American Family Insurance: What a Scam!

I am up on a soapbox right now, and I will warn you that I am furious. I am also on a mission to tell the world that American Family Insurance is a complete scam. They are thrilled to take your premiums and even more thrilled to reject your claims, with 42 pages of exclusions and loopholes. Their website states this:

"With American Family Insurance, we make your insurance experience easy and convenient and ensure there are no unwelcome surprises -- especially in your time of need."


Unfortunately, the entire sentence is a lie. Allow me to share a story with you.

Once upon a time, a young man and a young woman fell in love. They married young, while they were both still in college, and began to build a life together. The young man worked as a mechanic while studying to be a mechanical engineer; the young woman worked as a waitress as she earned her teaching degree. Eventually, they both graduated and found jobs in their fields. After working for a few years, in September 2009 they were finally able to buy their first home, a small two-bedroom they had been renting. The first thing they did to their new home was to completely re-do their bathroom. They installed ceramic flooring and put tongue and groove pine on the walls. They put in a new shower, toilet, sink and vanity.

In January, they found out they were expecting their first child, and that their baby was due almost exactly one year after they closed on their house. Things were going well, and they were very happy.

Then one day in late July, the young woman was doing laundry and noticed some water on the floor. She didn't think much of it, assuming it had to do with the laundry, but she mentioned it to her husband anyway. He did a bit of investigating and found that the water was actually coming from the bathroom, which shared a wall with the laundry room. And, upon additional investigating, he found that the shower was somehow leaking. Now, you will remember that the bathroom was new. But, things had changed. With a baby on the way, they decided that they would pull the shower out and install a tub/shower combo. The leak would be fixed and the baby-washing problem would be solved.

On Saturday, the young man got out his tools and set to work removing the shower. And this is what he found:

If you look at the upper left-hand corner, you will see the wall the shower was on. You will notice it is completely covered in mold and rot. In fact, you can see mold and rot pretty much everywhere in the photo. The subflooring is quite horrific.

With his engineering background, he knew that where there is mold, there is more mold. And so he continued to remove wood, tile, flooring, walls, until he realized that the mold and rot extended for over one half of the house. Let me repeat: over half of the house was completely covered in mold and rot. And his baby was due in 7 weeks.

And so he had his wife start packing. They packed up everything they owned and moved into his parents' house. With a baby due in 7 weeks.

Remember, the young man is an engineer with a background in mechanics. And so, he immediately found the cause of the leaking: a broken part in the shower head. He saved this part and took countless photographs. He was sickened that a defective part had destroyed his home. He called his American Family Insurance agent and was told that they do not cover mold. He knew this, as homeowners' policies stopped covering mold years ago, when claims started pouring in. He knew, however, that his policy DID cover damage caused by mechanical failure. And clearly this was caused by mechanical failure.

On Wednesday, yesterday, an insurance adjuster arrived to survey the situation. She told the young couple that they do not cover long-term seepage. They reminded the woman that the very first sign of trouble was a bit of water in the laundry room just over one week ago. She reiterated that they do not cover long-term seepage. The young man pointed out that most houses have linoleum flooring and sheet rock walls, both of which would have shown evidence of moisture much sooner than his ceramic and pine. She told him that his house was full of long-term seepage and they would not cover the damage.

The young man returned to his parents' house and called his agent. His agent said his hands were tied, as it was not his decision, but he gave the phone number for the adjuster's supervisor. The young man left a message with the supervisor, who called back a few hours later, listened to the story, including the part about the defective shower head, and told the young man his claim was denied because they do not cover long-term seepage. The young man, exasperated, asked, "Am I supposed to just tear down my walls every few weeks to make sure nothing's going on inside of them?" He reminded the supervisor that the very first sign of a problem was the water in the laundry room one week ago, and that they had no way of knowing that, for the past year, the defective shower head had been spewing water into his walls. He was again told that the claim was denied.

Folks, the young man is my little brother. Kevin has been at his house helping to completely gut it since early this morning. They filled one entire 20-yard dumpster and are working on filling a 30-yard dumpster now. They sawed a hole in the house big enough for a backhoe to fit in. A backhoe, people, has to go into the house. And my poor 33-weeks pregnant sister in law is a wreck. While she feels very lucky that they had somewhere to go, she is also heartbroken that she will be bringing her newborn to her in-laws' home rather than her own home. With less than one year of mortgage payments, they have virtually no equity in the house. They are scrambling to come up with money and are hoping that, with friends and family as their primary labor, they will be able to rebuild the entire house with only $30,000.

I may have mentioned something about this on Facebook. Kevin's cousin, in turn, commented that a close friend had just lost her home to a fire, and that America Family Insurance denied her claim, too, because the fire was caused by faulty wiring. She also commented that she would be canceling her own AmFam policy and would be very clear what her reasons were. And then my cousin said that her policy renewal had arrived in the mail that very day, and that she, too, would be switching insurers. And here is where my soapbox comes in: If you have American Family Insurance, please consider dropping them. They don't seem to cover anything anyway. I can't figure out why one would bother having homeowner's insurance if it doesn't even cover anything. If you do cancel with American Family, please consider telling them about my brother and my sister in law. And maybe about Kevin's cousin's friend.

This entire experience has been one unwelcome surprise after another. NOTHING about it has been easy. And I am making a huge effort to tell the world this story. Because not only do I want American Family Insurance to lose business over it, I also want all of you to look closely at your own homeowner's policy and your insurer's track record of payment to make sure that, should you lose your home to something like this, you will actually be covered. Nobody should have to go through this. Sam and Liz thought they were covered, but American Family Insurance had other plans.