Insurance Surprise

[Mr onetwo]

I am in the late planning stages of building a new 32x40 shop building(this year) and house(next year) on 30 rural acres. Since I had a homeowners policy payment due on my current home I thought I would call my agent and get a quote to start the process.I gave her dimension,cost,estimated value,ect. and the fact that I would be GC'ing the project with 4 subs.Same thing I did when I built my present house.Keep in mind that I have had the same agent since I got my first car 48 years ago and the same carrier on my house for 17 years.She got back to me a couple of days later and informed me if I GC'ed or built the building myself none of the carriers they deal with (which is all of the ones operating in the state of Maine) would insure it even after an inspection upon completion.I was SHOCKED . She told me about another customer that replaced the siding on his house himself and when the insurance carrier found out they immediately canceled the policy. I am going to get around this problem by hiring my site contractor as the GC on paper, but I will still do the coordinating, ordering and scheduling. This is all despite the fact that there is no general contractor or builder licensing of any kind in Maine. Insurance companies are the WORST greedy, scummy bas#ards ever! Has anyone else run into this farce...I suspect it is a very recent thing.

 

[jack stand]

Time to go shopping for a new agent, policy and carrier.

 

[PCustoms]

Time to go shopping for a new agent, policy and carrier.

This. What carrier does the agent rep?

Agents sounds like they're full of it. I know people in the state who have built multiple houses and buildings and have had 0 issues getting insurance.

 

[johninct]

Just wait until you have a claim....

 

[jblnut]

Build yourself a chicken barn and see who all wants to play with you. We’ve been dropped four times in eight years because of the “poultry structure”. No way I can afford to self insure that thing as it was high six figures to build it eight years ago and is close to double that now.

Insurance companies ****, there is no way around that.

 

[cvairwerks]

Got to remember that insurance companies are not your friends. They are out to make money for their investors. They do that by selling annuities with high payouts and planning on the owners death before they have to pay out on them, and by charging everything they can get away with on policies and fighting to not pay claims on them.

The claims payout is one of the big reasons that so many companies have stopped writing or renewing policies in California and Florida.

 

[Jlbc212]

If there’s no contractor licensing who’s to say a general contractor would be any more qualified than you to build the structure?
What are you concerned about that you would even need insurance? Fires can be prevented and a well-built structure should be able to withstand every weather event except a tornado.

 

[PCustoms]

If there’s no contractor licensing who’s to say a general contractor would be any more qualified than you to build the structure?

Agreed, that's why it's ridiculous and likely and agent misrepresenting the facts.

What are you concerned about that you would even need insurance? Fires can be prevented and a well-built structure should be able to withstand every weather event except a tornado.

Generally if you have a mortgage the bank requires insurance

 

[PCustoms]

@Mr onetwo you're not trying to get a construction/builders policy are you?

 

[pcmeiners]

What carrier does the agent rep?

Yes, please tell us what insurance company (and possibly the agent) you are talking about so the few hundred thousand GJ members can make an informed decision when deciding which company to go with. With the Internet businesses should be careful of how they treat clients, this ain't the 20th century anymore.

 

[hobie18]

Insurance Surprise
They paid.
Rates went down

Making life difficult, no.

 

[finn]

Thinking about it, it’s not as stupid as it sounds. If the insured is also the GC, and something goes horribly wrong, and there’s a major structural failure, roof failure, fire, etc, who does the insurance company go after if the insured was also the GC?

I’m not going to get much agreement on this forum populated by diy’ers, but I think the insurance company may be within their rights to protect their assets.

 

[NUTTSGT]

Thinking about it, it’s not as stupid as it sounds. If the insured is also the GC, and something goes horribly wrong, and there’s a major structural failure, roof failure, fire, etc, who does the insurance company go after if the insured was also the GC?

I’m not going to get much agreement on this forum populated by diy’ers, but I think the insurance company may be within their rights to protect their assets.

Maybe if it happened all the time.

Insurance companies pay out all the time for mistakes of the owner and/or residents.

 

[jd_1138]

Thinking about it, it’s not as stupid as it sounds. If the insured is also the GC, and something goes horribly wrong, and there’s a major structural failure, roof failure, fire, etc, who does the insurance company go after if the insured was also the GC?

I’m not going to get much agreement on this forum populated by diy’ers, but I think the insurance company may be within their rights to protect their assets.

