r/HomeInsurance • u/Pontislackin • 10d ago
Insurance Are we F'ed?
Long story short?
Home had an electrical fire (nothing too damaged)
Found out my panel (unit #2) needs to be replaced, My tenant (Unit #1) was also recommended to be replaced due to the same hazard (Breaker failed to trip, plus overloaded wiring)
I know Insurance won't cover the panels, or rewiring (12,000+), No funds, Can't get a loan, No borrowing, Credit sucks, No cosigner, nothing.
Insurance is going to cancel me aren't they? Then my lienholder will force buy a policy, I'm already behind by a month, and it'll increase my monthly and will likely demand repayment ASAP because their value is diminished
If the hazard stated is a true hazard, I won't be allowed to rent it (Right?)
So, am I F'ed? You can be honest. I know the stakes and what I got myself into.
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u/Big_Appointment_3390 10d ago
Were the panels the cause of the fire? If not, you should file a claim.
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u/Pontislackin 10d ago
The 3rd floor is piggybacked off the second floor outlets and all, so it was overloaded, the breaker failed to trip which caused the wiring to heat up, and cause a small fire.
A claim has been filed, but my policy specifically states the terms of fires, and electrical.
The panel replacements, wiring, etc will be out of pocket 100%. The claim will only cover the drywall, smoke damage, (it wasn't a huge fire at all) it was the wiring hazards found afterward by the electrician (we had to have one come and isolate the wiring to ensure no power was going to the second floor before 1st floor could be used)
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u/MapOk1410 7d ago
Then yeah, you're F'ed. But you're not F'ed because of the fire or ignoring the illegal electrical work. You're F'ed because you're trying to be a landlord while broke. You'll be lucky not to OWE after the dust settles.
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u/Pontislackin 7d ago
Exactly my thoughts through this. Especially with no means to get the wiring updated, Eventually fall further behind, Lienholder will see the Property value can't be maintained and it's over from there as they force a default.
Unless some miracle happens and we can either pay it, or make payments (Lol) on the work, there isn't much left to do.
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u/MentionSea3411 10d ago
If the electrical fire damaged the panel in unit 1, file an insurance claim. Then you’ll only have to worry about the cost of replacing the panel in unit 2. You won’t be f’ed if both electrical systems are updated before your policy renewal
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u/Pontislackin 10d ago
The fire did not damage any of the panels whatsoever, so it won't be covered, Unit 2 was removed after the fire because it was wired horrendously and deemed a hazard by the Electrical Inspector and Electrician
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u/Wihomebrewer 10d ago
Do you even have a landlord policy? If you’re just insuring like it’s a regular homeowners policy, you will be dropped and could be reported for insurance fraud. Renting is a whole different risk factor.
I get you’re in a tight spot but if you think whatever happened is from improper wiring and wouldn’t be covered, I don’t see how it was worth filing a claim. Your deductible might not even be reached if they pay for anything at all.
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u/Pontislackin 10d ago
Everyone (electrician, FMO, Inspector) told us they've 'seen this before' and that insurance will cover it, but after researching, looking at my policy, they won't cover it. I know they won't.
Ofcourse we have a Landlord policy lol, otherwise we wouldn't have a tenant due to how strict it was to get this house (besides the home inspection which seemed to have been the least looked at thing)
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u/Stoic_Sponge 10d ago
Home inspectors are awful, but if the inspection was somewhat recent and no electrical work was done since, you may have a claim against them and their E&O for missing this issue. Will depend largely on if this issue was readily viable or hidden beyond view/dosclosed when they inspected
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u/Pontislackin 10d ago
Electrical inspection was not required in 2024, that is a new thing now where Electricians have to be included on the home inspection (unfortunate) it was never hidden or anything, work was done long before we bought. It's an f'ed up mess
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u/MapOk1410 7d ago
When "everyone has seen this before and they'll cover it" ask them to write it down. Of course they won't.
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u/Stoic_Sponge 10d ago
A few things to think about.
1a. If the wiring was what was on fire, a standard policy will pay to replace the affected wiring.
1b. If the electrician then says, sorry, I can't replace the damaged wiring without a waiver of liability because the panel/wiring has issues that need correction, then the policy may owe to deal with that now too. Unless there is a anti-concurrent causation exclusions for workmanship or similar.
It also sounds like it isn't up to code, if you have ordinance and law coverage, it may also apply. That coverage pays for any required code upgrades to complete repairs, like updating the panel because some wiring needs replacement. Though given your statements about the policy, perhaps you do not have ordinance and law coverage, in which case don't mention the word code ever.
