INSURANCE NIGHTMARES

by Darrin DeRoches November 19 - 25, 2009

This week, the poor insurance companies have decided to raise their rates about 25 per cent for homes. Not bad, just raise your rates 25 per cent and the only choice you have is to go without insurance. If you do that, of course, your mortgage holder can call their loan or worse, foreclose. So what can a homeowner do? Pay it. This year has been hard on all businesses and most companies are reporting a 25 per cent decrease in business and many are struggling to keep everything going. Most companies are getting lean and mean, but the insurance companies are just getting mean! Business being down just raises your rates. Sure, they are saying the recent flooding in the city, business climate, and payouts are the reasons for the increase. You know what I say? Bullshit! That’s right, someone has to call it! Insurance companies make most of their money from taking your money and investing it into the market and the profit from your money is down, the markets are down – what to do? Raise the rates the exact amount the markets have fallen so they can still post their profits and keep money flowing in. We all know they do not pay out claims. Anyone who has ever dealt with insurance companies realizes how hard it is to get a payout. God forbid you get into a serious life-changing accident and look towards the insurance company to pay out your premium to help you through life. The reality is the lawyers get paid and the minimum possible is left for the disabled person to limp through life. The big question about insurance and your home is how much and replacement costs. If your house was to burn down, how much money would it take to make an exact replica? Older homes with all that beautiful ‘real woodwork and plaster’ would cost a ton to replicate. So even if you purchased your home for $300,000 it may cost $400,000 plus to rebuild and take care of the interim costs. It will take six months to a year to rebuild and you have to live somewhere in the meantime. I know a family who went through such a thing and if you have ever had to rent a car while yours is repaired and you drive an Escalade and the insurance company will only give you a Tercel to drive around, it is the same with accommodations. Their house nearly burned down and they started out in a hotel and ended up in a tent by the end. Yes, a tent. The ‘allowable monies’ for accommodations dwindled and their home was not read. Money was tight for the family: eating out, out–of–pocket expenses took their toll. A tent on their property was the cheapest and easiest thing they could do while waiting for the home to be finished. They were fully insured – their house was rebuilt – but they lived in a tent in the end. Let’s enjoy paying our 25 per cent more! V [DARRIN DEROCHES] Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at