Tuesday, April 10, 2012

Little-known potential insurance pitfall for home buyers

The home buying season is ramping up in Franklin TN and the rest of Middle Tennessee.  Are you thinking of shopping for a home? Better also think about the homeowners insurance for that house sooner, rather than later. Past homeowners claims – either for your own home, or even those for the house you’re interested in – can drastically increase the new rate you pay, if you can even find coverage.
I know that’s hard to believe, but it’s true. If you tell your insurance company you’re going to be buying a home in a few weeks, and need to know what it will cost to insure it, your insurance company is going to look up your own homeowners claim history, as well as that of the home you’re purchasing, and factor that into the premium you’re charged.
If they see no claims, you’re home-free (pun intended!). But the more claims they find, the higher your rate will likely become.
Of course, not all claims are weighted the same. Many insurance companies don’t count one weather related claim (hail, wind, lightning damage, for instance) every 3 years. But if there’s been a “water loss”, like a leaking upstairs toilet that ruined some flooring, walls and the downstairs ceiling, or an ice maker water line that burst, causing the wood floor in the kitchen to be replaced, now that’s a potential game-changer. Even one of those within the past 3 years for either you, or for the home you’re buying, could jeopardize your getting reasonably priced coverage for your new home. Two or more claims like that within the past 3 years will make your job finding even high-priced insurance substantially more difficult.
What to do? Ask the seller of any house you’re interested in to provide you with a full history of any homeowners insurance claims for the past 5 years. Also, get documentation that the repairs, if any, were made. Review this information early in the home-buying process with your insurance agent, who can help you determine whether your rate will be affected. You can also check with your insurance agent to review your own past claims history.
There are two organizations that maintain databases of insurance claims: 
Lexis Nexis -- “C.L.U.E. Report”, phone 866-491-0873                                     
ISO -- “A-plus Report”, phone 800-709-8842
Insurance companies use these databases extensively when determining what rates to charge. You can request claims information for your own home from these organizations, and there may be a charge (of course, if you’ve been with the same insurance company for a while, call your agent first, who should be able to help). You can’t order claims information for someone else’s home, though. But it’s in your interest to ask the seller to provide the C.L.U.E. or A-Plus Report, or at least some sort of verifiable documentation, for their own home.
Don’t let a long-forgotten claim or claims potentially derail your home and home insurance purchase at the last minute. Look into claims history early in the home buying process.

David Yates Insurance Agency
1881 General George Patton Dr., Suite 103
Franklin TN 37067  
Phone:  615-778-1816

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