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QUESTION: I have a old house that needs a lot of repair. Can i still insure it?


ANSWER: As with many questions, the answer is, "Yes, but..." The insurance industry is for profit. That means companies are always prepared to offer you coverage but the premiums may rise if what you want to insure is non-standard. In this situation, there are two very important considerations:

1. Does the poor state of repair mean your house is more likely to catch fire or that pieces may fall off it and injure people walking by on the sidewalk? If the answer is that the risks of a claim are higher, the premium rates will be higher.

2. In the majority of cases, insurance policies are written without the insurer physically sending someone to view the property. That means the company relies entirely on what you say to decide on the level of risk and value the premium rate. This places a duty of good faith on you to be absolutely honest and disclose all the features of the property that might give rise to a claim, e.g. that the roof leaks and heavy rain may damage the furniture in the bedrooms, that the electrical wiring is old and may be a fire hazard, and so on. If you fail to give a complete listing of all the "obvious" risks, the insurer has the right to cancel the policy later on if it discovers you forgot to mention something important. Sadly, some people in your situation discover their oversight when a claim is made. The result is no payment out and an old house in an even more damaged condition.

So, the bad news is that you have to be honest and tell the insurer all the problems even though this means a higher premium. If you do this, read the policy very carefully before you accept it. There can be unfortunate surprises in the small print and it is better to deal with those before you sign up, rather than waiting until you make a claim. If there are terms you do not understand, ask for an explanation. If it looks as if the coverage is limited in ways that will cost you money, try to get them changed. Insurers are usually helpful before you accept the policy and pay the first instalment.


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