Is this a good idea for an article in the ASHI Reporter?
Technical Review Committee members are called on to provide feedback on topics suggested for the ASHI Reporter. Recently, they weighted in on a proposed article topic. We're posting the idea and sharing committee members' opinions, and we're inviting you to add your own thoughts via ASHI LinkedIn.
In the first week of January, the suggested topic and a couple of the responses will be posted on LinkedIn, and you'll have an opportunity to add your comments.
To Join ASHI on LinkedIn, go to www.ASHI.org and click on the LinkedIn icon. On the LinkedIn page, click "Join Group." ASHI members will be approved within three days.
A MEMBER PROPOSED:
I have been hearing for years anecdotal that certain issues/components are uninsurable and their mere presence in a home will prevent the buyer from obtaining homeowners insurance.
I made a few phone calls and found that many of the things I thought would be issues are ignored, and others are bigger issues than I thought. I am asking for CONFIRMED topics that prevent getting a homeowner's policy. Not something you have HEARD about, but something that you either have the letter/email about or you have PERSONALLY spoken with the insurance underwriter about that prevented coverage.
- Knob & Tube wiring is almost a universal showstopper.
- No one (so far) cares about Polybutylene.
- Some companies won't write aluminum wiring.
- One won't write anything less than 100A service.
I think that having this information can bolster our reports and comments.
If we can say for certain that the mere presence of knob & tube wiring makes a home almost uninsurable, it adds weight to our report suggesting replacement. The seller can say "it works today" until the cows come home, but if the buyer can't get insurance, they can't get financing, the house is unsellable. Even a comment such as "Check with your insurance carrier to make sure none of the identified issues will prevent obtaining coverage, as some carriers will not cover homes with some of the identified components or issues" could prevent some nasty surprises near closing.
MEMBERS OF THE TECHNICAL REVIEW COMMITTEE RESPONDED
Technical Committee Member #1:
If something like this did appear, I suggest it not be prefaced by blanket generalities or misconceptions. It should not be a call to hysterically spread rumors. Though the member is trying to gather empirical evidence, his preface does just the opposite. Here, in California, the presence of knob & tube does not make a house "uninsurable" and is not a "showstopper."
The NFPA Committee on Electrical System Maintenance includes representatives from the insurance industry, and each company has its own policy. In my area, the State Farm policy is that knob & tube triggers a requirement for an electrical inspection. Same for fuses. In Florida, the insurers insist on "following the CPSC guidelines," which means swallowing Jesse Aronstein's version of acceptable aluminum "repairs" (even when nothing is wrong). I have spoken to staffers on the Florida Senate Insurance Committee, and they understand how silly that position is and would like to stop it.
It would be easy to be part of the problem rather than part of the solution.
A survey such as proposed should be based on valid statistical, geographic and demographic methods. I don't believe we have the resources to do more than add to the Apocrypha in the message. I share his frustration that so much "anecdotal" evidence is cited. Let's not add to it, but rather encourage the membership to cease reliance on such tales.
Technical Committee Member #2:
That sounds correct and seems to be validated by this insurance blog in Florida:
Dave Reed Insurance Blog, Aluminum Wiring
I agree that the best way to conduct a survey would be to employ valid statistical, geographic and demographic methods, but I think that an article like this may be a good segue into conducting such a study, and that something like that might be a good project to seek funding for through the ASHI foundation.
My take is that he is taking the first steps toward eliminating the apocrypha by insisting that all of the documentation be backed up with facts.
I think it is good food for discussion and will make inspectors communicate. He is not yet publishing an article; merely fishing for information, and his findings could prove to be interesting and open more doors for cooperative research with allied industries.
I say we should allow the request, but maybe share our thoughts/concerns with him to keep it from adding to the myths, and agree with you that we suggest it not be prefaced by blanket generalities or misconceptions.
Technical Committee Member #3:
If the goal is to find out what items or conditions will prevent an insurance company from insuring a home, why not simply ask the insurance companies? Would that not be far simpler than asking home inspectors what they might have heard from second- or third-hand sources?
I don't see why it would cost a dime. Assign a committee to draft a nice letter and send it to each of the major insurance companies.
Technical Committee Member #4:
By even addressing this topic, we are wandering far afield of our appointed responsibility of inspecting and reporting. Just as we are not to advise a client whether to buy a property or not, we should not be advising him if a defined condition or problem makes the house uninsurable. Not only does "what is insurable" vary from area but also from company to company. In my area, I have never heard of a company denying insurance because of knob & tube wiring. On the other hand, some companies will not insure a property with an underground oil tank, others will insure it with exclusions for the tank, while others will issue a full policy if the tank is inspected and passes.
My company includes advisories and warnings on various conditions that we may uncover. And as one of the members suggested, a recommendation for an inclusion in our reports, advising our clients to check with their insurance companies regarding any of the conditions or problems discovered during our inspection, could be included in our reports. This would allow us to protect our clients without expanding our responsibility or liability.
Technical Committee Member #5:
I wonder if any homebuyer has ever lost his earnest money because he couldn't close on his mortgage due to a lack of insurability that only came to light after the inspection period.
I think this is worth pursuing, simply because I'd personally like to know more. I suspect that the answer is a resounding "It depends" and would be of minimal use. And I have no idea if I would ever incorporate this into a report (probably not). But some things are worth knowing without regard to specifics regarding how or even if the information might be useful.
I strongly agree that a far better approach would be simply asking the insurance companies.
Technical Committee Member #6:
I have a more expansive view regarding my role as an inspector. I want to be an advocate for my clients, and to be their advisor for all things technical with their home purchase. If there is an insurance issue that hinges on a technical aspect of their potential new home, then I'd like to know that so I could help and advise my clients.
I'm confident that this whole enterprise will come to nothing because I suspect that there are no hard and fast rules regarding what insurance companies do. But I think it's worth pursuing. Also, I think it would be a good idea for ASHI to have some sort of relationship with the insurance industry. What problems cause most claims? It would be good to know that. What problems cause most injury claims or most monetary claims? It could only help ASHI to have a relationship with the insurance industry so that this information can be passed along to the guys on the front line. It seems to me that this is a primary role of a trade association like ASHI.
Technical Committee Member #7:
I have to respectfully disagree with this. I heartily agree about being an advocate for the client in all "things technical," and we go to great extremes to do this and include educational information in all reports. However, whether a discovered problem or an issue is covered by insurance is legal and not technical in nature. While it might be useful for an inspector to have some knowledge regarding insurance, it is not our place or responsibility to advise a client on this.
Coverage varies from area to area and from company to company as he notes: "There are no hard and fast rules regarding what insurance companies do."
Therefore, I earnestly believe that our clients would be best served by our advice to check with their insurance company as to whether a specific item is covered.
YEA OR NAY?
Okay, ASHI members, what say you? Would the survey be of value or not? We'll be looking for your feedback on ASHI LinkedIn.