California Homeowners Denied Home Insurance: ‘We’re Losing Everything’

California Homeowners Denied Home Insurance: ‘We’re Losing Everything’

A family with two children has been denied homeowners insurance on their $6 million home and now they fear what will happen as they lose more money trying to fix the house.

Frank and Neda Redmond are holding their breath hoping their home insurance, Selective and Ategrity, will cover leaks and damage to their $6 million home in Pacific Palisades, California.

“The house has faulty waterproofing that is causing water to seep into the house,” Frank said Newsweek. “They are claiming they are not responsible for the property damage even though they were informed of the leak but refused to cover the repairs.”

Frank, 55, built the house four years ago, but after insurance companies refused to cover its repairs, the Redmonds fear they could lose everything.

Redmonds
Frank and Nedah Redmond have two children, but they fear what will happen if their home insurance continues to deny coverage for their $6 million California home.

Redmonds

“We’re losing everything as a result with shipping costs, and they won’t even give us money to repair the damage,” said Nedah, 50. Newsweek. “It’s very sad. We are a couple with two young children who lose everything.”

In the summer of 2022, the insurers said they were “not liable” because they no longer insured the house. At the time the house was built, they were the insurers, causing the family considerable financial stress, the Redmonds said.

The Redmonds filed a lawsuit against the companies, but the trial is not scheduled until September 2025, which will be too late for the financial losses the family expects to endure.

The 5,300-square-foot, five-bedroom home was foreclosed on before a buyer backed out because of additional and worsening leaks, Nedah said. That caused mold and even more financial strain for the Redmonds, who say another neighbor who rents a house from the same builder also has the same leak problem.

“I think in some ways this is typical insurance company behavior,” Frank said. “They don’t want to pay claims. They deny claims, drag it out and make it very difficult.”

Frank, a small-time developer, built the house as his first development project from the ground up. He planned to sell the house, but as recent years have seen, the general contractor failed to provide adequate waterproofing.

“At first, it was like a game of hitting a mole that would inject resin into the walls and then immediately after a leak it would reappear somewhere else,” Nedah said. “This went on and on for several years until finally around the time we thought the leaks had stopped.”

That’s when they listed the house on the market, but the buyer backed out when the leaks started again.

“Frank has put almost all of his money into this project and all these insurance companies have to do is honor the project and pay the claims, but instead we would schedule mediation with them and at the last minute they would to cancel,” Nedah said, adding that they had already paid for some of the mediations.

Since then, insurance companies have offered $150,000, which Nedah said is a fraction of what she is owed minus carrying costs and lost opportunities.

“They’re playing a terrible insurance game,” Nedah said. “A beautiful $6 million house, empty, full of leaks that is being wasted.”

As parents of two children, the Redmonds fear for their financial future, unsure of what will happen next if insurance companies continue to deny coverage.

“I would never wish this on anyone. Insurance companies get paid thousands of dollars, but somehow, just because they can, they deny it,” Nedah said. “Just refusing to do the right thing, it’s just embarrassing. I’ve lost my hair in the last two years because of the stress of it.”

Newsweek reached out to Selective and Ategrity for comment via email.

Nationwide problem?

As the Redmonds search for answers, they aren’t the only ones experiencing strife as a number of home insurers ended coverage in California.

Marisa Simonetti, owner of Minnesota-based Simonetti Real Estate, said several home insurers have left the state, including major competitor Allstate.

“I would consider that a huge red flag for the state in general,” Simonetti said Newsweek. “It seems the insurance companies know something the rest of us don’t.”

The state has been dealing with ongoing wildfires, which naturally saw home insurance prices rise. But across the board, homeowners have seen rising costs due to rising home sales prices and more expensive building materials and labor.

Simonetti said it’s rare for insurance to be denied for leak and drainage issues, but it’s possible that previous claims or some other reason made homeowners look too risky to cover.

Because of this, Redmonds face a financial burden that all homeowners would likely want to avoid.

The exact reasons for denying home insurance coverage will vary, but according to Terry Fisher, chief marketing officer of the We Buy Any Home group, poor maintenance and high property values ​​can make insurers hesitant.

“The perceived risk associated with high-value properties, such as a $6 million home in California, may cause insurers to scrutinize such cases more closely,” Fisher said. Newsweek. “Transparency during the application process is essential and failure to disclose relevant information may result in denial.”

Experts say homeowners in Redmond’s shoes will either have to absorb the cost themselves, seek other coverage or sell the home entirely.

“Homeowners who can’t qualify for their policy will force the lien holder to force a policy on the property,” Simonetti said. “This is usually very costly.”