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Crumbling Basement Captive Insurance Launch Delayed Due to Volume of Public Comments

The launch date of the CT Foundation Solutions Idemnity Corporation Inc (CFSIC) website will not occur as expected on November 15.   According to the update the postponement is expected to be about thirty days and the new launch date will be announced on the CFSIC website.   According to the CFSIC, the postponement is a result of the volume of public comments they have received just half way through the thirty day public comment period and the possibility of subsequent guideline changes and tweaks to the online application platform.  I would expect many of these comments are related to the current ineligibility of more than 4 condo units on one foundation and the current maximum of  $175,000 per foundation replacement, (see square foot or linear foot maximums here) which according to the numbers I have heard quoted, seems low.   The new launch date will be announced on the CFSIC website. 

Applications are available in two categories, Type 1 is for those currently seeking replacement’ Type 2 is for those seeking reimbursement for a foundation replacement already completed.  It is important to note that there will a maximum number of Type 2 claims paid in a fiscal year so if you are looking for reimbursement you should apply as soon as possible after the launch.   Each claim has specific documentation that must accompany the application:

Type 1 claims must contain 7 of 8 data points to be considered an active claim: 

A.) proof that the building or addition in question was originally constructed during calendar year 1983 or subsequent;

B.) proof of ownership, such as a recent mortgage statement or tax bill;

C.) a pyrrhotite-positive core or other type of approved laboratory analysis;

D.) a separate written visual inspection report of the property in question conducted by a professional engineer licensed in the state of Connecticut, and where, using criteria found further in this guideline, that engineer has assigned a deleterious pyrrhotite severity code to the foundation in question;

E.) evidence in writing confirming that the claimant’s current or any prior homeowner’s insurer has denied a claim in whole or in part, or that a claim is pending, as a result of a crumbling foundation matter; OR

F.) evidence in writing confirming any claim paid, regardless of the amount paid, by an insurer as a direct or indirect result of a compromised foundation for the residential building or addition in question, where such communication from the insurer indicates that the insurer paid or settled the claim, in whole or in part, and stating the reason why the claim was honored and the amount of the settlement in question. This would be required even when the claimant litigated the claim with the insurer in question;

G.) confirmation as indicated on the application that the residential building in question is located in Connecticut;

H.) in the case of someone completing an application on behalf of a homeowner, a Power of Attorney certifying that the person signing the application is authorized to act on the homeowner’s behalf.

 

Type 2 claims, must include 8 of 10 data points to be considered an active claim (choosing between data point C or D and data point E or F below):

A.) proof that the building or structure in question was originally constructed during calendar year 1983 or subsequent;

B.) proof of ownership, such as a recent mortgage statement or tax bill;

C.) a pyrrhotite-positive core or other type of approved laboratory analysis from the foundation that was replaced, which was originally performed prior to the foundation replacement; OR

D.) a separate visual inspection report of the foundation in question, which was originally conducted by a professional engineer licensed in the state of Connecticut, and where that report confirmed convincing and clear visual evidence of the presence of deleterious pyrrhotite, as defined in this guideline;

E.) evidence in writing confirming that the claimant’s current or any prior homeowner’s insurer has denied a claim in whole or in part, or that a claim is pending, as a result of a crumbling foundation matter; OR

F.) evidence in writing confirming any claim paid, regardless of the amount paid, by an insurer as a direct or indirect result of a compromised foundation for the residential building or addition in question, where such communication from the insurer indicates that the insurer paid or settled the claim, in whole or in part, and stating the reason why the claim was honored and the amount of the settlement in question. This would be required even when the claimant litigated the claim with the insurer in question;

G.) evidence in writing confirming the replacement work done to the foundation in question, itemizing all costs and expenses associated with the work done as that work relates to the replacement cost parameters specifically shown in these guidelines, and indicating how much of the work may have been covered by insurance and how much was covered by out-of-pocket private payment. This would be required even when the claimant litigated the claim with the insurer in question;

H.) confirmation as indicated on the application that the residential building in question is located in Connecticut;

I.) in the case of someone completing an application on behalf of a homeowner, a Power of Attorney certifying that the person signing the application is authorized to act on the homeowner’s behalf;

J.) a Certificate of Occupancy signed by the building inspector of the town in which the residential building is located, which was provided at the time the foundation replacement was completed.

 

Type 1 claims will be considered based the severity of the current damage to the foundation using the following guidelines with Classes 3 and 2 receiving priority consideration. 

 

  • 1)   Class 1: Based on the visual inspection report, a licensed engineer concludes that no indications of deleterious pyrrhotite are present.
  • 2)   Class 2: Based on the visual inspection report, a licensed engineer concludes that some indications of deleterious pyrrhotite are present.
  • 3)   Class 3: Based on the visual inspection report, a licensed engineer concludes that clear and convincing visual evidence of significant deleterious pyrrhotite is present.

Another caveat you should be aware of is that all replacement claims exclude extraneous expenses that may be required to return your property to its original condition and other costs and expenses and inconveniences associated with the construction such as:

  • replacement of drywall and/or other finishing wall features, including re-framing;
  • removal/replacement of porches or decks;
  • removal/replacement of gutters;
  • removal/replacement of landscaping features such as driveways, walkways, paths, shrubs, lawns, trees, gardens, or other plantings or garden structures;
  • any work done to outbuildings, sheds, or barns; any work done to garages unless the garage is connected to the foundation of the main residential building and the work was performed to remediate or replace the garage’s foundation;
  • swimming pools, whether in-ground or above-ground, or any ponds or water features;
  • moving or relocation expense;
  • temporary housing expense;
  • meals, transportation, mileage, and incidentals;
  • loss of wages or income or revenue associated with any work or any business, whether such business is home-based or not

In recent comments, Michael Maglaras, Superintendent of the Captive Insurance Company estimated that between 600 and homes will be able to be repaired before depletion of the funds.   Further, Maglaras believes there are between 5,000-9,000 homes that will need replacement in the next few years and a potential of 35,000 homes in total when the full effect of the deleterious concrete is known in homes that are not yet showing signs of deterioration, pushing the ultimate cost in to the billions. 

Learn more about CFSIC

View a Type 1 or Type 2 application.  

Foundation testing reimbursement program