Buying or Selling a House
What’s Insurance Got to Do with It?
There are many things that can delay buying or selling a home. No matter which end of the deal you’re on, there are important factors to take into consideration, and steps that you should be sure to take well in advance!
Location is Key
Insurance premiums can be large or small, and a huge factor in this is where the home is located. Companies use a rating scale from 1 to 10 to judge how well-protected the area is from fire damage.
The lower the number, the closer you are to a fire station or hydrant. As that number crawls higher, you will see it reflected in the home insurance cost. In extremely rural areas, it is important to ensure you are with an independent insurance agent who has a wide variety of companies available who write insurance policies for these higher fire danger homes.
Age of Home and Fixtures
How old is the home? If it’s over 20 years old, many insurance companies require updates. This includes things like:
- Plumbing: Update from galvanized plumbing to PVC or copper pipes.
- Electricity: Fuse boxes are dangerous, and should be replaced with circuit breakers.
- Heating System: Most furnaces over 25 years old need to be replaced or updated.
- Roof: If roof is older than 15 to 20 years old, you may need to have it repaired or replaced.
Wood Stoves or Other Heating Methods
Due to danger of fire, most companies are strict about the types of heating sources they will allow. And most also have requirements, such as factory installation and annual cleaning. They may also result in a higher insurance premium.
Is it time to replace the old heating method with a new one? Will the benefit to the new owner and increase in sticker price outweigh the cost of installation? Be sure you ask yourself – and a professional – these questions. To avoid problems with insurance later, make sure all the proper inspections have been done before closing on the property.
Prior Damage to Home
Don’t let the purchase or sale of your home be delayed by technicalities. Make sure your insurance agent runs a CLUE (insurance history) report on the home to double check claims history. You’ll want to ensure that all the repairs are made as soon as possible so there are no delays in binding insurance coverage on the home.
Prior Claims
Have you had more than one claim in the last 5 years? Buying a home could be delayed by insurance.
- Claims related to weather are given more slack.
- Claims related to fire, theft and water damage are closely inspected.
- Some insurance companies will non-renew your policy when you are looking to purchase a new home, due to your claims history.
- The best advice? Keep a clean nose and your claims history out of hot water.
Four-Legged Friends
Are you buying a home, but own a dog? Depending on what kind of dog it is, you may find sticking points with your insurance company. This is especially true if your dog is considered vicious (Pit Bills, Rottweilers, Doberman Pinscher), or has a history of biting. Make sure you ask your insurance agent if you have a dog.
Here are some examples of unacceptable dogs:
- Akita
- Alaskan Malamute
- American Staffordshire Terrier
- Bullmastiff
- Chow Chow
- Doberman Pinscher
- Great Dane
- Pit Bull
- Presa Canario
- Rottweiler
- Siberian Husky
- Staffordshire Bull Terrier
- Wolf Hybrid
- Or any mix of these breeds
Swimming Pools & Trampolines
Pools and trampolines are viewed as an “attractive nuisance” by the insurance company, meaning that they attract liability exposure to the home (such as your neighborhood’s children). If a child comes on to your property to play on a trampoline when you’re not home and they get hurt, you are still responsible.
Some insurance companies are more relaxed on pools or trampolines, though they usually come with stipulations, such as pools having locking fences, no diving board or a minimum depth if there is one, and no children swimming unsupervised.
Insurance Score
Virtually all companies now use an insured’s insurance score when pricing their home or auto insurance.
It is important to understand that an insurance score is in place to help predict future losses by an individual and a credit score is used to predict future delinquencies on credit accounts by an individual.
Examples of attributes used in an insurance score are:
- Payment history
- Collections
- Bankruptcies
- Outstanding debt
- Length of credit history
- New applications for credit
- Types of credit in use
Some insurance scores also use information gathered from other insurance companies such as premium payment history and length of time with their previous insurance company. Though a clients credit score could be high enough to close the loan, there insurance score could significantly increase their premium and possibly put them above their payment threshold and hold up the closing.
Insurance Agent
Your time is valuable and you must have all the documents ready well BEFORE the closing date. So, you need an agent that is responsive and fast. Working with an independent agent is usually the best choice – they have many companies to choose from, so can pick one that theyknow can get quotes and binders done quickly.
(877) 783 – 0335
© 2008, Mark S. Balcos. The reader assumes all responsibilities for his/her own actions in regards to any items discussed in this report. Adherence to all applicable laws and regulations, federal, state and local, governing the use of any product or service described in this report in the US or any other jurisdiction is the sole responsibility of the reader. The publisher and author assume no responsibility or liability whatsoever on the behalf of the reader of these materials. The reader is encouraged to consult directly with his/her insurance professional.
Balcos Insurance Community Home | Balcos Insurance Main Website
