No Final Permits, No Insurance Pay out

logicOctober 12, 2012

For a long time here, some have told me I am wrong that a homeowners insurance company may not pay if a fire or other damage is determined to be due to work that was incorrectly done without permits.

Below is a link to a story that documents that it can happen.

Excerpt:

"A few years ago, after an electrical fire burned down a house in Bridgewater, the insurance company denied a claim filed by the homeowners after finding that no permits had been taken out for the finished basement where the fire started.

In Bridgewater, as in so many towns across the state, unauthorized work often comes to light with a reassessment, property sale or, in the worst-case scenario, an accident or fire...."

Here is a link that might be useful: Work done without permits, open permits a problem across N.J.

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chispa

After reading the article - It is all about the money. We did a large addition this past year with all necessary permits. Our GC got the CO and within hours we had the Los Angeles County Tax Assessor knocking at our door. A phone call or letter saying he would like to stop by would have been nice. I was just out of the shower and had kids home from school, so not a good time to stop uninvited. He gave me his card and said I should call him. He's still waiting!!! In CA they don't assess the same way as the article mentioned for NJ, so not much risk in not letting the assessor in.

    Bookmark   October 12, 2012 at 9:52PM
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dreamgarden

It seems as if this (permits or lack therewith) could be used as negotiating technique when buying.

Example: You've signed a contract and had an inspection. The inspection reveals issues. You go to the building dept and discover no permits were pulled for the work stated.

This happened to us with a seller who lied about their septic system. They said it was fine. Their neighbors told me otherwise. I discovered the truth at the building dept. No work/permits had been done. We would have been in the hole for a new septic system. We wanted a credit for a new system. He said no.

He chose to go with another buyer so he wouldn't have to fix it or disclose it to future buyers.

I could have mentioned this to the people who ended up buying it, but I didn't want any legal headaches....

Just one more thing to think about.

    Bookmark   October 13, 2012 at 11:01AM
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brickeyee

NJ is a People's Democratic Republic.

Bet the union electricians had a party (and freely supported the insurance company).

Without a review of the actual court transcripts this is just another BS story.

    Bookmark   October 13, 2012 at 11:07AM
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barbcollins

I can't find it now, but didn't this story about the Bridgewater house come up before here?

I thought the real issue was with the contractor's license, and that it was his liability insurance that was denying the claim.

    Bookmark   October 13, 2012 at 10:55PM
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greg_2010

Insurance companies will deny claims all the time, whether they have a leg to stand on or not. Then you hire a lawyer and get what you should rightfully receive.
We need more info about this situation than the one line in this article.

    Bookmark   October 15, 2012 at 9:39AM
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brickeyee

And being insurance companies, they are ALWAYS looking for a way to shift the loss onto another entity.

A GC, a tradesman, someone else with insurance and deep pockets.

They are generally stuck with items YOU as the owner did, since they ARE insuring YOU against your own errors, omissions, & mistakes.

They LOVE to find some oter licensed and insured entity they can go after for recovery.

I have testified for them (and against them) enough times to watch how they behave.

Just like banks, they rely HATE to lose money.

    Bookmark   October 15, 2012 at 10:46AM
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barbcollins

"We need more info about this situation than the one line in this article."

Agreed. And I also thought it was odd that they started the article with that line, but never referenced the details.

    Bookmark   October 15, 2012 at 7:00PM
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dreamgarden

brickeyee-
"And being insurance companies, they are ALWAYS looking for a way to shift the loss onto another entity.

I have testified for them (and against them) enough times to watch how they behave."

How about some details?

    Bookmark   October 16, 2012 at 11:18AM
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greg_2010

And I also thought it was odd that they started the article with that line, but never referenced the details.

That's most likely because they are just trying to prey on people's misguided fears in order to get more people reading the article. It's like those news teasers that announce "Are (insert common item here) slowly killing your children? Tune in at 11 for our in-depth expose." Then everyone panics and tunes in and finds out that the answer is "No, except for this very rare isolated case."

In this case it's "No permits? Lose everything!!! ... Now that I have your attention, forget about what I just said because if you look too closely at it you'll realise that there aren't any facts to back up what I'm trying to imply. Instead, let's talk about the fact that cities really want you to pay for permits and it really sucks because a lot of people don't do it and 90% of old houses have unpermitted work done on them."

    Bookmark   October 16, 2012 at 11:39AM
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brickeyee

"How about some details? "

No way.

They are called confidentiality clauses.

I can say the biggest thing every insurer faced with a loss is looking for is someone else to pay.

If they can find a licensed professional with deep pockets (or insurance) they start moving.

Recovering half a loss is better than eating the whole thing.

    Bookmark   October 16, 2012 at 2:39PM
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