Ready to buy the house of your dreams? Beware of past insurance claims [South Florida Sun-Sentinel] – InsuranceNewsNet
You wouldn’t marry someone without asking them about their past. You also shouldn’t buy a house without investigating its past.
Checking for liens, unrepaired damage, mold, termites, and other potential issues is an important and required part of the “due diligence” your potential lender requires before approving a mortgage on your family’s home. dreams.
But there is more to consider. You should also investigate to see if any insurance claims were filed by the previous owners of the home, said
Buyers looking for homes in today’s heat
A history of claims against a home can increase premium costs for future coverage. Like a
“Florida insurers continue to tighten their underwriting standards for homeowners insurance coverage due to the current statewide property insurance crisis,” Friedlander said in an email. “This includes assessing the risk of a specific property that may have experienced significant claims activity in the past and refusing to provide coverage to a new owner of that property.”
The company had searched the property through a database of claims reports and discovered an insurance claim filed nine months earlier by the home’s previous owner, Heimovics said. The claim, combined with the age of the home, made it ineligible for coverage, her agents told her.
Heimovics declined to identify the company that decided not to insure his new home, saying he did not want to create any conflicts with the company.
The previous claim, for the repair of water damage caused by a leaky washing machine, cost the insurer
Heimovics, a lawyer who specializes in corporate finance and real estate transactions, said several insurance agents he spoke to were unable to find another regulated company willing to cover the home. Its replacement value exceeded
No more reliance on excess lines
So to satisfy his mortgage lender’s requirement for full replacement coverage to be eligible for financing, Heimovics exited the regulated insurance market and purchased a policy from an unregulated company known as excess line carrier name. Since excess line companies are not required to seek state approval for their rates, the policy cost him approximately
More homeowners are turning to the surplus market, Friedlander said. “We are seeing a significant increase in excess line coverage for existing homeowners and new buyers where no private market coverage is available and where citizens have rejected coverage due to various risk factors,” a- he declared.
Insurers also look at homeowners’ credit scores and their own claims history to assess the likelihood of future claims.
Every time someone signs a contract to buy an insurance policy, the insurer pulls what is called a CLUE (Comprehensive Loss Underwriting Exchange) report. It works much like a credit report: insurance claims filed by a claimant stay on the report for seven years, just like payment histories stay on your Experian, Equifax or
CLUE reports track claims history for individual policyholders and properties,
“Most home insurance companies provide information to the CLUE report, so your claims history follows you,” Manning wrote. “The claims history of your home also influences rates – even if the claims occurred before you owned the home.”
Heimovics’ experience is probably not common, but could be a sign that insurers are looking for other ways to tighten their eligibility criteria.
Owners of homes valued at less than
But Peltier acknowledged, “Other carriers may not write home due to age and a prior claim.”
have a clue
Stravecky recommends buyers protect themselves by having their agent purchase insurance immediately after signing an initial purchase agreement. If a CLUE report reveals a disqualifying history of claims by the previous owner, it’s best to find out about it earlier in the sale process. “Previously, buyers would wait until the last minute to initiate a policy,” he said. “I recommend doing it right away.”
No, buyers cannot access CLUE. Federal law restricts access to CLUE reports to a home’s owner, lender, and insurer. Insurers typically commission reports when verifying claims from potential policyholders, as in the case of Heimovics. Homebuyers can also ask the seller to purchase a CLUE report for approximately
Most contracts require buyers to obtain financing within 30 days or potentially lose their deposit. This is set out in what is called the contingency clause in purchase contract financing.
With a shortage of homes on the market, buyers are bidding without thinking about availability or the cost of insurance, Heimovics said. Home sellers and their real estate agents are not required to investigate past insurance claims or include anything regarding insurance claims history in a sales contract. “But it would have been helpful for me to know that,” he said.
Homeowners who might be considering selling their home should consider how filing an insurance claim might affect their ability to complete a sale, Heimovics said. If the damage can be repaired without filing a claim, that choice could avoid complications later, he added. “It goes both ways,” he said. “Everyone is at risk of something affecting them if an insurance claim is filed.”
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