Insurance companies and appraisers sometimes scam their customers to make more money. Here's a story about how my homeowner's insurance premium got raised without my consent.
I've always trusted my insurance company, which I'll call TRICKY DICK, to do the right thing. After all, I've been a client of theirs for 22 years. They've benefited from my growth in assets and I now have auto insurance, homeowner's insurance, valuable personal property insurance and an umbrella policy with them. Furthermore, I've got a relatively large chunk of change in CDs deposited with them as well.
I had a unwelcomed change on my credit card the other day and had to call Tricky Dick to cancel my existing card on file and add a new one. Imagine my surprise when looking over my previous statement that they were billing me 45% more a month in premiums!
What the hell, I thought to myself. Clearly there must be a mistake. Oh how wrong I was.
How My Insurance Company Scammed Me
Tricky Dick sent out a “mandatory” home inspector to my house last December to make sure my re-building costs were still the same. I don't know what the rule is, but supposedly after so many years, a home inspection is mandated by law, or so a letter from Tricky Dick said. Uh huh.
The inspector noted the amenities in my house and calculated the square footage. Apparently, the home inspector and Tricky Dick now believe I live in a mini-mansion with a livable square footage estimate 50% higher! WTF guys!
Based on Tricky Dick's new square footage estimate, it now costs me $400/sqft to rebuild my house based on the new 50% larger size, and $600/sqft on my house's real square footage!
Somehow, the home inspector and Tricky Dick think that instead of hard wood floors, I have gold floors. All the door knobs have suddenly turned from crystal to diamonds. Meanwhile, my roof is not just any old roof, it's clearly a landing pad for one of my Airwolf Helicopters. Come on guys. $400-600/square foot in building cost is ridiculous!
When I asked the Tricky Dick insurance woman how much the building costs are for her area in Colorado, she said $100-$200/sqft. Exactly, so why the F does Tricky Dick think it costs 4-6x more to build a house in San Francisco? It's not like California has special wonder board, windows, nails, tiles, roofing, and wood. The materials are largely the same. But the labor is slightly higher, not 4-6X higher.
She sheepishly agreed and said she'd look into it.
Guilty Until Proven Innocent
This is what really pisses me off. Despite telling Tricky Dick to look up my house on the SF county records to see the real square footage, she said it is up to me to prove the real size of my house!
Her company prevents her from logging on to the SF county records, Zillow, and all these other online real estate companies because of “security” reason. It is absolutely ludicrous that I have to fight the crooked home inspector's assessment.
Good thing I have an appraisal report from last year when I refinanced, detailing the floor plans, square footage and all the details within my house. If I didn't, I'd have to go spend $700 to get an appraisal and then send it in. What a waste of time and money!
When companies waste my time, that's when everything goes to hell. I did some investigating by talking to my friends in the real estate industry and what I found was disturbing.
What Home Appraisers / Inspectors Are
They basically said home appraisers/inspectors are henchmen used to enrich the banks and insurance companies. With the banks, home appraisers manipulate the value higher so that a seller can sell to the buyer, even if the value is lower than reality. If a home does not appraise for what the buyer wants to pay, no transaction happens and nobody gets paid.
For insurance companies, home inspectors are asked to increase the value of the home by increasing the square footage and embellish the value of the amenities. Instead of laminate floors, they'll put in Brazilian Cherry hardwood floors, or in my case gold floors. Instead of simple lights, they'll enter crystal chandeliers to use to juice their estimates. This way, the insurance companies can charge a higher premium for coverage. In my case, Tricky Dick plans to charge me a full $1,200 more a year.
I am so disappointed that after all the money I have parked with Tricky Dick and after 22 years of being a client, they'd want to screw me like this. What the hell happened to more customer protection after the financial downturn? Apparently nothing much has changed.
Game Plan To Fight My Insurance Company
My first instinct as a blogger was to contact Tricky Dick on Twitter and ask them for help. But just like the other five tweets I've sent over the past 12 months, nobody has ever responded. Why have a Twitter account if you don't ever respond to your customers? Their social media effort is a D-.
I then called a nice representative who said she would investigate. She did and told me to send in proof of my home floor area, which is still a pain in the ass despite having the appraisal on file somewhere.
I will send the document in and tell them to credit my account back for the two months overcharge. I will then ask them to reimburse three hours of my time and stress dealing with this bullshit valued at $500/hour, or $1,500 total.
If they do not give me something close to $1,500 credit, I will withdraw hundreds of thousands in cash deposits. Then I may shut all my insurance product accounts. If they keep me as a happy customer, they will probably get hundreds of thousands in deposits over the next 10 years. If not, I walk. I will vote with my money.
So Disappointed In My Home Insurance Company
What makes this situation worse is that Tricky Dick is a great company 99% of the time. Their customer service is excellent and their rates for CDs and insurance products are competitive. Every time I talk to someone there, they are very helpful.
It's too bad a black sheep in the home insurance department at Tricky Dick convinced the home inspector to over appraise my home by 50% to make more money. To over appraise by 10-20% is reasonable, but by 50% is absolute hogwash.
Tricky Dick, I know you will never get back to me online. Just know that it's not good to scam your customers, especially ones that have been loyal customers for two decades and who have a blog. Re-instill the faith I've had in you guys for all these years and make it right.
After sending in my recent home appraisal, telling me it will take two weeks to have your corrupt home inspection department look into it is now wasting your company's time and money. Just do the right thing and stop screwing around!
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How Insurance Companies And Appraisers Scam Their Customers is a FS original post.