It’s time to arrange your home owner’s insurance.
If you are buying a condo or townhouse or any property where the hazard insurance on the structure is being paid by a home owner’s association, you’ll still need to obtain what is commonly called “condo or Renters” insurance — it covers certain interior real estate items, your personal property and liability protection.
You’ll want to arrange the home owner’s insurance before the end of the Property Insurance Objection Deadline date found in Section 2 of your purchase contract. Some insurance companies are charging premiums based on the claims history of the property in addition to your own claims history as an insured. If the insurance company you want to use is doing so, the cost to insure the house might be prohibitive if there has been too many insurance claims filed by the current and previous owners of the property you are buying. You can terminate the contract and get your earnest money back if the cost to insure it is too high — BUT ONLY IF YOU FIND OUT ABOUT THIS BEFORE THE END OF THE PROPERTY INSURANCE OBJECTION DEADLINE FOUND IN SECTION 2 OF YOUR CONTRACT.
If you have an insurance agent that you know and trust, please call that person to arrange for the insurance on the house you are buying.
If you are looking for an agent, it may help you to know that there are two basic types of insurance agents. Some insurance companies sell insurance through their own agents and the agent can only sell that company’s policies — these are known as captive agents. State Farm, Farmers and All-State are examples of this type of company. Other insurance companies sell insurance through independent agents who can represent more than one company. In theory, the independent agents can shop around to get you a better deal, but it seems like most of them only represent one or two insurance companies.
Be sure to ask lots of questions if you are shopping around and comparing rates. You will find that different agents give different advice on how much coverage and type of coverage to obtain. Make sure you are doing an “apples-to-apples” comparison between programs offered by different agents.
The insurance agent may ask you many questions about the house so that they can give you a quote on the cost of insurance. If you don’t know the answers to those questions, please reach out to us.
If you’d like the names of some agents used in the past, please give us a call or refer to our Contractors page.
Be sure to ask the Insurance agent to run a CLUE report on the property you are buying and to share the results with you. The CLUE system is a database that has been set up by the insurance industry. Insurance companies report claims to this database and your agent can check it to see the claims history for the house you are buying. This can be valuable information.
Once you have selected an Insurance agent and arranged for the insurance, call your loan officer and give him/her the agent’s name and number. The lender needs to get certain information from the insurance company prior to closing. The lender will find out the cost of the premium and make sure that it gets paid at time of closing so that the insurance is in effect as soon as you become the owner. You don’t have to write a separate check for the insurance – it’s all taken care of through the closing process.
If you are buying in a development where there are HOA’s, you need to consider getting coverage for Special Assessments. You can learn more about this topic here