They, um, go after no one and just pay the claim. Just because it was self built with subs doesn't mean it was built wrong. As long as basic building standards are met and a structure passes inspection, it should be insurable. Shame on insurance companies for not being fair with long term customers.

 

[Mr onetwo]

@Mr onetwo tour not trying to get a construction/builders policy are you?

No, just a regular policy after everything is complete

 

[Mr onetwo]

Agreed, that's why it's ridiculous and likely and agent misrepresenting the facts.

I really don't think so....I have known and dealt with them for many years. She said this was a surprise to her also.

 

[Mr onetwo]

If there’s no contractor licensing who’s to say a general contractor would be any more qualified than you to build the structure?
What are you concerned about that you would even need insurance? Fires can be prevented and a well-built structure should be able to withstand every weather event except a tornado.

There are as many bad contractors as good...licensing means absolutely nothing.The only inspection is a state plumbing inspection...nothing else. Are you saying you have no insurance on the place you live in right now?

 

[PCustoms]

I really don't think so....I have known and dealt with them for many years. She said this was a surprise to her also.

What company?

Think about this another way. You built a house 15 years ago as GC/contractor. You sell me that house today. Is it now uninsurable because it was "owner built"?

Makes 0 sense. As I said earlier I know someone whose done this a few times in Maine and not had an issue.

 

[PugetDude]

Something doesn't sound right about this story.

 

[tarmy]

Welcome to the insurance world here in CA. ANY excuse will get you cancelled. A change in material content (new structure) on the property…see ya. My guess is that they have decided to limit the total risk amount exposure in your state/area and this is part of that effort to manage that overall portfolio risk.

Good luck…start calling around.

 

[finn]

Every time a building colllapses, or a bridge falls down, who does the insurance company go after?

Answer: without question, it’s the builder. That’s why builders have their own liability insurance.

An insurer never goes after their own policy holder.

The insurance company is within its rights to refuse to cover home built buildings.

 

[bwringer]

Welcome to the insurance world here in CA. ANY excuse will get you cancelled. A change in material content (new structure) on the property…see ya. My guess is that they have decided to limit the total risk amount exposure in your state/area and this is part of that effort to manage that overall portfolio risk.

Good luck…start calling around.

Yup, sounds like the insurer wants out of your area for whatever reasons. Any old excuse will do.

Or maybe they really have had to pay out too many claims on owner-built or owner-improved death traps? Dunno.

Sounds like you have a solution in process.

Also, your years of loyalty mean precisely diddly/squat. The friendly local agent is only a useful fiction, especially if they only represent one company.

 

[cgrutt]

Theres also now a higher risk of claims during construction of a new building on property (for example a worker gets hurt on property, a guest slips and falls due to construction debris, etc) insured under a standard homeowners policy that wasn't there when the insurance was placed or priced. An outside GC presumably would have a separate policy to cover those additional risks. I can understand why insurer would not want to cover that scenario. Maybe they would accommodate a long time customer if you obtained a builders risk policy during construction or agreed to certain policy exclusions etc. I'm sure there are other companies that would be willing to write policy may need a new agent.

 

[reader2580]

I have been the GC for my new garage, but I hired subcontractors to do 75% of the work. My insurance company had no issue insuring the building for not all that much money.

 

[pcmeiners]

I’m not going to get much agreement on this forum populated by diy’ers, but I think the insurance company may be within their rights to protect their assets.

Ok, Then maybe the insurance company should be all right with a self build with a stipulation an architect/engineer sign off is needed, a reasonable stipulation or require a performance bond.

This is like insurance companies forcing a new roof install with a satellite/drone image or an inspection from someone on the ground. Inspections from the above methods are absurd, an inspector must be on the roof, any professional roofer would agree. it is unfair and the insurance companies should not be allowed to do it. You can say it would cost the insurance companies money to send an inspector on the roof, true but give the owner the option to pay for the inspection, instead of a multi multi thousand new roof.

 

[finn]

Ok, Then maybe the insurance company should be all right with a self build with a stipulation an architect/engineer sign off is needed, a reasonable stipulation or require a workmanship bond.

This is like insurance companies forcing a new roof install with a satellite/drone image or an inspection from someone on the ground. Inspections from the above methods are absurd, an inspector must be on the roof, any professional roofer would agree. it is unfair and the insurance companies should not be allowed to do it. You can say it would cost the insurance companies money to send an inspector on the roof, true but give the owner the option to pay for the inspection, instead of a multi multi thousand new roof.

