‘Holy s**t, an earthquake’: Home owner’s insurance fight

By Emma Clarke | The Queensland Times

HER house shaking as the wind rattled through the timber walls, North Ipswich home owner Jessie Harlow thought she was experiencing an earthquake.

It was late October last year when a typical Queensland summer storm rocked Ms Harlow’s 1930s home but it wasn’t until the next month she noticed some alarming damage.

While moving furniture in the living room, she noticed grass and daylight peaking through a sizeable gap between the floor and wall of her home. When she went outside to investigate further, Ms Harlow found her house had shifted on the concrete stumps.

Now she’s facing a damage bill worth tens of thousands of dollars after her insurance claim was rejected.

She said insurer CGU claims soil and stump movement caused the damage, not the storm.

“My whole house shook and it actually moved my house off the stumps. It shifted the whole house.” she said.

“I thought, ‘holy, we’re having an earthquake’. There was not a lot of damage that I could see except there was water coming out of the light fitting on the front veranda and one of the doors wouldn’t close properly.

“It wasn’t until I moved the furniture in the lounge room that I realised there was a gap between the wall and floor. The floor and wall have come apart on the whole length of the house.”

She said her insurance company, CGU, sent inspectors to look at the damage but they claimed it happened before the storm hit.

“Insurance is saying because the stumps have been packed before, it has obviously moved, then it’s likely the soil has subsided over time and that has caused the damage,” Ms Harlow said.

“They won’t pay because they say it’s not caused by the wind. I just thought it would get done because you pay your insurance in good faith and it’s covered for storms. I’ve never missed a payment so I thought this is what I was covered for.

“What I really want to know is who else got damage in those high winds, if anyone else suffered damage or some sort of wind damage so I can prove it’s not just me and I’m not imagining it.”

Ms Harlow said she bought the house three years ago after returning to Ipswich to be near her family.

“It’s such a gorgeous little house, it’s such a cute little house. I really like my house,” she said.

A spokesperson for IAG, the company that manages CGU insurance, said a general approach was applied when assessing all storm damage claims.

“During the event of a storm, our priority is the safety of our customers and to ensure they have immediate help and support,” they said.

“Our builders and technical specialists can then assess the cause of damage to a property and the repairs required to help our customers get back on their feet as soon as possible. We may also be required to use experts, such as engineers, to assess the cause of damage to a property, to ensure we make the appropriate decision in line with the policy.”

The “Allstate Insurance Safe Homeowners Study” highlights common risks to be aware of as it could help prevent major headache for potential buyers and homeowners

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Unexpected expenses could spell big trouble for Millennial homeowners

TSX/NYSE/PSE: MFC     SEHK: 945

  • A significant percentage of Canadian homeowners lack the financial flexibility to adjust to rising interest rates, unexpected expenses or interruption of income, with Millennials most at risk, according to Manulife Bank survey
  • One in four Canadian homeowners have not had enough money on hand to pay bills once in the last 12 months while one in five are unprepared for a financial emergency
  • Average mortgage debt is up 11% to $201,000
  • Almost half of Millennial homeowners received help for their first homes

WATERLOO, ON, May 23, 2017 /CNW/ – Mortgage debt increased by 11 per cent1 to $201,000 last year and more than half (52 per cent) of Canadian mortgage holders lack the financial flexibility to quickly adjust to unexpected costs, per a new Manulife Bank of Canada survey. This despite 78 per cent of Canadians having made debt freedom a top priority.

The problem is most acute among Millennials, who saw their mortgage debt rise more than any other generation. Millennials are also most likely to have difficulty making a mortgage payment in the event of an emergency or if the primary earner in the household were to become unemployed.

“The truth about debt in Canada is that many homeowners are not prepared to adjust to rising interest rates, unforeseen expenses or interruption in their income,” says Rick Lunny, President and Chief Executive Office, Manulife Bank of Canada. “However, building flexibility into how they structure their debt can help ease the burden.”

Overall, nearly one quarter (24 per cent) of Canadian homeowners reported they have been caught short in paying bills in the last 12 months. The survey also revealed that 70 per cent of mortgage holders are not able to manage a ten per cent increase in their payments. Half (51 per cent) have $5,000 or less set aside to deal with a financial emergency while one fifth have nothing.

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1 The percentage change in average mortgage debt controlled for regional, age and income differences between the samples. However, different research providers were used for each wave of the study which may impact trended results.

