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True or Urban Insurance Myth?

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S

Stellazz

Guest
What is the name of your state? AL

I've hear that insurance companies will drop homeowners at the drop of a hat, for minor claims, too many in a 5 year period, or becuase someone who used to own the house filed a claim...or they will require outrageous repairs like a new roof in order to keep the policy in force. Is this truly an epidemic as I've read on some sites...or are there just a few horrible cases out there? Are there any sites that rank HO companies by best customer service/least likely to drop? Thanks for any words of wisdom
 


Souix

Senior Member
Stellazz said:
What is the name of your state? AL

I've hear that insurance companies will drop homeowners at the drop of a hat, for minor claims, too many in a 5 year period, or becuase someone who used to own the house filed a claim...or they will require outrageous repairs like a new roof in order to keep the policy in force. Is this truly an epidemic as I've read on some sites...or are there just a few horrible cases out there? Are there any sites that rank HO companies by best customer service/least likely to drop? Thanks for any words of wisdom

***Yes insurance companies have become really anal when it comes to hazard insurance. Thats why we as Realtors now write into our purchase agreement that the sale is subject to obtaining an insurance binder and then make that the number 1 priority as far as contingencies. The reason is that if there has been a prior claim on the home, most will not insure the place. The insurance agents are now using the C.L.U.E system to research past claims on a property.***
 

HomeGuru

Senior Member
Souix said:
***Yes insurance companies have become really anal when it comes to hazard insurance. Thats why we as Realtors now write into our purchase agreement that the sale is subject to obtaining an insurance binder and then make that the number 1 priority as far as contingencies. The reason is that if there has been a prior claim on the home, most will not insure the place. The insurance agents are now using the C.L.U.E system to research past claims on a property.***
**A: are you setting a dollar amount in the contingency? I got a call from a Buyer client that could get insurance but at $10K per year premium. And that was the only company that would insure.
 

Souix

Senior Member
HomeGuru said:
**A: are you setting a dollar amount in the contingency? I got a call from a Buyer client that could get insurance but at $10K per year premium. And that was the only company that would insure.

***No not really because it would depend on the lender on the amount they require. So the subject to clause says "Subject to buyer obtaining a hazard insurance binder that is satisfactory to the lender". Oh but I do see what you mean, and its a very good idea to put a dollar limit on it. I will do that in the future. Thank you :) ***
 
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HomeGuru

Senior Member
Souix said:
***No not really because it would depend on the lender on the amount they require.

ask your broker if this is ok based upon a high insurance premium since the lender would not care how much the buyer would be paying.
"Subject to buyer obtaining a hazard insurance binder that is satisfactory to the lender and buyer"
 

Souix

Senior Member
HomeGuru said:
Souix said:
***No not really because it would depend on the lender on the amount they require.

ask your broker if this is ok based upon a high insurance premium since the lender would not care how much the buyer would be paying.
"Subject to buyer obtaining a hazard insurance binder that is satisfactory to the lender and buyer"

***See above, I just edited. Very good idea! I don't have to ask my broker, I know this is something I will do in the future. :) ***
 
S

Stellazz

Guest
From a buyer's perspective this seems like a great idea, since I've heard some horror stories of insurance pushing the monthly premium WAY over budget. Are there any companies that are better than other about tolerating claims, or is CLUE to blame across the board?

Thanks you two for all you do (ha!)

PS - Sioux, could I ask you to look at my post on the buying/selling RE post about an old disclosure used at closing? I'm afraid I'm not being objective, and I want to understand from your perspective what -if any - responsibility my agent had to suggest a roof inspection, request copies of roof repairs, insist on an up-to-date disclosure (the one used was 2 years old). If you have the time (ha again!) I'd really appreciate it!
 

Souix

Senior Member
Stellazz said:
From a buyer's perspective this seems like a great idea, since I've heard some horror stories of insurance pushing the monthly premium WAY over budget. Are there any companies that are better than other about tolerating claims, or is CLUE to blame across the board?

Thanks you two for all you do (ha!)