I don’t necessarily disagree.

The problem is that I have never encountered a home inspector that was competent. I think the bar for calling yourself an inspector is pretty low, and they all have you sign a contract absolving themselves of liability, as far as I can tell.

The last couple of policies I was involved with used the agent as the inspector, which is a joke, too. The last one was for a house that I was selling, the previous one was for one I acquired through family. I think our Az house also had the insurance company do an inspection, although I wasn’t present for that one.

Bottom line, though, is that insurance companies work by numbers and actuarial tables, not “should be or could be”. In most places, if you don’t like their policies, you are free to go to one of their competitors. Don’t forget the cheap vs good tradeoff though.

 

[jd_1138]

Every time a building colllapses, or a bridge falls down, who does the insurance company go after?

Answer: without question, it’s the builder. That’s why builders have their own liability insurance.

An insurer never goes after their own policy holder.

The insurance company is within its rights to refuse to cover home built buildings.

Most losses I would assume occur due to fires, wind, flooding, thefts, etc. Who will the insurance company go after? They just pay the claims. Well sometimes. lol

 

[Jlbc212]

There are as many bad contractors as good...licensing means absolutely nothing.The only inspection is a state plumbing inspection...nothing else. Are you saying you have no insurance on the place you live in right now?

I have insurance with a $10K deductible. In 50 years of home and garage ownership I’ve never made a single claim against it. I wouldn’t be surprised if I did have to make a claim, the insurance company would find a reason not to pay. Insurance is just another form of legalized gambling with the odds stacked against you.

 

[wssix99]

none of the carriers they deal with (which is all of the ones operating in the state of Maine) would insure it even after an inspection upon completion.I was SHOCKED

Building inspections can't and don't find every issue with a building. In many parts of the country, you can't even pull a permit for a new structure without a contractor's license.

This isn't a big deal... (or a unique issue - most people encounter this)

You can either go get your GC license in Maine or hire a paper contractor (for a small fee) to check your work and sign off on your job.

 

[PCustoms]

You can either go get your GC license in Maine or hire a paper contractor (for a small fee) to check your work and sign off on your job.

You sure about that?

Go read the OP again. I believe that is correct...

 

[wssix99]

You sure about that?

Go read the OP again. I believe that is correct...

The only way the insurance company would know a paper contractor is involve is if someone tells them!

When working with a paper contractor, a best practice is to have them show up and help with advising on the project and inspecting the work. If any issues come up in the future, they can say that they were a part of the project with a straight face.

 

[finn]

Most losses I would assume occur due to fires, wind, flooding, thefts, etc. Who will the insurance company go after? They just pay the claims. Well sometimes. lol

I agree that most losses are storm or fire related, but the industry has the numbers that go into the actuarial tables, you or I don’t.

Actuaries are pretty highly paid, and they aren’t idiots. At least my former neighbor was well paid, as was my wife when she was in that field in the last century.

The insurance companies don’t just pay the claims. There’s a lot of probability and statistics that go into setting rates. Even then, insurance companies are pulling out of places where staying in business is unsustainable. And people are bitching about it.

 

[finn]

I have insurance with a $10K deductible. In 50 years of home and garage ownership I’ve never made a single claim against it. I wouldn’t be surprised if I did have to make a claim, the insurance company would find a reason not to pay. Insurance is just another form of legalized gambling with the odds stacked against you.

It’s a stretch to say your insurance won’t pay a claim. You have, by your own admission, never even attempted to make a claim.

If you have reservations about the company you, by your own free choice, chose to do business with, you should switch companies. It’s foolish to stick with a company you think won’t pay.

 

[PCustoms]

Delete

 

[dcg9381]

No, just a regular policy after everything is complete

I don't "get it" either. I've never been asked the origin of any structure (existing) that I went to insure. Perhaps if we "omit" the information that you're building it, things go differently?

Here "GC" doesn't mean squat. There is no license. It only matters to builder's risk insurance carrier and to the bank that is financing the construction.

When I built a shop not attached to a residential structure, they had me take out "rental insurance" for the contents. Which seemed really odd to me at the time. Basically USAA would not insure a free-standing structure unless it was associated with a residence.

When the residence was complete, USAA insured it as an "accessory building".

I've never had an insurance company ask me for pre-construction details on any home or shop I've insured. Weird.

