Insurance Department investigating cancellation of homeowners with failing foundations insurance policies

March 27-- Mar. 27--The state Insurance Department is investigating at least two cases of insurance providers cancelling homeowner's insurance policies due to the presence of a crumbling foundation.

At least two victims have come forward and said they received notices in the last month that their homeowner's insurance was cancelled, despite a directive from the state that prohibits insurers from cancelling policies on the basis of having a failing foundation.

Lisa Centola, an Ashford homeowner, received a cancellation notice from her insurance provider at the beginning of March. The letter said her homeowner's insurance policy would not be renewed in September because of foundation cracking due to groundwater and pyrrhotite -- the mineral partially responsible for causing foundations to crumble.

"When I found the non-renewal notice, I was just in a rage," Centola said.

Centola said after she filed a complaint with the state, she was informed by Insurance Department investigators that her insurance provider had sent the letter in error. Still, Centola was left to worry for several days about whether she'd have homeowner's insurance in six months.

"It's still really frustrating," Centola said. "We can't just go to another insurance company, we're stuck with the one we have. What if I had lost my insurance? What happens to my mortgage? You can't have a mortgage without insurance."

The state Insurance Department is investigating the incidents and asked that homeowners with failing foundations file a complaint if they receive an illegal cancellation notice.

"Under no circumstances is a carrier writing homeowners or condominium insurance in Connecticut allowed to non-renew or cancel a policy as a result of a foundation found to be crumbling or deteriorating," insurance commissioner designate Andrew Mais said. "The Insurance Department stands ready to help anybody if they encounter an issue with their insurance company -- or even just have a question. The best thing that a homeowner can do in this situation is immediately reach out to the Department's Consumer Affairs Division so that we can investigate the matter on their behalf."

In 2015, the Insurance Department protected homeowners with failing foundations from loosing coverage by directing all insurers to take no action to "cancel or non-renew an affected homeowner's insurance coverage as a result of a foundation found to be crumbling or otherwise deteriorating."

The Insurance Department did not comment on how many policy cancellations they are investigating.

"The Connecticut Insurance Department has recently been contacted by consumers who have been notified by one insurance carrier regarding a potential non-renewal of coverage," a statement from the department said. "These notices explicitly cited reasons directly related to crumbling foundations in violation of long standing Department direction to the industry. The Department is working with this one carrier to reverse the non-renewals, understand why the carrier has issued non-renewals directly related to crumbling foundations, and ensure that affected homeowners continue to be protected from being cancelled or non-renewed on the basis of having a crumbling foundation."

Centola and her husband bought their home in 2014 and said while there was some discussion of the crumbling foundations at the time, they believed their house had been built late enough to be exempt from the issue.

In 2018, the couple noticed the tell-tale vertical cracking and by December, an engineer had confirmed their foundation was crumbing. They filed a claim with their insurance company in February and were denied a few weeks later.

Insurance companies have been denying homeowners claims saying that the issue does not fall under their definition of collapse, leaving homeowners to bear the burden of the costly repairs.

"This was added insult to the injury," Centola said. "In my opinion insurance companies should be paying for this."

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