April 12, 2019

CT updates insurers, homeowners on crumbling foundations

HBJ PHOTO | Bill Morgan
HBJ PHOTO | Bill Morgan
South Windsor resident Kristen Cole is one of many homeowners dealing with cracks in her home's foundation.

Connecticut's top insurance overseer is again publicly reminding insurers and home and condominium owners that they cannot face higher premiums or cancellations because they have, or have repaired, crumbling foundations.

Separately, two Connecticut Congressmen announced that the Internal Revenue Service has declared additional tax relief available to owners of crumbling foundations whose repairs are not covered under Connecticut's special indemnity unit.

Late Thursday, Congressmen John Larson (D.-1st District) and Joe Courtney (D.-2nd District) said the IRS provided them with clarifying information confirming that homeowners can apply for the federal casualty loss deduction to certain repairs linked to fixing their crumbling foundation not covered by the Connecticut Foundations Solutions Indemnity Co.

Specifically, the IRS's letter confirms that if the repaired structures was damaged by the crumbling foundation or needed to be damaged or destroyed to repair the foundation, the cost of the repair of this item would be eligible for federal tax relief under the revenue procedures that the IRS has published.

Meanwhile, State Insurance Commissioner Andrew N. Mais said Thursday his agency has alerted insurers to its updated notice, first issued three years ago, as to what property-casualty insurers can and cannot do when they encounter legitimate claims for foundation repairs. Mais said he acted after becoming aware of consumers' concerns that lodging a claim could spawn repercussions.

According to Mais, a notice directing insurers to not cancel or not renew affected homeowner's insurance coverage as a result of a foundation found to be crumbling or otherwise deteriorating was first issued in Oct. 2015, and updated in Jan. 2017.

"It has come to my attention,'' Mais said in a statement, "that affected homeowners who have filed a claim on their insurance policy because of a crumbling foundation or suspicion of having a crumbling foundation, or even just made an inquiry to their insurer on the topic, could have this held against them. I am taking this opportunity to inform both insurers and homeowners that this will not be allowed."

"Homeowners should not be afraid to file a claim or ask a question related to crumbling foundations,'' he said.

According to Mais, the updated notice:

  • Reminds carriers that state law prohibits cancelling or non-renewing a policy or increasing a policy's premium based solely on inquiries or a claim made on their insurance policy;
  • Instructs insurers that the use of a Comprehensive Loss Underwriting Exchange (CLUE) report or any other similar source of claim-related information concerning a crumbling foundation inquiry or claim will be prohibited in connection with underwriting, pricing and/or surcharging new or renewal business, and;
  • Informs insurers that the insurance department will not approve company underwriting rules or guidelines that would allow a homeowner to be cancelled or non-renewed or have a premium increase based solely on unrepaired crumbling foundation damage or on the property's crumbling foundation being in a current state of unrepair or under repair.

"This provides homeowners with additional reassurance that their premiums will not be increased nor will their policies be cancelled or non-renewed because of a crumbling foundations-related claim or inquiry to their insurance company,'' Mais said.

Homeowners with foundation problems not covered by insurance can apply for repairs funds from the Connecticut Foundation Solutions Indemnity Company Inc. on its website.

This story has been updated

Read more

A guide to apply for crumbling foundation relief

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