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Ugly home insurance development

By Jay MacDonald ·
Tuesday, March 12, 2013
Posted: 6 am ET

If a stealthy new option on the revised standard homeowners insurance form catches on, it may soon cost you more to maintain your home's appearance.

As Insurance Journal reported last week, a revised homeowners insurance form was filed in most states in February by the American Association of Insurance Services, or AAIS, one of two organizations that design standardized forms and policies for the property and casualty, or P&C, industry.

The revised form includes a new "cosmetic damage exclusion" option that would excuse your home insurer from paying to repair cosmetic wind and hail damage to your roof, walls, doors and windows. The form also allows insurers to limit the exclusion to a single part of the dwelling, such as the roof.

Policies containing the exclusion would still pay to repair functional physical damage to the insured home, i.e., its ability to keep the weather outside.

The other P&C standards organization, ISO, also wrote a cosmetic damage exclusion into its recently revised standard commercial insurance form and is considering adding it to its new homeowners insurance form as well.

AAIS spokesman Joseph Harrington says the 330 insurance companies that use AAIS forms requested the change as a tool to help manage a recent increase in cosmetic damage claims. While some insurers may choose to apply the exclusion on a policy-by-policy basis, Harrington expects most will either apply it across the board or not use it at all.

On the surface (so to speak), the cosmetic damage exclusion seems like an ill-timed nickel-and-diming by home insurers whose pleas for rate increases have lately fallen on deaf ears at state insurance departments.

Why, a homeowner might well wonder, should I submit to a sketchy bit of hair-splitting that gives my insurance company discretion on what constitutes cosmetic damage, especially in traditionally hard-hit geographic areas like the Midwest, where this shell game is likely to be popular? And how might this potential blight affect our already-struggling property values?

Many home insurers no doubt hope that this option will become the new norm. But once homeowners get wind of it, there's a fair chance it may backfire and simply drive business to the agencies that refuse to use it.

Would you buy a policy from an insurer who couldn't care less what your home looks like?

Follow me on Twitter: @omnisaurus

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E Scott
September 12, 2013 at 3:58 pm

They also hit you if you don't insure your car with them, one I know of has those adds about mayhem happening, when they themselves are the mayhem. After 15 years of insurance with them and not one single claim they cancel my policy because I don't insure a car with them and it cost them money, what if you don't own a car, but its profitable to insure a million dollar house in the southeastern US out on a barrier island prone to flooding and hurricanes. I live in South Carolina and the state government lets them get away with it. And now when I go to get insurance I can't find any because my roof is not pretty or its nearing the end of it's life. Being unemployed for over nine months doesn't help either. They are all a bunch of crooks and only look out for their own pockets.

March 19, 2013 at 9:35 pm

Since a previous article stated some insurance companies are requiring you to keep your home looking good to keep good rates, I would expect those not to charge this (yeah, right. They will be the EXACT ones that charge it).
Why did the state insurance boards approve the new form? is a better question.

Elfriede Kuen
March 19, 2013 at 1:17 pm

I am insured with American Ins.Company, have a Cider Shake Roof and some shakes are bent upwards and some are missing (Wind) the gave me an ultimatum fix it by 2014 or we cancel your Ins. a new Roof least exp, cost me 21.000. Dollars, I am single and make 23.000. a Year.

Charlie 60
March 19, 2013 at 10:27 am

If they do exclude 'cosmetic' condition claims, which are say "X %" of your premium currently pays for, then one would expect your own premiums to be reduced by that same "X %"... but you know, that is not going to happen. They will exclude these items, and you will still be charged more

March 14, 2013 at 9:28 am

Another way the insurance companies can hold us hostage for higher rates. Since their pleas to government have not produced what they want, they have, again, found their way around the system. What a bunch of highway robbers!

If my insurance company institutes this, I WILL be shopping for one that actually CARES about those who pay their salaries.

Harvy Patton
March 14, 2013 at 9:24 am

Insurance company,s are just like all company,s (polic service,phone,credit cards com.any one you deal with.yes there are some crooks out there.but not all of us are scamers.all of them can deduct loses on there taxes(company,s I mean) all of them that we use, they are charging more and doing less fore it. We are being reaap off by every one. for many years now. we have heard. that more of us are liveing pay check to pay check. the american deam is gone.we are being robbed,by every one

dolly mcphillips
March 14, 2013 at 8:55 am

i live in an area where tornadoes,, straight line 100 mph winds and hail etc, dooooo happen, and i depend on the insurance monies i pay my insurance company to cover that when it happens to my house, if my insurance company decided to not let us use that any more, i would be out there looking for an inusrance company who covers it automatically without a bunch of higher costs to its is always high the way it is, and when you pay over a many years and never use it, , you ought not to be taken to task when you finally would need it.

Samantha in AZ
March 14, 2013 at 4:41 am

This is going to severly effect my husbands work as a contractor for a roofing company. Does anyone what companies/states are instituting this????