PS - Sioux, could I ask you to look at my post on the buying/selling RE post about an old disclosure used at closing? I'm afraid I'm not being objective, and I want to understand from your perspective what -if any - responsibility my agent had to suggest a roof inspection, request copies of roof repairs, insist on an up-to-date disclosure (the one used was 2 years old). If you have the time (ha again!) I'd really appreciate it!

***C.L.U.E. is an acronym for something and since I am not an insurance agent I can't tell you for sure what it is. :) . But I can tell you that CLUE is what the insurance companies go by to research past claims on a property. If you do a search, there is a CLUE website.

With regard to your other thread, I think I have read through it and I thought HG was helping you with that. All I know is if I had used an old disclosure on one of my sales my broker would blow a fuse and I would be opening myself and my seller up for a potential lawsuit.***
 
S

Stellazz

Guest
Yeah, I think my broker is on damage control mode right now...both sellers and buyers agents work for her, and this is potentially Very Ugly. That being said, I LOVE my agent - she's really been great in so many ways but there have been some really bad mistakes in our transaction. Thanks for giving us all your time!
 
S

Stellazz

Guest
Oh, and yes, HG has helped me a LOT but I thought as a broker you might have a somewhat different perspective than HG's "your agent is stupid" - though I think he is right, unfortunately. You both have been great!
 

Souix

Senior Member
Stellazz said:
Oh, and yes, HG has helped me a LOT but I thought as a broker you might have a somewhat different perspective than HG's "your agent is stupid" - though I think he is right, unfortunately. You both have been great!
***Yes I am very careful and detail oriented. I would never ever use an old disclosure in a real estate transaction. You may have some mediation, arbitration or a civil action in your future. Best of Luck!***
 
My 2 cents

On conforming loans, the HOI policy only has to cover the loan amount when multiplied at 120%. Sub-prime has to be 100% almost everywhere. There are a few exceptions to those rules when it comes to cost to construct numbers on the appraisal.
 
B

BennyDi

Guest
My 3 Cents

My state is NY.

SOUIX, C.L.U.E. stands for Comprehensive Loss Underwriting Exchange. It is an electronic database that is used by the insurance industry to evaluate risk. It contains information on home related claims or damage reports supplied by insurance companies. The database is run by a private company in Georgia, Choice Point, Inc.

SOUIX and STELLAZZ, yes, insurance companies will drop you for having too many claims, or for having one major claim, but I have never heard of them dropping anyone because of the prior owners claims. (please note that just because I haven't heard of it doesn't mean it has never happened)

STELLAZZ, also, if a new roof is an outrageous request to keep the policy in force, maybe you might want to think of the insurance company perspective at having to pay out thousands of dollars worth of claims for damages due to water leaks from roofs that are in need of repair.

If the house needs a new roof, it needs a new roof.

Maybe the examples you have heard of have occurred in an area where there is a huge risk for loss? Mudslide or earthquake area maybe?
 

tammy8

Senior Member
The company that I work for now has new guidelines however they have been changed several times in the past yr. With us, credit is a huge issue (makes sense most of the time but I can't say I totally agree with the use of insurance financial scores--the better your credit, the better you will upkeep the home plus you are statsically less likely to file claims). Also any type of claim. Claims are seen in 2 catagories--major claims-fire, theft, liablity and WATER (big mold factor now and most companies will not insure with prior water damage because most 95% of water damage is lack of maintance) and then the minor ones--lightning, wind, or anything else.

The main reasoning behind these changes for us, is that in our state for every dollar taken in as premium, approxiately $1.29 is paid out in claims on homeowners. A company can't take this lose without going broke. One reason that about 20 companies pulled out of our state this past yr.

As far as prior loses with prior owners, we used to look at them especially the water damages but recently changed that....but we do look at any water lose YOU had a previous address, again due to likeliness of lack of maintance.

And I promise just one more thing. About the roof-we don't require proof on a new roof on homes less than 30 yrs old--because if the roof has not been replaced within the past 5 yrs, then the insurance company is likely to have to replace it with one wind or ice storm.
 

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