“What insurance concerns have we experienced lately?”
In answering this question REALTORS® mentioned some of the usual risk assessments insurance companies ask for:
- Some knob and tube wiring the insurer wanted replaced,
- A 20-plus year old furnace requiring a report of fitness,
- A licensed approval of a home’s aluminum wiring.
The most discussed topic turned out to be a property’s “Claims History”. You see, a prior insurance claim on a home may dramatically affect the cost of insurance for the buyer. So when buying, this is something you want know.
In questioning prior claims history REALTOR® exposed the issue on three recent offers to purchase. By doing so, buyers were armed with potentially costly information prior to deciding whether to proceed with the purchase.
So how can your buyer representative craft this necessary safeguard? Here are 3 possibilities:
1. Ask the Sellers prior to making an offer if they made an insurance claim against the property and whether they were told of insurance claims before their ownership.
You also need to know what the insurance claim was for. In one instance, the sellers were aware of more than one insurance claim because of damage caused by sewer backup. Yet since the problem did not crop up during their brief ownership, it didn’t occur to them that it should be disclosed.
2. Have the sellers represent in the agreement that there has or has not been prior insurance claims against the property during or prior to their ownership that sellers are aware of.
3. Include a condition in the offer on the Buyer arranging satisfactory insurance and determining through the insurer whether there has or has not been any prior insurance claims on the property.
Insurance companies have access to a central database that gives them information on claims history. With this additional precaution you obtain the information from a 3rd party insurer who also wants to know.
Disclosure of claims history further protects the seller from future legal problems.
Whether buying or selling, talk to us about how we can protect your interests in buying and selling. At Century 21, we strive to make you sale or purchase as hassle-free as possible.