frost asked in Business & FinanceInsurance · 6 years ago

Home insurance company wants their money back?

We had some pretty nasty rain a few weeks ago in our area, to the extent that even FEMA had to get involved in the region. Our basement flooded due to a failed sump pump. We didn't think it would be covered under our policy, but to be safe we checked with our insurance company, and surprisingly they stated it was covered. We asked if they were positive...they insisted it was. They mailed us a check, and we used the money to fix our basement. There is no way we currently could have afforded this otherwise. Fast forward 6 weeks after the check is cashed and spent...we get a letter from them saying WHOOPSIE, we made a mistake, give us our money back. How do we approach this? We absolutely cannot afford to pay it back, and it's not like we can "un-fix" our basement to recover it. Do we just threaten to cancel all of our policies with them (we use this company for EVERYTHING)? The sad part of this is it's a major company that serves veterans and their families, and has always been great for us...but this is low.

Update:

Edit: Again, the flood was due to the sump pump failure, which by extension means the flooding came up from under the house (ultimately through the overflowed sump pit). I understand that flood coverage typically isn't part of a homeowner policy...hence our checking and re-checking when they claimed it was covered. We did not expect coverage initially. It is a finished basement. Without the money, we'd have left the basement in its pseudo-unfinished state. I understand that they made a mistake, but when we made a reasonable effort to ensure it WASN'T a mistake, I fail to see any further obligation on our part. It would leave us in an even worse financial position than we were in before we received the money, because again, we would have just left stuff as-is for the foreseeable future. If we could work it out with them so that we pay it back as part of our policy over the next 5 years, I could maybe live with that...but I will demand something in return for the inconvenienc

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  • car253
    Lv 7
    6 years ago
    Best Answer

    Flood is never covered. However, it is the insurance companys mistake. Not sure is the claim was due to the pump failure or the rain came in through the roof and caused damage or the rain fell to the ground and then rose back up from the ground. These are all different types of claims.

    Water falling from the sky (rain) and hitting the ground and then raising up from the ground is flood. Flood insurance is not covered un the homeowners insurance. If the rain came in from a bad roof and caused damage, that is a covered claim to the damage the water caused. So, bottom line is it depends what happened. Please post more details.

    Your ONLY resource is to file a complaint with the Department of Insurance in your state. And, call and tell the claims department that you are filing the complaint. Please post more info and your state for more help. A link is below. Look under the headling US Insurance Departments. You might have to scroll down to find your state.

    ++New++ Sorry, I missed the sump pump info. That is not what we call flood. However, for that to be covered you have to have an endorsement on your homeowners insurance called "back up of sewer" or "sump pump failure". Check to see if you have anything like that on your homeowners insurance policy. Check your "endorsements" for that type of coverage.

    And, still contact the Department of Insurance in your state for help. It is the ONLY free government help.

  • Anonymous
    3 years ago

    I would recommend one to try this web site where onel can compare rates from the best companies: http://QUOTES-FOR-INSURANCE.NET/index.html?src=2YA...

    RE :Home insurance company wants their money back?

    We had some pretty nasty rain a few weeks ago in our area, to the extent that even FEMA had to get involved in the region. Our basement flooded due to a failed sump pump. We didn't think it would be covered under our policy, but to be safe we checked with our insurance company, and surprisingly they stated it was covered. We asked if they were positive...they insisted it was. They mailed us a check, and we used the money to fix our basement. There is no way we currently could have afforded this otherwise. Fast forward 6 weeks after the check is cashed and spent...we get a letter from them saying WHOOPSIE, we made a mistake, give us our money back. How do we approach this? We absolutely cannot afford to pay it back, and it's not like we can "un-fix" our basement to recover it. Do we just threaten to cancel all of our policies with them (we use this company for EVERYTHING)? The sad part of this is it's a major company that serves veterans and their families, and has always been great for us...but this is low.

    Update: Edit: Again, the flood was due to the sump pump failure, which by extension means the flooding came up from under the house (ultimately through the overflowed sump pit). I understand that flood coverage typically isn't part of a homeowner policy...hence our checking and re-checking when they claimed it was covered. We did not expect coverage initially. It is a finished basement. Without the money, we'd have left the basement in its pseudo-unfinished state. I understand that they made a mistake, but when we made a reasonable effort to ensure it WASN'T a mistake, I fail to see any further obligation on our part. It would leave us in an even worse financial position than we were in before we received the money, because again, we would have just left stuff as-is for the foreseeable future. If we could work it out with them so that we pay it back as part of our policy over the next 5 years, I could maybe live with that...but I will demand something in return for the inconvenienc

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  • Anonymous
    5 years ago

    Try to work out with the insurance company or contact Department of Insurance in your state for help.

    RE:

    Home insurance company wants their money back?

    We had some pretty nasty rain a few weeks ago in our area, to the extent that even FEMA had to get involved in the region. Our basement flooded due to a failed sump pump. We didn't think it would be c...

  • 6 years ago

    The "inconvenience" = you got the basement fixed when you wouldn't have otherwise. The "inconvenience" of having to pay back a check you didn't you would have to is GREATLY over powered by the fact your basement is stable.

    - your "inconvenience" is not going to fly.

    You are correct. You should be creating a payment plan with insurance company. 5 years of a payment = sure if it's a $50000 loan. If it's $10000 = 5 years, waaaaaaaaaaaaaaaaay too long.

    The thing is ultimately you are going to lose (aka they put a lien on your house or whatever and you will end up filing BK or dealing with the loan for the rest of your life). Unless you can prove that you should have been paid the money, which even you agree you should not have.

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  • 6 years ago

    there are several options here..without knowing an actual number I'm assuming that we are talking about a large amount of money. you could always threaten to switch insurance companies and not pay the money back and just hope they don't take legal action. Fortunately for you they sent you a check endorsed to you and you did nothing wrong by cashing it. You could always do the right thing and offer to make payments or offer half of the money back since they "wrongfully" gave it to you. what would you have done if they hadn't sent you a check, would you have been able to fix your house by another way of funds? sounds like one way or another you would have had to pay, so definitely try to work something out with the insurance company

  • 6 years ago

    You had called and it was verified. Their adjuster cut the check. It's not your problem. However I'd do a consult with a property damage lawyer (the first 1/2 hour will be free) about it.

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