Connecticut Gov. Dannel P. Malloy on Tuesday announced that The Hartford and Liberty Mutual Insurance had agreed to provide additional assistance to customers facing crumbling foundations due to defective concrete.
The companies joined Travelers Companies Inc. in committing funds to supplement benefits already available through the state’s new captive insurance program, known as the Connecticut Foundations Solutions Indemnity Co.
Under the agreements, The Hartford will provide $3.5 million to the program, and Liberty will contribute $7 million, Malloy and state Attorney General George Jepsen said in a press release. Travelers was the first firm to make a similar commitment of $5 million in December.
The companies will each pay up to $25,000 to current customers and $10,000 to past customers dealing with potential collapse due to the presence of a naturally occurring iron sulfide originating from a quarry in Willington. The mineral—pyrrhotite—causes the gradual deterioration of concrete when exposed to water and oxygen.
The supplemental funds would be available to homeowners enrolled in the CFSIC, which is expected to cap benefits at $175,000 per home. The cost of replacing existing foundations is estimated to run between $150,000 and $250,000, and the additional benefits would help homeowners make up the difference for repairs.
In total, some 35,000 Connecticut households are thought to be affected by what Malloy called a “widespread and complex” problem.
“These commitments from The Hartford and Liberty Mutual represent significant progress for affected homeowners, and I applaud both companies for stepping up,” he said in a statement.
Insurance companies have been increasingly hit with lawsuits in recent years after they refused to pay claims, saying that failure in the foundations did not meet the definition of a structural collapse. Connecticut Law Tribune reported last month that only one case out of the 15 cases filed against Allstate Insurance Co. has avoided dismissal, though several other suits, including at least one against Liberty Mutual, remained pending.
Jim MacPhee, president of Liberty Mutual, said Tuesday that the company continued to “empathize” with its customers who have been impacted by deteriorating foundations as a result of defective concrete.
“This has been a particularly complex issue and we applaud the state for establishing a fund to assist Connecticut homeowners in this unfortunate situation when the policy does not provide coverage,” he said. “We believe it’s the right thing for us to provide additional assistance to our customers who would have no other avenue for relief if their repair costs exceed their CFSIC benefit.”
Officials said that they hoped the agreements would spur other insurance companies to establish their own voluntary insurance assistance programs.
“These funds will help many homeowners to bridge the gap between their CFSIC benefit and the cost of replacing their home’s foundation,” Jepsen said in a statement. “This is an important commitment made by these two companies today, and I’m hopeful that additional insurers will join them to help address this potentially catastrophic situation.”
Customers of The Hartford must be enrolled in the CFSIC in order to receive supplemental benefits from the companies. Under the agreements, the Connecticut Insurance Department will monitor the companies’ participation and administration of the programs.