 

[BurtEggley]

my father was licensed as an actuary in life insurance. He also studied actuary of property insurance. I was licensed as a fire and casualty agent, as well as life here in California for maybe 25 - 30 years. The insurances companies consider risk. It it that simple. If you have been a client for 30 years and never filed a claim, that can be an increased risk from their viewpoint because you are due for one. If your house has been hit by lightning two or three times, it may be an act of God but they figure that your house is prone to it. Any of these things can get you cancelled. Generally in the Insurance World, when claims are low they accept more risk. When claims are high they refuse more risk. Right now claims are excessively high with the California fires, and damage from Hurricane Helene in North Carolina. That said, someone who is a GC is an idiot to take a DIY job unless they earn enough to offset the risk to them that presents. All that said, here our improvements are overseen by the City Building Dept. They are much more prone to approve a project where a licensed tradesman is doing the work than a DIY. That was not so 20 years ago. Everyone has too much liability today. I know lots of tradesmen who had small companies with 10 - 15 workers 20 years ago, that want nothing of the sort today - they do mostly 1 or 2 person work today only due to the liability that supervising workers presents. I personally spent 40 years managing and supervising people in several careers, and in my last one I told my employer no when they offered it - liability is too high. People think they are entitled to be paid for work they did not do. They make up lies to get what they want. And I am sure insurance companies have lots of problems with DIY work where there are hidden defects. How many threads here do we see where someone is cutting trusses, or ignoring basic engineering, trying to hide lead or asbestos - and other people chime in with "this is how they got away with it." Insurance companies want no part of that.

 

[BurtEggley]

I don't "get it" either. I've never been asked the origin of any structure (existing) that I went to insure. Perhaps if we "omit" the information that you're building it, things go differently?

Here "GC" doesn't mean squat. There is no license. It only matters to builder's risk insurance carrier and to the bank that is financing the construction.

When I built a shop not attached to a residential structure, they had me take out "rental insurance" for the contents. Which seemed really odd to me at the time. Basically USAA would not insure a free-standing structure unless it was associated with a residence.

When the residence was complete, USAA insured it as an "accessory building".

I've never had an insurance company ask me for pre-construction details on any home or shop I've insured. Weird.

It is just a construction project until it is completed. There are insurance companies that deal with policies to cover that. All those boards, nails, fixtures etc., are personal property until the structure is complete. A shower door kit in your pick up is personal property until it is installed and the project is signed off. Why would USAA want to insure it as a structure until then? The insurance company wanted insurance on personal property (renter's insurance) in an amount to cover the cost if there was a loss.

 

[dcg9381]

It is just a construction project until it is completed. There are insurance companies that deal with policies to cover that. All those boards, nails, fixtures etc., are personal property until the structure is complete. A shower door kit in your pick up is personal property until it is installed and the project is signed off. Why would USAA want to insure it as a structure until then?

Construction project, sure - builder's risk policy. But that's commercial.

I didn't expect them to insure it under construction: USAA would not insure the structure on it's own period. It's not a "habitable" residence with a CO. They wouldn't touch it until it was an "accessory building" with value tied as a % of home value. Guess they don't want to be in the business of insuring non-residential.

The insurance company wanted insurance on personal property (renter's insurance) in an amount to cover the cost if there was a loss.

Yes, that makes sense. I could insure the contents under the "rental" policy, but not the building until a residence was associated with it.

 

[dcg9381]

That said, someone who is a GC is an idiot to take a DIY job unless they earn enough to offset the risk to them that presents.

I have a neighbor that has built a few homes for himself. They just "accept the risk" during the construction phase. When the home is complete, passes inspection, he puts a mortgage on it and pays back the shorter term loans associated with construction.

He saved about 40% on what it would have cost using a custom builder. That's a lot of "offset" in terms of instant equity.

And I am sure insurance companies have lots of problems with DIY work where there are hidden defects. How many threads here do we see where someone is cutting trusses, or ignoring basic engineering, trying to hide lead or asbestos - and other people chime in with "this is how they got away with it." Insurance companies want no part of that.

Tons of hidden defects in construction. I'm out in an area where there is very little oversight of construction, homes here get insured all the time.

The larger actuarial risk seems to be with weather-related issues that are occurring, including fire. Several insurers have pulled out of the area (high fire danger). And some insurers aren't writing in CA or FL at all any more.

 

[jack stand]

I know someone whose done this a few times in Maine and not had an issue.

I'm one myself.
@Mr onetwo ,
Go see an "independent" broker who works with multiple carriers.