Thursday, September 27, 2012

Avoid Insurance Surprises When Buying or Selling a Home


Don’t let insurance surprises blow your real estate transaction! Here are some common deal-breakers:

1. You don’t pre-qualify for home insurance before escrow close.

Before escrow close, the title company will request proof-of-insurance from your insurance agent. If the amount of insurance does not meet the lender’s guidelines, you could lose the house of your dreams.

Let Allied Brokers review your policy well in advance of escrow close and the deadline for waiving the insurance contingency. And if your insurance agent is an employee of the insurance company that wrote the policy, he may not be able to do anything to solve the problem. Oops!

 As an independent insurance broker, we work with ten different carriers and will be able to get you the coverage you need- whatever your situation.

2. You don’t run an insurance claims history report on the property you are buying

If there are previous insurance claims against the property you want to buy, your insurance agent needs to know about these risks before escrow close. Some big companies, like State Farm, will not insure properties with any claims history. Your realtor should run a “clue report” to learn about previous claims.

Multiple claims guarantee difficulty getting insurance and higher premiums. Allied Brokers had a client in La Honda whose house was damaged twice by large trees falling on it. Since the house was in a forest and the surrounding trees were not chopped down, it’s likely the next big windstorm will cause more damage. Insurance companies won’t touch a property where future damage is so clearly predictable. Conversely, remedied claims are not much of a concern. If you were robbed but afterwards installed a burglar alarm, insurers won’t expect this claim to be made again.

3. If you, the buyer, have reported insurance claims at your prior residence

Two claims in a short period of time is a red flag to insurance companies and puts you in the top 5% of homeowners that will file a claim. If you have more claims within 5 years, you will be cancelled. We advise you to raise your deductible to $5,000 and spend the money you save on lower premiums to pay for repairs yourself. Insurance is for big risks you can’t afford to cover, not maintenance or the small stuff. If you are going to have a claim, have a big one.

4. If you are selling a home with the following conditions:
  • No electrical, plumbing, heating or roof upgrades in the last 20 years.   
  • Old wood roofs in wooded areas.
  • Fuses.
  • Galvanized plumbing.
  • No earthquake retrofitting if your home was built before 1960.
Most insurance companies decline coverage for these conditions. Some companies will give you time to make the proper repairs.

5. What about occupancy?

Will the home be owner-occupied, a vacation home or a rental? Will it be vacant or under construction? These all make a difference in what type of policy you should have and your agent needs to know this before placing the coverage. If not, you could be declined, or worse, your claim will not get paid.

Call Allied Brokers to avoid nasty surprises that can break a real estate deal. We provide free clue reports to realtors. Consult with us well in advance of escrow close to learn what the required coverage amounts are and then get pre-approved for them. We have the resources to solve any insurance problem.

Visit our website at www.alliedbrokers.com for information about all the types of insurance we offer. Or call 1-888-505-7988 for a free rate quote.

No comments:

Post a Comment