A bill proposing additional assistance for homeowners impacted by the ‘crumbling foundations’ issue in Connecticut has been rejected by the state’s judiciary committee.
SB 518, which would have meant insurance companies were required to cover “the peril of collapse” for homes affected by the ‘crumbling foundations’ issue, failed in a vote of 16 Yeas and 24 Nays on 4 April.
The bill also proposed adding a $20 surcharge to all homeowner insurance premiums in order to create a fund for those affected by the structural issue.
Commercial insurance companies have generally refused to cover the ‘crumbling foundations’ issue, which was caused by concrete of a stone aggregate mined from a quarry containing pyrrhotite and has resulted in cracks forming decades after the foundation was constructed.
According to the Connecticut Mirror, around 5000 homes have been affected and with the cost of re-pouring a complete foundation estimated at between $150,000 and $200,000 the overall exposure to loss could be billions of dollars.
The Connecticut state government has developed a potential solution utilising a non-profit captive insurer, Connecticut Foundation Solutions Indemnity Company, to administer the Crumbling Foundations Assistance Fund, which was set up to distribute the remediation funds to homeowners across the state–with $100 million available in state bonding over the next five years.
In October 2017, the Connecticut state government passed SB 1502 which authorised the formation of a non-profit captive to cover the exposures and in February this year the state bond commission approved the $350,000 necessary to set up the captive.
Programme manager of captive insurance at the Connecticut department of insurance, Janet Grace, said that the failure of SB 518 would have no impact on the assistance that the non-profit captive would be able to provide.
Grace explained: “While homeowners are anxious for repairs to begin, the funding and process by which they can happen is underway based on the 2017 legislation.”
“The Crumbling Foundations Assistance Fund and captive insurer established in the 2017 legislation is designed to create a source of funds and fair adjudication process for homeowners and the establishment of that company is well underway.”
Connecticut state government predicts the fund will be accessible through the captive in July 2018.
Insurance Committee co-chair Senator Tim Larson, announced on 9 April that he planned to introduce a new amendment to create revenue for the Crumbling Foundations Assistance Fund by placing fees on new or renewed homeowners insurance policies and mortgages, similar to the surcharge proposed in SB 518.
Larson said: “This legislation provides a new source of revenue, which is a $10 surcharge on new home mortgages, insurance companies who are writing insurance properties in the state of Connecticut and individual policyholders.”
He added: “This proposal renews my continued commitment to help out eastern Connecticut homeowners who are still struggling through this horrific ordeal.”