoral, people actually have been known to go to jail from time to time, because this is not the way you want to be handling your life's business generally.
posted by praemunire at 3:20 PM on September 3, 2019
posted by praemunire at 3:20 PM on September 3, 2019
I agree, consider yourself uninsured. To that end, shop quotes with your current home info and get a new insurance policy. 2009 is not 2019 in the housing industry! You shouldn't fear getting quotes and getting proper insurance.
posted by amanda at 3:38 PM on September 3, 2019
posted by amanda at 3:38 PM on September 3, 2019
A friend owns property in the mountains in southern California. They had a similar thing happen where their insurance agent was a little creative in order to help the policy go through. Two years ago there was a wildfire and all of the outbuildings burned. They weren't accurately listed on the policy, so the claim was denied, then the insurer started investigating the policy more closely and cancelled it, which was reported to a central clearinghouse for other insurers to know about. They are now in a very, very deep hole with basically no options. If they had a mortgage on the property they would be in even worse trouble. Get a new policy.
posted by feloniousmonk at 3:39 PM on September 3, 2019
posted by feloniousmonk at 3:39 PM on September 3, 2019
The insurance companies are very good about spotting fraud like this — after you finally make a claim. In one sense, you're lucky that you haven't had to do so yet. But in another sense, basically all the money you paid on insurance was wasted, because they probably would have denied any claim. Get new insurance based on correct details immediately. As others have noted, you are essentially uninsured now.
posted by ubiquity at 4:06 PM on September 3, 2019
posted by ubiquity at 4:06 PM on September 3, 2019
You may be worse than uninsured. If you have a mortgage, you’re never uninsured, because your lender will take out a policy on your behalf in order to protect their investment. The problem is that force-placed insurance is around five times as expensive as normal insurance, and can be placed retroactively. So if the shortcomings in your policy come to the attention of your lender, you could end up owing quite a pretty penny.
The agent who sold the policy is probably not long for the insurance business, either. There are a lot of ways this could end badly for him. You should end that relationship quickly.
I suppose that if something did happen, you could argue that the agent defrauded you as well as them, but however chill they are about inspections, no insurance company is chill about litigation.
Get a new, honest policy now while you can still dodge the bullet.
posted by kevinbelt at 5:00 PM on September 3, 2019
The agent who sold the policy is probably not long for the insurance business, either. There are a lot of ways this could end badly for him. You should end that relationship quickly.
I suppose that if something did happen, you could argue that the agent defrauded you as well as them, but however chill they are about inspections, no insurance company is chill about litigation.
Get a new, honest policy now while you can still dodge the bullet.
posted by kevinbelt at 5:00 PM on September 3, 2019
This is not good. Definitely get a new policy with the correct details.
However, does anyone know how much insurance companies share with each other? I was looking at a different company once and their online sign up form asked who the current policy was with. Will the fraud be uncovered through this?
posted by kinddieserzeit at 5:42 PM on September 3, 2019
However, does anyone know how much insurance companies share with each other? I was looking at a different company once and their online sign up form asked who the current policy was with. Will the fraud be uncovered through this?
posted by kinddieserzeit at 5:42 PM on September 3, 2019
The insurance agent did not actually help you. However, I think I would not announce that you were aware of the misstatements. Call your insurer, you've paid them for 8 years. Tell them you reviewed the policy and it is not accurate. They are likely to continue to insure you, at a higher rate because the current rate is for a newer 1-family house.
Hire a house inspector to look at your house very critically. Fix everything. My insurance inspector made me put a hand rail on the stairs; it's a very useful improvement.
Every state has an insurance commission, it's in the Attorney General's Office. They can sometimes help if you are in a bind.
posted by theora55 at 6:56 PM on September 3, 2019
Hire a house inspector to look at your house very critically. Fix everything. My insurance inspector made me put a hand rail on the stairs; it's a very useful improvement.
Every state has an insurance commission, it's in the Attorney General's Office. They can sometimes help if you are in a bind.
posted by theora55 at 6:56 PM on September 3, 2019
Applications ask about the current policy to confirm if there have been any claims against it. Unlikely to compare the details, although in this age, who can be absolutely sure?
Trying to change your policy with the current carrier in such a drastic way is tantamount to walking into their office and saying HI I'M A LYING LYING FRAUDSTER WOULDN'T YOU LIKE TO KEEP DOING BUSINESS WITH ME? Maybe you get a lazy agent and nothing gets picked up--more likely you get the policy cancelled, and that'll dog you.
posted by praemunire at 9:03 PM on September 3, 2019
Trying to change your policy with the current carrier in such a drastic way is tantamount to walking into their office and saying HI I'M A LYING LYING FRAUDSTER WOULDN'T YOU LIKE TO KEEP DOING BUSINESS WITH ME? Maybe you get a lazy agent and nothing gets picked up--more likely you get the policy cancelled, and that'll dog you.
posted by praemunire at 9:03 PM on September 3, 2019
Just to add to the chorus of concern...if you have a second family living there and no liability insurance for that situation there’s an entirely separate area of concern here if something catastrophic were to happen to them physically.
posted by warriorqueen at 3:07 AM on September 4, 2019
posted by warriorqueen at 3:07 AM on September 4, 2019
My mom's house was recently flooded (burst pipe while she was on vacation) and needed to be gutted and rebuilt, and she has spent the entire year fighting to have her completely 100% accurate insurance pay out on the damages.
The insurance company will find any small reason to not pay out a claim. This is a major reason. You need to get quotes and get a correct policy ASAP.
posted by elvissa at 6:59 AM on September 4, 2019
The insurance company will find any small reason to not pay out a claim. This is a major reason. You need to get quotes and get a correct policy ASAP.
posted by elvissa at 6:59 AM on September 4, 2019
This thread is closed to new comments.
That totally sounds like fraud, which would be a gigantic risk and a huge deal. I think if you were to file a claim, it would be denied by any competent adjuster.
We didn't misrepresent anything ourselves, but we'd have a hard time pleading ignorance given that the misinformation is right on the policy.
You signed the policy, right? You can't blame the shady broker for this, you say yourself your knew what you were doing and needed to close on the house. I think you need to start getting new quotes immediately, I'd feel as if I was effectively uninsured if I were in your shoes.
posted by Fidel Cashflow at 3:02 PM on September 3, 2019