Insurer of Home Values Goes Under

An Ohio court has ordered Home Value Insurance Co. into rehabilitation for inadequate capital and surplus.

The rehabilitation order said that HVIC failed to maintain the $5 million minimum capital and surplus that is required by Ohio statutes and is in a “hazardous” financial condition.

The Ohio insurance superintendent has been appointed receiver for HVIC.

The insurer, which originally launched in 2009 but pulled back and then reentered the market in September 2011, covers the loss in value if a homeowner sells a home for less than its appraised value at the time it was insured. The policy guarantees the present home value for up to 10 years and compensates policyholders in case of a market decline of up to 25 percent.

HVIC had sold 172 polices between September 2011 and June 2012 in Ohio, as well as in Oklahoma and Georgia. HVIC was also licensed to sell insurance in Arizona, Indiana, Louisiana, Oregon, and Texas but did not sell any policies in these states.

While HVIC is out of business, it does appear to have more cash than current claims obligations. Any claims should be directed to the Ohio Insurance Liquidator.

Policies are not being cancelled. Ohio officials said policyholders should continue to pay their premiums and those who do not pay will have their HVIC policy cancelled. Agents may not continue to sell HVIC policies. Any outstanding agent commissions are a liability of HVIC.

HVIC just entered Georgia in March of this year, followed by Indiana weeks later, and indicated then that it planned to proceed with its U.S. expansion.

Richard L. McCathron was executive vice president with Home Value Insurance Co. when it re-launched in Sept. 2011. “We are a monoline carrier focusing on what we know and our primary and only focus is this insurance product,” McCathron told Insurance Journal last year. “Insurance companies should focus on what they know and what they do well and this is what we know and want to take it to a national audience.”

HVIC is headquartered in Columbus, Ohio, and has offices in Austin, Texas, and San Francisco.