Is Your Dream House Insurable?

By
Real Estate Agent with Evers & Company Real Estate, Inc. AB95346

There can be an important stumbling block to getting to settlement - getting homeowner's insurance.

Insurance companies participate in a a huge database that includes not just claims a homeowner may make on a property, but also inquiries he may make.  C.L.U.E. (Comprehensive Loss Underwriting Exchange) may know more about your house than you do.

For example, while my home is now in reasonably good shape (considering it's really, really old), a check into C.L.U.E. would show that I had a burst pipe a couple of years ago.  To find it, State Farm's recommended contractors had to take two old upstairs bathrooms down to the studs.  By the time they finished, I had two gorgeous bathrooms, at a cost to state farm of somewhere around $35,000.  Then during the Snowmageddon of 2010, the roof on my garage collapsed under the weight of the white stuff, taking the garage door with it, and once again, State Farm came to the rescue.  I now have a garage with a strong roof and nice new door, but it's another entry on the C.L.U.E. database.

While a buyers would view these as improvements that would make the house more attractive, their insurance agents might reach a different conclusion.  They might instead think of the house as prone to claims, and perhaps uninsurable.

While there is a home inspection contingency included in our local boiler-plate contract language, there is no contingency allowing a buyer to get out of a contract in the event he or she cannot get insurance, or at least insurance at a less than exorbitant rate. 

My recommendation? 

Once you find the perfect house, call your insurance agent right away.  If he can check the C.L.U.E. before the home inspection, it could turn up issues that might not be apparent, even to the most eagle-eyed house nerd.  So if the sellers are "forgetting" to disclose last year's flood, and they did a decent clean up job, you'll know it happened and your inspector can pay to attention to water issues.  The sellers might brag about how safe the neighborhood is, but if you find a string of break-ins, you'll know they are fibbing.

And you need to check right away, maybe before you even make an offer, but certainly during the home inspection period.  After all, once the inspection contingency expires, it becomes very difficult to walk away from a ratified contract.

So add your insurance agent to the list of people who have to love your house before you can get to the settlement table.

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Home Buying
Groups:
Realtors®
Tags:
clue reports
homeowners insurance

Anonymous
Post a Comment
Spam prevention
Spam prevention
Show All Comments
Ambassador
438,947
Deb "Alayne" Brooks
Alayne Brooks, Re/Max Elite Group, Wichita Falls Texas - Wichita Falls, TX
940-500-4010 Wichita Falls Real Estate

Snowmageddon of 2010

I can't stop laughing. Not at your post but at that statement! nod.

Jun 24, 2011 01:10 PM #1
Rainmaker
378,325
Pat Champion
Coldwell Banker Camelot Realty - Mount Dora, FL

Excellent advice to the home buyer get the insurance right away so you will know of any problems that may arise.

Jun 24, 2011 01:14 PM #2
Ambassador
2,433,075
Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Deb, I'm guessing you don't get as much snow!

And Pat, there have been so many times that sellers were caught in bold face big ones!  One more reason I recommend that they disclose.

Jun 24, 2011 01:18 PM #3
Rainmaker
583,288
Susan Neal
RE/MAX Gold, Fair Oaks - Fair Oaks, CA
Fair Oaks CA & Sacramento Area Real Estate Broker

Hi Pat - Good advice!  What is scariest about finding out that the sellers "forgot" to disclose something that they clearly would remember, is that it leads me to believe that they are lying or covering up other things that may be important but for which they have not filed a claim.  CLUE kind of gives you an idea of whether you are dealing with an honest seller, so it is worth doing.

Jun 24, 2011 01:29 PM #4
Ambassador
1,763,952
Barbara-Jo Roberts Berberi & Corinna Birgit Cromartie
Charles Rutenberg Realty - Palm Harbor, FL
Palm Harbor & Dunedin FL Residential Real Estate

GREAT point! Nothing like finding out you can't get homeowner's insurance on that dream home!

Jun 24, 2011 06:56 PM #5
Ambassador
1,861,547
Jeff Dowler CRS
Solutions Real Estate - Carlsbad, CA
Carlsbad CA Homes for Sale (760) 840-1360

Pat

This is excellent advice. I had not had problems myself but I know of buyers whose deals fell apart precisely because they could not get insurance. And some areas (e.g., fire) are high risk here and the cost of the insurance from those who WILL insure is sky high. Checking insurability is a must do, and a required part of our due diligence in the contract. And of course lenders want to know, too.

Jeff

Jun 24, 2011 08:16 PM #6
Rainmaker
135,841
Jeanne M. Gavish
Jeanne Gavish, Keller Williams Realty Elite Partners - Spring Hill, FL
Keller Williams Realty Elite Partners - CIPS,GRI,S

Thanks Pat for some very eye opening perspective.  It's always interesting to peek into another state's issues in the industry. 

Jun 24, 2011 09:00 PM #7
Rainmaker
1,800,858
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
CRB, CRS, CIPS, GRI, SRES, TRC, e-PRO

Pat

Thanks for sharing your thoughts and tips regarding homeowners insurance.

Good luck and success.

Lou Ludwig

Jun 24, 2011 10:08 PM #8
Anonymous
Post a Comment
Spam prevention
Show All Comments
Ambassador
2,433,075

Patricia Kennedy

For Your Home in the Capital
Ask me a question
*
*
*
Spam prevention

Additional Information