My furnace gave out, the insurance said they wont cover due to old electrical panel. I just bought the home, did they Defraud my FHA loan?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Feb 25, 2018

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Insurance Question from Cimarron Hills, CO

Asked on 02/25/2018

My furnace gave out, the insurance said they wont cover due to old electrical panel. I just bought the home, did they Defraud my FHA loan? 1st time home owner, havnt been living here a year, my furnace gave out, they stated they would credit me $1k, now they are not because of an old electrical panel (Main).

Answer given on February 26, 2018

A furnace that “goes out” is not usually covered by a homeowner insurance policy. It is possible that you have a home warranty insurance policy.  That is not a “standard” insurance policy, so you need to review the actual policy to see if this sort of thing is covered by that policy.

If the furnace failed due to an electrical problem, such as a surge, your homeowner insurance policy may cover it. However there is a deductible that will apply.  Contact your homeowner insurance agent or company to see if they will pay for the damaged furnace. 

In either event, there is no fraud to the loan you have.  The home warranty policy is an optional policy, so not required by FHA.  The standard homeowner policy is specific in what they do or do not cover, so again no fraud is involved in this situation.


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