Insurance canceling after 4-point was updated post closing

[Chris VanBuskirk]

I purchased a duplex with FHA and had a clean 4-point inspection. I went through closing with no problems. After closing, the insurance provider requested that the inspector updated the 4-point to include the secondary roof that was not previously included (It was included in the full inspection report). It came back as satisfactory with 3-8 years remaining, but the insurance provider is canceling the policy unless the secondary roof is replaced.

My hand is forced here, right? I have to have the roof replaced?

[Tsipora Smith]

Typically the insurance company will cover it under a claim. However, you can always switch insurance companies. FHA only requires that the roof be good for 5 years to lend.

[Andrew Syrios]

That sounds pretty lame but insurance companies have been known to do such things. I don't think you would have much of a problem finding another insurer who would take on the project. So I would start looking and just chalk it up to the cost of doing business. 

[Bo Bond]

Chris,

You're only forced into this if you elect to stay with the same carrier/agent.  If the agent doesn't have other carrier options, then look for an independent agent who can help you shop multiple carriers for alternative options who don't have issues with this roof.  

Sometimes issues like this isn't about the "insurance industry", but about an underwriter/agent who didn't follow underwriting/quoting protocols, missed something, or wasn't aware of the exposure somehow.  The policies we provide have little concern as long as a roof isn't over 15 years old.  Some carriers have issues once they reach 10 years old.  Just depends on the carrier and their policy.  That said, most carriers don't cancel coverage if you don't replace the roof.  They just apply ACV (actual cash value) to the roof if it hits 10 or 15 years of age or more (whichever is listed in their policy).  ACV is current replacement cost, less depreciation.  

Also, some carriers run an inspection and then present the insured with their report.  On that report you usually see both optional and/or required maintenance.  It would appear that this is required maintenance from your carrier and not optional, but I suggest you call the agent/carrier to confirm (if you haven't already). I've had some insureds confused by the report, believing it was required maintenance when it was actually optional.  Hope you find this helpful.

[Chris VanBuskirk]

Originally posted by @Tsipora Smith:

Typically the insurance company will cover it under a claim. However, you can always switch insurance companies. FHA only requires that the roof be good for 5 years to lend.

Thanks for your response! I'm not sure how a claim would cover this? If I were to file a claim I assume they would just claim material misstatement. 

[Russell Brazil]

Switch insurance companies...problem solved.  

[Chris VanBuskirk]

Originally posted by @Bo Bond:

Chris,

You're only forced into this if you elect to stay with the same carrier/agent.  If the agent doesn't have other carrier options, then look for an independent agent who can help you shop multiple carriers for alternative options who don't have issues with this roof.  

Sometimes issues like this isn't about the "insurance industry", but about an underwriter/agent who didn't follow underwriting/quoting protocols, missed something, or wasn't aware of the exposure somehow.  The policies we provide have little concern as long as a roof isn't over 15 years old.  Some carriers have issues once they reach 10 years old.  Just depends on the carrier and their policy.  That said, most carriers don't cancel coverage if you don't replace the roof.  They just apply ACV (actual cash value) to the roof if it hits 10 or 15 years of age or more (whichever is listed in their policy).  ACV is current replacement cost, less depreciation.  

Also, some carriers run an inspection and then present the insured with their report.  On that report you usually see both optional and/or required maintenance.  It would appear that this is required maintenance from your carrier and not optional, but I suggest you call the agent/carrier to confirm (if you haven't already). I've had some insureds confused by the report, believing it was required maintenance when it was actually optional.  Hope you find this helpful.

 Thanks, this is very helpful. To clarify the secondary roof is a ~7 year old flat roof where life expectancy is 10-15. 

I've reached out and my agent assured me that the carrier will drop me if the roof isn't repaired. Unfortunately I wasn't provided any details of required/recommended improvements out side of the requirement to fix the roof within 20 days. 

They seem to be considering the inspection as failed since the secondary roof was not included in the original 4-point even though it is listed as satisfactory now. I reached out to other agents I was working with previously in case I can't get the roof replaced in the 20 days they are giving me (FL).

[Tsipora Smith]

@Chris VanBuskirk Have you already closed on the home? If so you would be able to file a claim, if not just switch companies.

[Justin K.]

@Bo Bond

I don't know if he can help you out but Bo helped me tremendously after my insurance canceled me for filing a claim.