SOUTH WINDSOR, CT — The captive insurance company set up to process claims for crumbling foundations in Connecticut has suspended its application approval process until more funding is available later this year.
The Connecticut Foundation Solutions Indemnity Company, Inc. announced Monday that it had received nearly 1,000 applications for foundation repair coverage since it began approving claims in early 2019. The claims are piling up so quickly that the insurer may cease accepting all new applications in late 2019 or early 2020 as the total liability approaches the maximum funded amount of $121.6 million.
Repairs are underway at more than 90 homes in the state, said Michael Maglaras, superintendent of the CFSIC, and another 61 are already approved for funding once the next round of state bonding is released.
There are an estimated 35,000 or more Connecticut homes with failing foundations due to the presence of the mineral pyrrhotite in concrete used during construction, according to the state Department of Housing. Homes with problem foundations are particularly concentrated in the northeastern portion of the state, in towns like Stafford, Tolland, Vernon and South Windsor.
Another $20 million installment from the State Bond Commission is expected in September or October, but Maglaras said that funding will also be distributed very quickly.
“We are in suspension now awaiting our next tranche of $20 million. When I get the $20 million I’ll be out of money by Christmas Day again,” he said.
The CFSIC took on a pile of new liability this summer after the legislature expanded coverage to larger condominium buildings. Within days of Gov. Ned Lamont signing the bill, the CFSIC took on more than $12 million in new liabilities from approved claims from condominiums, the company said.
State Sen. Saud Anwar, D-South Windsor, said he is hoping the legislature will again consider funding for foundations in a special session before the end of the year. Anwar is the former mayor of South Windsor, a town with a high number of failing foundations.
“The disaster is far bigger than the solution so far,” Anwar said. “We have slowly been able to move in the right direction to try to address this, but we are far from being able to achieve success.”
The CFSIC also receives funding from a $12 surcharge on home insurance policies. The insurance agency said Monday it has more than $80 million in active claims but has only received $40 million so far.
“The ones with the most significant problems are the ones who are being helped right now, but we are not able to help everyone because we are a little behind in the funding,” Anwar said. “There are people who are stuck in limbo and we need to have a mechanism to help them.”
Until the next funding allocation, the CFSIC will continue to receive and review applications, but will not be able to sign “participation agreements” to release funding.
“At the rate at which applications are being received and evaluated, particularly in light of the July 9 legislation expanding outreach to condominiums, CFSIC will at some point soon cease the new application process entirely,” the company said Monday. “CFSIC will cease taking both Type 1 and Type 2 new applications entirely when the value of incurred asserted claim liabilities reaches $121.6M. It rests today at $101M. This means that we are a little more than $20M away from the day we stop taking applications.”
The problem concrete was included in homes built between 1983 and 2015, and came from the now-defunct JJ Mottes Concrete Company in Stafford, the state said. The pyrrhotite was present in material the company processed from a Willington quarry that no longer supplies home construction.
Foundations with pyrrhotite must be fully replaced in order to be repaired, a costly, weeks-long process that usually involves raising a home off its old foundation and pouring a new one.
Full replacements take around eight weeks, and cost on average $200,000 once decks, patios, and landscaping are rebuilt around a home. The state funding pays only for the foundation replacement, said James Newcity, owner of Newcity Builders.
Newcity recently started his 12th foundation this year, and expects to do 18 by the end of 2019, he said.
“You’re building a brand new foundation from scratch, but you’re doing it with a house over your head,” Newcity said outside of a Stafford home that was raised off its foundation Tuesday morning. “It’s monumental. It’s so much work.”
He said the state funding has been a relief for the people who have been scheduled for a repair, but available funding will affect just a fraction of the homeowners with failing foundations.
“As much as you would expect people to be upset when you walk in the door, they’ve already emotionally dealt with it. Once we get them on the schedule there’s definitely a sigh of relief,” Newcity said. “But even in my lifetime I don’t think this is going to end. We’ll be fixing these long after I’m gone.”
Across the street from the Stafford home, Yvette Philibert also has a crumbling foundation but is ineligible for state funding because she and her husband are suing their homeowners insurance company. They have a court date scheduled for May 2020, she said.
“We bought the problem six years ago when nobody knew anything about any concrete in this neighborhood,” Philibert said. “Here we sit looking at the cracks getting bigger and bigger each day. It’s scary, it really is, because no one really knows what can happen.”