Home policies don’t cover landslides for most holders
One month after a dramatic landslide sent the hill looming over his backyard tumbling down on his Millvale home, 70year-old Rich Mitesser is still living with his daughter. He’s waiting for the borough to allow him back on his property to rebuild.
“I have lived here my whole life and I’ve never seen so much dirt come off that hill,” Mr. Mitesser said last week while he was sitting in a car outside the property and keeping a watchful eye for potential thieves.
The damage will cost thousands to repair, but he is not counting on help from an insurance company. Mr. Mitesser
recently had inherited the three-bedroom house from his mother. She dropped the home insurance policy in 1993 after his father died.
As tragic as his situation may seem, even if he had a homeowners insurance policy, it would probably have been useless to file a claim.
Mount Washington resident Beth Ann Butler was shocked to learn that her insurance company would not cover damage related to the February landslides that leveled her home on Greenleaf Street, leaving her and her husband homeless.
“I was disheartened to say the least,” Ms. Butler, 58, said. “I thought at least they would pay for the contents if nothing else. They referred to the exclusion in their policy that does not cover land movement.”
The Butlers had paid off their 30-year mortgage last year. It would have been a total loss for them if not for the generosity of her co-workers at UPMC Mercy who have raised more than $61,000 to help the Butlers either rebuild or purchase another home.
More than a dozen homeowners who were either evacuated or had their homes destroyed due to a rash of landslides this year throughout the city of Pittsburgh and nearby suburbs have discovered that their insurance policies will not pay for damage from natural geological events such as earthquakes, sinkholes and landslides.
Such disasters are considered a form of land movement, which is generally excluded from a standard policy. Even homeowners who buy flood policies may find they still are not covered for damage caused by a landslide.
The heavy rain and an intense freeze-thaw cycle this year have led to multiple landslides, including one in East Pittsburgh that led to the collapse of a 400-foot-long section of Route 30.
Several people from the Pittsburgh area who believed their “all perils” insurance policies should cover the damage contacted the Pennsylvania Insurance Department to complain about the issue.
But there was nothing the state could do.
“We’re aware of the recent landslides in the Pittsburgh area, and we’re examining the issue,” said Elizabeth Rementer, spokeswoman for the state Insurance Department.
Robert Hunter, director of insurance at the Washington, D.C.-based Consumer Federation of America, said standard homeowners policies have evolved.
Until 50 or 60 years ago, homeowners had to purchase separate policies for each particular peril, such as fire, theft, lightning and explosions.
When standard policies were created to cover all perils, the insurers did not include earthquakes, floods and landslides. Mr. Hunter said no model existed for those events, and insurers did not know how to price them.
“They didn’t know why floods happen,” he said. “But now we have flood maps and more information on how to price it. The arguments they had for not putting flood coverage in standard homeowners policies are less valid now.
“There is still no good data on landslides. We know some of what causes them. But we have no maps to identify areas that are high risk.”
Mr. Hunter said that for years the Consumer Federation of America has testified before Congress for changes in standard homeowners policies to include flood and earthquake coverage. But it will require more information to allow insurance companies to price the risk.
“We would like for policies to move in that direction. But we worry about low-income people getting a huge increase in their premiums,” Mr. Hunter said.
“Premiums could jump from $500 to $5,000 if someone lives in a flood plain. Some people can’t afford that and if they can’t afford the insurance, they would lose their mortgage.”
The problem with standard insurance policies, said Etti Baranoff, an associate professor of finance and insurance at Virginia Commonwealth University, is that customers are not demanding expanded coverage.
“Floods are excluded in standard policies, and it appears to me insurance companies are using landslides as a flood event,” she said.
Consumers could try to change that, she said.
“I think people affected by landslides should fight for coverage for the loss of their homes,” she said. “They should tell the insurance companies they don’t see where the destruction of their home is excluded in their policy.”
Ms. Rementer, the state Insurance Department spokeswoman, said landslide damage caused by mining practices is covered by the Coal and Clay Mine Subsidence Insurance Fund, while mud flow damage associated with flooding is covered by flood insurance, including the National Flood Insurance Program. According to the Federal Emergency Management Agency, 5 million federal flood policies were in force in 2016.
Ms. Rementer noted that some consumers may be able to purchase policies that specifically cover landslides through the surplus lines market.
Surplus lines insurance could be thought of as coverage for strange risks with odd provisions.
This type of insurance can be purchased from insurers who are not licensed in the insured’s state, and agents who sell it must have a special license.
This year’s landslides across the city of Pittsburgh left about $12 million in damage to homes, roads and other infrastructure, according to an estimate by the mayor’s office. The collapse of Route 30 in East Pittsburgh was paid for by the Pennsylvania Department of Transportation.
The city’s Department of Mobility and Infrastructure alone has seen $2.4 million in recent landslide-related expenses, said Karina Ricks, director of that department.
“This was an unusual year. This was not common,” Ms. Ricks said.
Even if it wasn’t a normal year, she believes it has been a reminder that homeowners and contractors need to be aware of the potential issues.
“We have steep slopes and we need to treat them very carefully,” Ms. Ricks said.
“We need to be very conscious about where we allow development. People love houses at the top of hills to capture our beautiful views. But what happens is they are perched on top of a hill, but they want a backyard and they add soil and various materials and that adds weight.
“I worry that the outside world seeing all these stories about landslides in Pittsburgh is creating the image that Pittsburgh is vulnerable to landslides,” she said.
“But nothing is wrong with development in Pittsburgh. Like New Orleans, these uncommon events don’t happen every day. We just learn from it.”