Insurer's HVAC demand cost $10,000

DEAR BARRY: Three months after I bought my home, I got a letter from my homeowners insurance company. They threatened to cancel my policy because my furnace, according to them, was "outdated." But they never even looked at it. The new heating and air-conditioning system cost me nearly $10,000 -- a huge expense -- just to keep my insurance. Shouldn't my home inspector or my Realtor have warned me about this before I purchased the property? --Tracy

DEAR TRACY: It may have been the insurance company, rather than the heating and cooling system, that needed replacement. Their demand for a new HVAC (heating, ventilation, and air-conditioning system), without a specific evaluation of your furnace, was unreasonable and over-reaching.

The insurance company apparently made a corporate decision to eliminate coverage on all old furnaces, regardless of specific conditions. Mandates of this kind reduce an insurance company's exposure to claims while encumbering their customers with costs that may or may not be necessary.

Unfortunately, demands of this kind cannot be anticipated by buyers, Realtors, or home inspectors.

Some home inspectors state in their reports that an old furnace "may have limited life." And some routinely report that a furnace "appears overdue for annual servicing." But most home inspectors simply disclose actual defects that are observed. If no defects are found, then no comments about age are stated in their reports.

Most Realtors are as familiar with heating and air-conditioning equipment as they are with nuclear reactors. Unless your agent had previous experience with old furnaces or with similar insurance mandates, there would have been no reason to warn you about your insurer's impending actions.

It is unfortunate that you gave in, without question, to the insurance company's demand. When they notified you about the furnace, a professional review of the system was in order. The system, after all, had just been approved by your home inspector. ...CONTINUED

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