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Insurance Carrier: Travelers Insurance Company Of Hartford, Ct
State: District of Columbia
I owe a 100+ year old house in the historical district of the SE side Capitol Hill. Since purchasing of the property in 1997, I have had it insured with Travelers. Last year, I was told to fix the back stairs leading from the kitchen to the back yard, as well as placing railings on the front steps. Fixing the back yard stairs was no problem and it was planned since summer of 2008. However, when I informed them that having railings on the front steps is IMPOSSIBLE and WILL NOT be approved by the historical society for the District of Columbia, they refused to renew my home insurance. Adding insult to injury, they reported the cancelation to Citimortgage (the group that used to fleecing taxpayers and now homeowners), and in turn I received from Citimortgage affiliate an insurance policy at a premium costing almost FIVE times the primary charged by Travelers. I am outraged and think Travelers stupidity combined with Citimortgage action is placing me in an economic hardship which could drive me to foreclosure. This could be Travelers Insurance Company+ Citi mortgage last assault on compliant homeowner who's never been late or missed monthly payment!!
Insurance Expert Answer:
You've been hit with "forced insurance". Almost every mortgage requires that the borrower maintain an adequate level of property insurance on the mortgaged property to protect the lender. Forced insurance is the coverage a mortgage holder buys when the borrower has failed to obtain his or her own coverage, as required by the mortgage. It's typically outrageously expensive. It's more complicated than being just a racket, however. True. the insurance carriers who issue the policies know that (1) the mortgage holder who buys that insurance does not really care what it costs as the cost is passed on to the borrower. But (2) just about anyone who can't get his or her own coverage has a horrible risk profile and claims history and/or (3) the property has horrible risk factors or claims history. I can understand why Travelers may not have wanted to cover you -- open stairs create serious liability risks. But what you should have done is get another company to cover you, or put up a railing and get any needed waivers from the City. It's probably not too late to ask the lender what will happen if you now get coverage on your own and then get it and notify the lender to cancel the forced coverage prospectively.