Millennials not alone

Despite generally having more equity in their homes, many Baby Boomers face the same challenges as Millennial homeowners. Some 41 per cent of Baby Boomers said that home equity accounted for more than 60 per cent of their household wealth and for one in five (21 per cent) it makes up more than 80 per cent.

This indicates Boomers may need to rely on the sale of their primary residence to fund retirement, since much of their household wealth is wrapped up in home equity. However, more than three quarters (77 per cent) of Baby Boomer respondents want to remain in their current homes when they retire.

“Many Boomers approaching retirement share the same lack of financial flexibility as Millennials,” said Lunny. “They want to remain in their current homes, but their home makes up a big part of their net worth. Instead of downsizing, or even selling and renting, homeowners in this situation could consider using a flexible mortgage to access their home equity to supplement their retirement income.”

Helped into the housing market

Almost half (45 per cent) of Millennial homeowners reported that they received a financial gift or loan from their family when purchasing their first home. By comparison, just 37 per cent of Generation X and 31 per cent of Baby Boomers received help from family members when they purchased their first home. Conversely,  almost two in five (39 per cent) Boomers, many of whom are the parents of Millennials, still have mortgage debt.

The generational increase in new homeowners requiring family support comes despite a long-term trend toward two-income households. The number of Canadian families with two employed parents has doubled in the last 40 years, but housing costs are growing faster than incomes2.

“With higher home prices and larger mortgages, it’s more important than ever to find the mortgage that’s right for you,” says Lunny.  “A flexible mortgage that offers the ability to change or skip payments, or even withdraw money if your circumstances change, can help you ride out financial difficulties more easily.”

Manulife Bank recommends that Canadians have access to enough money to cover three to six months of expenses.

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2 Statistics Canada. May 30, 2016.

Quebec homeowners most at risk

In addition, the Manulife Bank survey found that:

  • Mortgage holders in Quebec (76 per cent) would have the most difficulty with an increase of 10 per cent to their mortgage payment and are more likely to be impacted should they have a fiscal emergency, as almost 30 per cent have no emergency funds.
  • British Columbia had the highest instance of homeowners getting help from family members when they purchased their first home, with almost half (45 per cent) saying they either borrowed or were given money.
  • Compared with other regions, homeowners in Manitoba and Saskatchewan (73 per cent) prefer most to own and live in their current home when they retire.

Debt management should begin at an early age

More than two in five (44 per cent) learned “a little” or nothing about debt management from their parents—and were also most likely to have been caught short financially in the past 12 months (28 per cent).

“Kids who learn about money and debt management are more likely to become financially healthy adults,” says Lunny. “One of the best lessons we can teach our children is the importance of saving for a rainy day. Being prepared for unexpected expenses is good for our financial health, good for our mental health and gives us the freedom and confidence to deal with the unexpected expenses and opportunities that come our way.”

About the Manulife Bank of Canada Debt Survey
This survey was conducted online within Canada by Nielsen on behalf of Manulife Bank of Canada from February 1 to 14, 2017, among 2,098 Canadian homeowners aged 20 to 69 with household income of $50,000 or more. The data were weighted by age, province of residence and household income where necessary to bring them in line with their actual proportions in the Canadian homeowner population.

About Manulife Bank
Established in 1993, Manulife Bank was the first federally regulated bank opened by an insurance company in Canada. It is a Schedule l federally chartered bank and a wholly-owned subsidiary of Manulife. As Canada’s first advisor-based bank, it has successfully grown to more than $22 billion in assets and serves clients across Canada.

About Manulife
Manulife Financial Corporation is a leading international financial services group that helps people achieve their dreams and aspirations by putting customers’ needs first and providing the right advice and solutions. We operate as John Hancock in the United States and Manulife elsewhere. We provide financial advice, insurance, as well as wealth and asset management solutions for individuals, groups and institutions. At the end of 2016, we had approximately 35,000 employees, 70,000 agents, and thousands of distribution partners, serving more than 22 million customers. As of March 31, 2017, we had $1 trillion (US$754 billion) in assets under management and administration, and in the previous 12 months we made almost $26.3 billion in payments to our customers. Our principal operations are in Asia, Canada and the United States where we have served customers for more than 100 years. With our global headquarters in Toronto, Canada, we trade as ‘MFC’ on the Toronto, New York, and the Philippine stock exchanges and under ‘945’ in Hong Kong.

SOURCE Manulife Financial Corporation

Many insurance policies don’t cover flooding, and homeowners could be on hook

By Alexandra Posadzki

THE CANADIAN PRESS

TORONTO _ The majority of Canadian homeowners aren’t insured for flooding and could be left footing at least part of the bill after heavy rains in several areas across the country, experts say.

