ABOUT REAL ESTATE: Bankruptcy filing can rob ability to get homeowners insurance

Many insurers will no longer renew a homeowners policy or issue a new one if the customer has recently filed for bankruptcy.

DEAR DAVE: We have had the same company provide our homeowners insurance for about 11 years, and we have never made a claim for damages. Last week, however, we were shocked when we received a letter from the company that said our policy will not be renewed when our current one expires in August because we filed for bankruptcy earlier this year. All of our insurance payments are up-to-date because we did not include the insurer as part of our bankruptcy filing, and we have already saved enough cash to continue paying for coverage well into next year. Is it legal for the company to cancel our policy just because we filed for bankruptcy?

ANSWER: It may seem unfair, but the insurer probably has the right to cancel the policy simply because you filed for bankruptcy earlier this year.

Many insurance companies won't issue a new policy — or will refuse to renew an old one — for customers who have filed for bankruptcy or who have seen their credit score sink due to other problems. Insurers justify such decisions for a number of reasons, including statistics that suggest financially troubled owners are more likely to file claims — or perhaps even set their own home on fire to collect on their policy to pay other bills.

Call your insurer or insurance broker and demand to appeal the company's decision to decline your renewal. Each state requires that insurers must have a process for such appeals.

At the same time, also call other insurance companies to see if you can line up similar coverage for less money. Despite your bankruptcy filing last year, many firms still will be likely to provide a policy because you haven't filed a claim in more than a decade. Your current home insurer obviously doesn't appreciate that fact, but others may, and they may reward you with a lower rate.

You also can contact your state's department of insurance for help. The phone number of the local office should be listed under the "State Government" heading of the local white pages, or you can get it by calling the National Association of Insurance Commissioners at 1-816-783-8500.

The NAIC, which represents all 50 insurance commissioners across the nation, also operates a website (www.naic.org) that includes state-by-state information about consumer rights, regulatory policies and the law.

* * *

DEAR DAVE: We signed an offer to buy a house, and followed your previous advice to make the offer contingent on first obtaining a satisfactory report from a professional home inspector. The inspector uncovered several serious structural problems that the seller would not agree to fix, so we canceled the sale and got our deposit back. However, can we also demand that the seller reimburse us for the $450 that we paid for the inspection itself?

ANSWER: Most purchase offers today require the buyer, not the seller, to pay for the cost of a home inspection. So, you don't have the right to be reimbursed unless the offer you signed stated otherwise.

Though you probably can't get the $450 back, it was money well-spent, because the inspection helped you to avoid purchasing a property with lots of hidden problems that would be costly to repair.

* * *

DEAR DAVE: I served for 12 years in the Navy during the Vietnam War, and I purchased a house through the Veterans Affairs' home-loan program after leaving the service in 1972. I am 67 years old now, and I would like to move to a retirement development in Florida. Can I get another VA loan, even though I used the program back in the 1970s?

ANSWER: Yes, sir.

I answer that way because I have great respect for the decade-plus that you served our nation. Though your stint in the Navy ended years ago, your contribution to help keep America strong was no less significant than those that are being made today by brave men and women — or those who fought before you in Korea, Germany, Japan or other parts of the world.

A veteran's eligibility for the VA's array of low-interest, low-down-payment plans never expires. Most vets, like you, can use and then reuse the program as often as they wish, provided that they were honorably discharged and meet the agency's other requirements.

Call the VA (800-827-1000) for more information, or go to the agency's website at www.va.gov. And again, thank you for all the years that you unselfishly contributed to our country.