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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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March 13, 2013 at 11:18 pm

Get real people... It's called gambling and the insurance companies are the casino's. The odd's are in their favor. Because they own our politician's who no longer work for us the American people. The majority of American's who own a home, have mortgages. Which means you have to have home owners insurance. Forget about writing or emailing your so called government representatives. The American people need to start sticking together again and start protesting together again. I've had enough of BIG BUSINESS running my life. As well as our politician's sticking to the American tax payer's. If you think this latest home owners insurance BS is bad? Wait until January 01, 2014. When Obama care goes into effect. With no price limit's in place. The insurance companies are going to have one heck of a pay day. All thanks to "OUR" politician's.

March 13, 2013 at 9:44 pm

When housing took a dump and your value went down.
Did the insurance companies give you a break?

March 13, 2013 at 9:13 pm

sorry i totally disagree with chris about the public adjusters. I had damage to my home in new jersey my insurance co hired a company that hired a company. the people that came to my house were storm chasers from texas.. I know because i asked them and thats what they told me. after all was said and done my total claim minus my deductable was $300.00 yes thats right $300. i had over $30,000 in damages and they wanted to give me $300. no thank you.. your dam right i went out and hired a public adjuster.. ins co. try to give you the least and charge you the most. with oh i'm sorry thtas not covered answer..

Wanda in Tennessee
March 13, 2013 at 9:00 pm

I truly am sick of insurance companies! Diane it is not about time the insurance companies woke is time people of America wake up! I for one have had just about enough. Most people do not file insurance claims unless there is a reason. In all probability most people, like us, had never filed a claim until hail damage. Been with the same insurance company (Farm Bureau) for over 30 years. Filed this claim and our homeowners went up about 500 dollars a year. Where is all the money we have paid for over 30 years and never used? In their pockets, yes, you are right. File a claim and they go up. This is so such a racket that people can do nothing about.

stephen frost
March 13, 2013 at 8:04 pm

who saves two hundred and fifty thousand dollars? what if the house burns down with everything in it what and you just started saving? sounds like the blind leading the blind to the edge of a financial cliff.

March 13, 2013 at 6:56 pm

wake up people insurance is a scam. people should be saving money to repair properties they own. why bring a third party in at all!

March 13, 2013 at 6:16 pm

Public Adjusters are the problem. They go around looking for damages on homes, contact the owners and talk them into making a claim. They get commission to do this. I attended one of their seminars to see what they were about and when I found out what trouble they stir up I walked right out. They nickel and dime insurance companies on petty claims to get owners and themselves money from a claim, and now insurance companies are fed up. The only one who wins are the public adjusters, they are making LOTS of money and spreading like a plaque all over the country. They are NOT your friends and they are hurting ALL of us.

March 13, 2013 at 6:00 pm

WOW! - This is really unbelievable. Talk about insult on injury. Insurance rates are already super-ridiculously high. In this less than stellar economy, it's insulting for them to come out with this and for no good reason. Why should they get automatic rate increases?! My own homeowner's insurance policy just went up, in one year, over 75%! And for no reason! I've had one small claim in over 30+ years! Sadly, there's no other conclusion except the're a bunch of greedy, money-grubbers. How they can look in the mirror or hold their heads up is truly beyond me. It's very sad. Their mafia-like lobby shouldn't be able to influence our elected officials but they surely do in a major way. That's sadder still. No one begrudges any insurance company's right to make an honest profit BUT there's a vast difference between an honest profit and an obscene one. Seriously, when is enough enough?! What happened to the America we all loved?

March 13, 2013 at 5:23 pm

It is about time insurance companies woke up and realized that most hail storms do mot impact the integrity of the roof. The roofers come out in droves to make a fast buck and the homeowners get dinged with a claim that raises their rates.
Home insurance should not be a maintenance policy, it should be used in the for damages that impact the safety and integrity of the home. Right now as it stands the only winners are the roofers who are gouging homeowners and insurance companies.

Wayne in Indy
March 13, 2013 at 5:09 pm

How about we just give the insurance companies, and they are responsible for nothing. That's what they want.