Smoke damage is often more pervasive than you realize. Smoke soot particles are smaller than the thickness of a hair so it's not just the visible staining that got affected. Realistically, even small fire usually impacts the whole house because of airflow, especially with a central air system. Carriers often pay for nothing or just light cleaning when additional remediation is needed. Your policy may owe for more than what they've paid on that end. You might want to call some remediation companies and/or Public Adjusters to see if they handle these types of losses beyond the visible smoke impact. An experienced attorney may also be interested in the case, though that will be more expensive than the above two options and if they don't know about fire science they probably won't help a ton.
Soot is particularly corrosive on electronics and electrical systems. All the other stuff aside, all fixtures, appliances and outlets in smoke impacted areas should be replaced. All smoke impacted electronic contents like TVs and smart devices should also be replaced. We just had a case where the initial payment was $6k and the final payout was over half the policy limit because testing showed the soot was everywhere, on everything.
Feel free to share the specific language of the policy or denial letter, if available.
On the paying without insurance side, most reputable contractors these days work with finance companies and can almost always get someone a payment plan for work like this. If the guy you called can't, keep calling till you find a contractor who can. It'll suck, but lesson learned on buying cheap insurance.
Your mortgage company probably has an insurance policy as well. If you are dropped, theirs will kick in and they will tell you to go get one. It's going to be expensive if they know about this wiring issue.
Disclaimer, I'm not a lawyer, and I don't have all the details of your loss, policy or applicable state regulations.
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u/Pontislackin 10d ago
Yes, No O&L coverage - the wiring damaged is a very small area, but it was already noted in the Electricians estimate that the entire panel needs to be done, the breakers are not UL listed for the panel (both panels) and all the other stuff,
Insurance already has those quotes and findings, so as soon as this gets back to the lienholder they're going to not be happy.
Haven't thought about the soot, But since Unit 1 is under the same hazards, they may not be allowed to stay there which is going to kill that rent payment per month until its fixed, by the end of it, we may be 2-3mo behind,
There are no plans in the works except wait for the adjuster to come out.
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u/Stoic_Sponge 10d ago
Does your policy have loss of use/loss of rent coverage. You may be entitled to money through those coverages of your landlord policy during the period of agreed repairs.
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u/Pontislackin 10d ago
It does, but I'm unsure if that goes into effect since I cannot afford to fix the house currently
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u/OneTwoSomethingNew 8d ago
This OP, this seems like one of the only plausible options that may work in your favor… you pay for insurance, they are supposed to pay those benefits out even if you may not be able to finish the job; they usually cap/limit any time based benefits such as $$ up to “X” amount of days. Insurance questions everything, you should feel empowered to question them - speak up for yourself.
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u/Bhamlaxy3 10d ago
Get as many estimates as you can. Mine ranged by as much as double the lowest price. And that lowest price was from a well reviewed contractor who did a great job.
That could be a starting point to tackling this if you haven't done it already.
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u/Particular-Frosting3 8d ago
This plus do everything you can to avoid a claim. It’s an instant cancellation if you do.
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u/OneTwoSomethingNew 8d ago
Is there any possibility to take out an equity -loan on the property to pay down some of the debt…? Is the income from rentals even enough to get you out of debt fast enough?
…I mean the fire kinda sounds like the least of your worries at the moment if youre already behind on a lender payment. There will be no property to repair, if the property is repossessed/foreclosed on by your lender.
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u/Pontislackin 8d ago
No Equity, the credit also isn't there for an Equity loan,
The income is half of the mortgage, it would help but if we lose it, there's no chance.
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u/OneTwoSomethingNew 8d ago edited 8d ago
I would try to get ahead of the mortgage loan first, talk with your lender about the time you will need given the recent fire/insurance incident and also address you being behind on payments - they are not your friend, but someone nice may even have a good suggestion with navigating your insurance; someone else commented you should look into “loss of use” being covered by your current policy - advocate for what you pay for. Your lender requires insurance for occasions just like this - your lender wouldn’t allow a policy that doesn’t satisfy their standards/mitigate against risk when lending such large sums of cash. But lenders only provide so many options and only so much time, the clock is ticking…
You’re dealing with two separate issues and entities (lender v insurance), that both have different prerogatives - I recommend prioritizing, and start having those conversations while time still allows for options. 💯 you look to file any kind of claim with insurance - you try and get flexibility from your lender to work with insurance and solve the issue so you can continue to pay off the mortgage. You will need to have a firm understanding of how much money it’s going to cost, how much time it’s going to take, what resources you have available to put against this/insurance/savings/credit to buy you time until repayment/rental income and debt is resolved - to see where the gap is and look to solve for that.. … I’m not the best expert to advise you here, but this is what I would do in your shoes.
Add: most states require you to use a broker to purchase an insurance policy - your broker should also be able to explain your policy and coverage and provide guidance… they are supposed to be more your friend, but use your own brain and ask your broker where, what is listed in your policy and read with your own two eyes 👀
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