Craig Stewart, vice-president of federal affairs for the Insurance Bureau of Canada, estimates that only 10 to 15 per cent of Canadians have so-called “overland flood insurance,” which is offered as an add-on to insurance policies.

Stewart says that’s because it’s a fairly new product that wasn’t available prior to 2013, when severe flooding hit Toronto and Alberta.

“That was primarily because we did not have flood risk maps developed for the whole country,” Stewart says.

“The insurance industry needs to be able to quantify the risks so they can assess which premiums to charge which people. Up until then there was simply no risk mapping done to be able to support such policies.”

Heavy rains left several communities in Quebec and Ontario struggling with rising floodwaters over the weekend, while parts of New Brunswick and British Columbia also faced flooding.

Insurers started working on the overland flood insurance add-on after the 2013 incidents, but it took time to roll the policies out. Stewart says the product has been available since late 2015.

The low uptake is likely due to the fact that most Canadians only interact with their insurance broker when the time comes to renew their policy, Stewart says.

“Most people are not aware that overland flood insurance is available,” Stewart says. “Therefore, unless they have been directly in a conversation with their broker or their agent at the time of renewal over the past year, they likely won’t have it.”

Stewart says most homeowners grappling with flood damage will be left relying on government assistance, which typically covers less than insurance.

“Insurance is meant to make you whole,” Stewart says.

That’s in contrast to government assistance, which will help compensate homeowners for their losses, but typically focuses on core essentials.

Jason Thistlethwaite, an assistant professor in the faculty of environment at the University of Waterloo, says many Canadians lack the information they need about flood risk.

For example, many Canadians think fire poses the biggest threat to their homes, when in fact flood damage is more common, Thistlethwaite says.

Thistlethwaite co-authored a study last year that surveyed 2,300 Canadians who live in high-risk flood areas. The majority of those polled 70 per cent said they had not been contacted by an insurance company about newly available overland flood insurance, he said.

The survey also indicated confusion on the part of respondents about what is and isn’t covered by insurance policies. The majority of those surveyed thought overland flooding was already covered by default under insurance policies, Thistlethwaite said.

He said governments should do more to help homeowners get the information they need to protect themselves from future floods.

“We’re just looking at the tip of the iceberg when it comes to flooding because climate change is going to make the problem much worse in the future.”

Ontario bill would ban certain door to door sales, license home inspectors

Ontario has introduced legislation that would regulate home inspectors, ban certain door-to-door sales and strengthen payday loan rules.

The changes would all fall under the Putting Consumers First Act, which the government said is aimed at protecting people in transactions involving common household and financial services.

The bill would ban unsolicited door-to-door sales of water heaters, furnaces, air conditioners and water filters, to protect against what the government calls “aggressive” and “high-pressure” sales tactics.

All consumer-initiated contracts, such as for roofing or home renovations, would also have a 10-day “cooling-off period” during which a consumer can change their mind and cancel the contract without any reason.

Home inspectors would have to be licensed if the bill passes, and it would create an administrative authority to oversee them, with complaint and enforcement processes, including discipline and appeal committees.

The regulatory body would establish a code of ethics for home inspectors, standardize home inspection reports and contracts, define what must be inspected to ensure consistency, and set out insurance requirements.

Home inspectors are currently the only professionals involved in real estate transactions in Ontario that are not regulated. The Ontario Real Estate Association applauded the introduction of the bill.

“When buying a home, people have a right to expect high professional standards and government oversight of all professionals involved in a real estate transaction,” said Tim Hudak, the former Progressive Conservative leader and CEO Designate of OREA.

“High standards and a clear legal framework in the home inspection industry will ensure home buyers and sellers receive reliable, informative and professional advice when making one of the largest decisions of their lives.”

The not-for-profit corporation would be funded by licensing fees.

The bill would also give the registrar of payday loans the ability to restrict high-frequency borrowing, create standards that lenders must consider when determining a borrower’s ability to repay and give repeat borrowers an extended payment plan option.

It would also come with more enforcement powers to address unlicensed lenders. And municipalities would be allowed to regulate the number and location of payday lenders.

Debt collection rules would be changed under the bill, making firms that purchase debt for the purpose of collecting it subject to the same rules as collection agencies.

 

‘Try [to] keep that loss at a bare minimum.’– Kent Rowe, Insurance Broker’s Association

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