House Bill 5522 Could Raise Homeowners Insurance in Connecticut

According to a report in The Norwich Bulletin, House Bill 5522, now before the general assembly, has the potential to increase homeowners’ insurance premiums across the state.
Proposed by Legislature’s Insurance and Real Estate Committee, HB 5522 focuses on the “crumbling foundation problem” that exists in northeastern Connecticut, but its effects could spread well beyond that region.
The foundations of homes in that area have been slowly deteriorating and, based on reports, 161 homeowners filed complaints with the Department of Consumer Protection as a result, stating the decay can be attributed to a chemical reaction. Twelve out of this group filed claims with their insurance companies to replace the foundations – a $150,000 to $200,000 cost – but were denied, as their carriers claim their policies don’t cover this type of damage. In response, some homeowners have filed class action lawsuits against their insurance carriers.
As a result of this issue, HB 5522 would require every Connecticut homeowners’ insurance policy to pay for all damage a property experiences, including if it relates to defective construction materials and methods. However, in response, this would greatly increase premiums and, according to the state Department of Insurance, the ruling could affect the affordability of homeowners’ insurance in Connecticut.
Premiums in the affected area would be particularly high. According to a statement made by the Department of Insurance, “Carriers would need to increase rates in the regions affected by the faulty foundations by reflecting the claims costs of those losses in future pricing. As a result, all homeowners in the territories impacted by this issue — regardless of the status of their foundations — could face significantly higher premiums in the years to come.”
Related to HB 5522, HB 5519 would set up a catastrophe savings account to assist those homeowners with deteriorating foundations.
While HB 5522 isn’t a law yet, if you have concerns about your homeowners policy, direct them to the agents at Ion Insurance. For all inquiries, give us a call today at 203.439.2815.