All real estate buyers will be required by their lender (and good sense) to obtain hazard insurance. In most cases, the insurance is an afterthought, but maybe it should not be. The Multi-Board 4.0 Real Estate Contract contains a provision that allows a buyer to check with an insurance agent to determine if the property being purchased can qualify for form HO-3 hazard insurance at "preferred permium rates" and provides an out from the contract if that detemination is made and timely notice provided to the seller.
When underwriting a homeowner's policy, insurance companies usually review claims information and can deny coverage to a potential buyer based upon prior claims at the property address. In such a situation, a buyer will be forced to purchase "non-standard" coverage or coverage through the government, usually at extremely high premium rates.
In any event, in order to make a determination about policy availability at preferred rates, Buyers need to get involved with an insurance agent much earlier in the buying process. Generally, the insurance agent will order up a "C.L.U.E. report". C.L.U.E. stands for "Comprehensive Loss Underwriting Exchange" which is basically a database that tracks prior claims against a property. The company that runes C.LU.E. currently indicates that the report has information about the most recent seven years of claims activity.
This information can be interesting potential buyers and may be a valuable resource when purchasing a home. A Seller can now obtain a version of a C.L.U.E report stripped of personal information (such as social security numbers) for their buyers for about $20. The information contained there can be valuable to prevent the purchase of a lemon or to provide piece of mind to a buyer that there is not a history of problems at a particular property. In any event, insurance inquiries must be made earlier in the process.
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