Undisclosed Student Housing Cautionary Insurance Tales to help you buy appropriate insurance coverage by DRickard Insurance, Your Favorite Insurance People

DRickard Insurance

607-843-8860

insurance@drickardinsurance.com

New York State

DRickard Insurance
"Your Favorite Insurance People"

DRickard Insurance

Your Favorite Insurance People

607-843-8860 insurance@drickardinsurance.com

Tales Of Woe*

*Unless you keep your agent and insurer informed. These are cautionary insurance tales of real or dramatizations of real life scenarios.

Undisclosed Student Housing

In this episode Rico has discovered that student tenants pay a lot more than blue collar tenants. He also has found out that many insurers do not write insurance and student housing. When he finds the insurance it is more expensive that standard land lord insurance. So he has a plan. As the story goes...

Rico, is a landlord with many properties. He is very experienced and knows the ways of insurance since he has been buying insurance for his income properties for 15 years. He has learned that depending on who is occupying his properties has an effect on his premiums. Since Rico knows that student housing may cost a few hundred dollars more per apartment, when his insurance professional asked him is there any student housing in the building he said, "No". The agent then finds Rico the very best policy he can. Rico loves the policy and the price. One of the stipulations to qualify for the insurance is that there can be no student housing. The application asks, "Is there any student housing on the premises?" Again, Rico states "No" on the application. However, at the time of the application, Rico has already knowingly rented the apartments to under graduate students. Rico, also advises the students to be scarce on the day the insurance inspector comes to look at the property. Everything is fine as far as Rico is concerned. His house passes the inspection with flying colors and he has a great value policy in his hands and he has saved a bunch of money.

Time goes by and the students throw a party. There is underage drinking and more that ultimately results in a death of a student. The family of the dead college student are understandably upset. A law suit is brought against Rico. Rico, has a million dollar liability coverage on his policy. So, he is all set, right?

Remember, Rico "forgot" to correctly inform the insurance agent, the insurance inspector and the insurance company, that the property had student occupancy. Since the insurance company would not have issued a policy had they known of the student housing exposure, and that the student occupancy existed before the policy was purchased, the insurer will not pay any claim or defend him from lawsuit. The insurer also cancels his policy due to the unacceptable risk. Will he now be in trouble for insurance fraud?

Rico could have avoided the insurance problems by being honest about the occupancy of the property. Yes, he would have paid more money. However, when the claim came, the correct insurance company would have been his insurer and they would not have denied his the claim due to student housing because it would have been disclosed on the application and the appropriate policy would have been issued.

The moral: Always be honest with the insurance company and your agent, don't give them a reason to deny a claim.

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