What do you need to consider for your insurance needs when you purchase or sell in today’s market?
Selling can be a big challenge, and sometimes it involves a lot stress due to reduced values or personal tragedies. When canceling your policy due to the sale, don’t try to save a little money by making the cancellation effective on your closing date, but wait until you have moved out or have insurance at your new home. You want to have coverage for any short periods while you are a tenant of the new owners or when your personal property is in transit from your old home to your new location.
If you lose your home to foreclosure or a short sale, don’t forget to cancel your policy like above after you move out. Also ask for a refund for the remaining policy term. There is a good chance you will get a refund, but it all depends on your mortgage company and insurance carrier’s policy terms.
While purchasing a home in today’s market, there is the great potential to get one priced below what it was worth just a few years ago or below its current tax value. Be very careful about the limits you insure your home for. It may appear to make good economic sense, but in reality your purchase price does not reflect the replacement cost for damages or total replacement of your home and personal property. Always make sure to have the correct limits in place to cover you in the event of a total loss.
There can be severe consequences for not having proper replacement limits of coverage in place. Even a partial claim, like damage to a roof, can result in a dramatic reduction in the claim amount paid by the insurance company if a property is not fully insured. At the time of loss, if the limit of liability on the policy is less than 80% of the full replacement cost of the dwelling, the insurance company will only pay a proportionate share of the full replacement cost.
Insurance carriers use sophisticated replacement cost calculators that work in the background to insure that your property has the proper amount of coverage. The calculators take into account several variables that are based on statistical history of loss, square footage, construction costs and zip code. Other variables, such as swimming pools, past claims history, and the age of the roof are determined on a case by case basis and may impact the premium.
If you think the replacement value is too high make sure you bring that to your agent’s attention so he or she can review with you the different factors that went into the calculation. Sometimes your agent can consult with an underwriter at the insurance carrier to come up with a more appropriate replacement cost amount.
One of the other factors when purchasing distressed or foreclosed properties is finding a good source of information concerning the history of a home. In many cases a Sellers Disclosure Statement is not available. In these cases make sure you ask the insurance agent you are working with to provide you with feed back on what is contained on the CLUE report.
C.L.U.E. stands for Comprehensive Loss Underwriting Exchange, which is a database featuring loss information submitted by 9 out of every 10 insurance companies. A C.L.U.E. report provides a history of about 30 different kinds of losses from wind damage to dog bites that have been filed against insurance policies covering a given property. The report provides information including the dates and types of losses and the amounts paid for each claim. This information is confidential in nature and can only be shared with the client, not a third party such as a real estate agent or loan officer.
The above examples are just a few of the reasons why you should select an Independent Agent like Judge Fite Insurance Agency instead of an agency that only represents one insurance carrier. We have over 30 appointments with insurance carriers and a service level to provide you more options, competitive quotes and answers to your questions.
For more information about insurance for your home, investments, vehicles, or business, contact Judge Fite Insurance Agency today at email@example.com or 214-446-2571.