Mortgage insurance scam

[DallasLoanGuy]

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@IOBA wrote:

So maybe bite the bullet, get the coverage to make WF happy, then change it later.

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doable. they might not catch it.
but the home has to be insured for replacement value for these lenders.

but you can ALWAYS change insurance after closing.

[frugalQ]

I understand exactly what you are saying.

I found out last month that homeowners ins does not cover the cost to repair things like water leaks if the leak is outside of the house structure. Cost us $2,400 to fix a leak that was found under our driveway....but outside of the garage....even though the water line led straight into the house.

What a disappointing discovery!!

[DallasLoanGuy]

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@frugalQ wrote:
I understand exactly what you are saying.

I found out last month that homeowners ins does not cover the cost to repair things like water leaks if the leak is outside of the house structure. Cost us $2,400 to fix a leak that was found under our driveway....but outside of the garage....even though the water line led straight into the house.

What a disappointing discovery!!

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you dont want to file a claim for $2400..... will cost you in the long run in higher premiums.
even if you change ins companies, they will know about the claim

[IOBA]

Yeah, insurance companies are now charging back a specific fee to recover what they paid out in claims.  (Uh, don't we have insurance to cover problems???  And if we have to make a claim, why should we have to reimburse the insurance company for what we already paid for??)

My husband are I are having the conversation about this house we are purchasing.  It will be owner financed and they don't have insurance.  I was shocked to find out that structure coverage ONLY (no contents, living expenses, etc) was 3k a year, with 1k deductible!

DH says wait until we get a mortgage on the property or get a heloc on the property  before we get insurance.  The owners don't care if we have

insurance or not, since they don't currently and they will continue living in the house for a bit after the closing.

I think we should get the insurance at closing.  DH says not until the very last minute.  But if something happens to that house, we can not afford to repair it/rebuild it.  Not that it's likely anything would happen to it...but...things happen.

Back to the house we purchased last year - if we did the labor ourselves, we could have rebuild the house for less than the mortgage.  After we switched insurance companies, we got better coverage, and a much more realistic policy.   Now we don't have to rebuild.  In theory, if there is a problem, the insurance company will hand us a check.  

[frugalQ]

orginally, we thought the cost was going to be upwards of 5k because the plumber couldn't find the pipeline and was saying they would have to tear our concrete driveway and then re-pour it.  i was more concerned about doling out the funds because we are saving for a new house...and didn't consider the long-term drawbacks of filing a claim.

i guess in my case it all turned out ok.  we found the original subcontractor who ran the lines when the house was built.  they came in, located the line, and replaced it...all without having tear up my driveway and 1/2 the price.

it still annoyed me to find out that neither my homeowners insurance nor my home warranty policy covered outside issues.

[IOBA]

It's kinda crazy how almost no insurance covers from the house to the main line.  The electric company - not related to the water company out here - will actually offer insurance to pay for a water pipe problem that occurs from the main water pipe to the outside of your house.  Homeowners insurance will pick up the tab inside your house.

Glad it worked out for you.

[frugalQ]

thx!

We called the water dept.  they came out and told us they don't cover leaks greater than 1 foot (12 inches) away from the main water meter.  Craziness.