Just $20 To Help Homes In Danger

Lawmakers voted down a bill that would have put a small surcharge on homeowner policies to help pay for crumbling foundations in northeast Connecticut. (John Woike | Hartford Courant)

For less than the price of a couple of movie tickets, Connecticut homeowners could have helped their fellow homeowners whose foundations are crumbling. But lawmakers were afraid to ask for the money.

The Judiciary Committee on Monday voted down, 24-16, a proposal to tack a minor charge onto homeowner insurance policies. The money could have gone toward repairing failing home foundations. The cost to policyholders? A mere $20 per policy.

Last year, the proposed surcharge was even less — just $12. That bill died in the Finance, Revenue and Bonding Committee.

No doubt the insurance lobby played a large part in the Judiciary Committee’s decision. But legislators were afraid that policyholders couldn’t afford it, says Sen. Paul Doyle, the bill’s sponsor and a Democratic co-chairman of Judiciary. If only lawmakers had such tender concerns when it comes to other taxes.

The surcharge proposal probably will keep coming back as more and more homeowners in the state’s northeast corner report worrying cracks in their basement walls and as legislators search for ways to avoid a real estate crisis.

Connecticut’s Nightmare

Nearly 700 homeowners have filed complaints with the state about problem foundations, but as many as 34,130 homes might be affected by pyrrhotite, according to Gov. Dannel P. Malloy. That mineral came from a quarry in northeastern Connecticut that no longer supplies concrete aggregate for foundations. Pyrrhotite expands, cracking concrete, when exposed to water and air.

The $20 surcharge would have been a relatively painless way to help homeowners replace foundations weakened by pyrrhotite’s damage. A new foundation can cost $150,000 to $250,000. The surcharge might have raised tens of millions of dollars.

Alas, its chances of passage weren’t helped by another part of that same bill. It required that insurance companies, going forward, cover any and all building collapses from hidden decay or defective construction — not just collapses that were caused by pyrrhotite. It also required insurers to cover any mitigation that homeowners might do to prevent collapses.

Insurers — hyperventilating over the claims they saw coming down the road — warned that premiums would double.

That overly broad mandate could have been changed, with a simple amendment, to cover only the perils of collapse caused by pyrrhotite.

But the bigger concern that Sen. Doyle said he heard from his colleagues on the Judiciary Committee was the $20 surcharge on all new and renewed policies. Surely lawmakers can put that small surcharge in perspective.

There has been a rise in foreclosures in the corner of the state hardest hit by the pyrrhotite peril. Banks, mortgage companies and town leaders are very worried about the Quiet Corner’s crumbling concrete crisis.

The state is setting up a $100 million fund for repairs, financed though bonding over five years. The first $20 million bond won’t be issued, however, until a captive insurance organization is established to administer the funds, and who knows how long that will take?

Meanwhile, a $20 insurance policy surcharge might have been a quicker way to help afflicted homeowners directly. It could have established "a sustainable funding mechanism that could have addressed the issue for years to come," said state Rep. Tom Delnicki, R-South Windsor.

It’s a pity that lawmakers were more concerned about a $20 burden on policyholders than the far greater cost to the hundreds, maybe thousands, of people whose most valuable possession is in danger of falling apart.

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