I'm not an insurance expert, just a simple homeowner who has lived in a variety of areas and homes, and someone who helps buyers and sellers buy and sell. So check with an insurance expert if you have some specific questions about your situation and area. But here are some general thoughts to consider, based on my knowledge and experience, some of which are more specific to my area:
BUYERS
Check on the insurability of the home you are buying early on in the due diligence period to make sure you can get coverage. While this is likely not a problem for most homes, there are insurers who will no longer insure certain kinds of property, or if a home has had excessive claims, or the rate may be very high because of certain risks. In particular this may occur with homes:
- In high risk fire areas or areas where fires have recently occurred (e.g., Inland San Diego County)
- Directly on the water or on ocean bluffs (e.g., Carlsbad, Encinitas, Solana Beach, Del Mar, Oceanside, La Jolla)
- In areas of landslide risk and/or past activity (e.g., Mt. Soledad area of La Jolla)
Proof of insurance (paid for 1 year) will likely be required at the time of closing by your lender for a detached home. Even if you are a cash buyer, you should certainly obtain it too.
For condos, proof of the Master Insurance Policy through the HOA will be necessary, and more and more lenders are requiring other insurance (e.g., "studs in") on condos, from the word on the street. Be sure to ask your lender during the transaction so you will be able to close.
To the best of my knowledge earthquake insurance is NOT part of standard policies and must be purchased separately. Know that it can be expensive, and many folks opt to not buy it and take the risk. Hmmm. If the home you are buying is in a higher risk zone (based on the Natural Hazards Disclosure Report) give this some serious thought and investigation.
SELLERS
Check on your insurance when you remodel, especially if extensively (e.g., adding square footage), or add a pool or spa or other structures.
Periodically check on your insurance including comparison shopping on rates. Make sure those valuables (art, jewelry) and expensive toys you buy are covered, or get them on a rider.
Know that you may be required to maintain the same insurance coverage on your home for the duration of your sales contract - check to see what it says specifically
If you vacate your home (e.g., move to a new home, relocate) check on your insurance coverage. Homes may not be insured by your provider if the home is vacant, and a different policy may be needed
Again, it's smart to talk with the insurance experts to make sure you are not under-insured.
And do some comparison shopping.
********************************
If I can provide more information about Carlsbad real estate and surrounding areas, or the housing market in general, or otherwise assist you in your homes search, please contact me by phone or text at (760) 840-1360 or email me at JDowler@remax.net.
All content copyright © 2009 Jeff Dowler "The California Relocation Dude" Carlsbad Homes and Real Estate Tidbits
Same like over here with hurricane insurance....separate and HIGH
I'm glad we don't have many natural disasters up this way. Heck flood insurance is something people hate paying around here. I can't imagine earthquake or Hurricane.
Lots of good advice. I always ask for a clue report or a letter from the current owners insurance carrier.
Jeff,
that's a nice and great advise to people, sometimes they don't check it and they finish paying a lot more :P
Great post !
I've heard of earthquake insurance, but have no idea how it is priced. Any idea, Jeff?
Sally, I've never heard of hurricane insurance....all we get here is flood insurance, while wind damage is typically covered by the hazard policy. What's the difference?
Sally yep, you're right.And many folks don't bother.
David - well we have our issues no matter where we live it seems. And the insurance jsut keeps getting more expensive.
Joan - yep, CLUE reports are pretty important, and pretty common here.
Ray - so true. And in some cases they pay big bucks for not having it. But the insurance itself can be pretty expensive and sometimes people are just willing to take the risk, unelss they are required to have it.
Lisa - not sure exactly but recent estimates I saw were hundreds of dollars, possible as much as the overall home policy itself. But when you consider the consequences...
Jeff
Jeff - sage advice my friend. I am a licensed insurance agent and can tell you that Jeff is right. People get nasty surprises when they don't follow through on Jeff's recommendations. Especially confusing (like Jeff said) earthquake is not included. I've had a lot of people think the government will pay for earthquake damage. NOPE.
Other things to consider: sinkhole coverage is separate. many policies do not include damage to property (investment property) due to illegal activity. One case an insurance friend of mine had was a renter cooked methamphetamine in the home and blew it up. Owner called for replacement coverage...sorry, not covered. Read your policies thoroughly folks! Remember it's not what it covers it's what it DOESN'T cover!
Some areas of the country it is a big deal great advice.
This is so important.
One of our buyers couldn't get home insurance at anywhere a reasonable rate because the seller made an insurance claim for water intrusion two years ago, NOT DISCLOSED BY THE WAY.
We have to find the buyers another property.
Did the sellers and their agent really expect to get by with that??????
I advise our buyers to get a CLUE report early on and not wait until the last minute to get homeowners' insruance.
Nice post. Insurance is our number one expense but we don't always take the time to read the fine print or to make sure we are not paying for too much insurance or that we are underinsured etc. Happpy Holidays. You must have your palm trees decorated or something?
Most insurance companies issues policies that are for Owner occupied. If the home is vacant you must get a different type of insurance policy.
Most insurance companies issues policies that are for Owner occupied. If the home is vacant you must get a different type of insurance policy.
It has been my experience that everybody should carry flood insurance as well. Because floods can happen anywhere. You don't have to live in a flood plain to have a flood. Rain causes floods as well.
Nevin - great points. I suspect many folks are underinsured and don't realize it. And as you say, it's what's not covered that really matter.
Terry - so true
Lenn - yep, I know someone with a similar issue. And there are recent buyers who purchased in areas near the 2007 fires who had a terrible time finding someone who would insure them (only 1 company) and the rate was more than double what it would have been in another area.
Jeff
Know your policy limits:
Its really the amount of flood that occurs. Here (in South Carolina) many companies include minor flood damage coverage. In the event that a major catastrophic event occured, there would most probably not be any coverage.
Request a Clue Report from the seller:
I recently had a customer who purchased a Log home (which will certainly be the topic of a later blog post). The previous owner neglected to inform him of the past claims on the property and as a result he recieved a higher premium. Sometimes auto clue reports can show past owner's accidents because they travel with the VIN information.
Always remember:
Everything is included, unless it is specifically excluded. These are words that every insurance agent lives by.
Jeff well done! Congrats on a well deserved
... this is a topic that we address during the negotiating process. I include a insurance addendum right along w/the offer. Heard of too many companies changing policies for everything from water claim, to pets!
Jeff CLUE reports are also an important tool for the protection of the buyer
Jeff, great advice for both buyers and sellers - informaiton every agent should know especially in areas where there are issues like most of California :-)
Merry Christmas,
John
PS - I think I am going to reblog this and add a link for my local insurance guy.
real biz
Nice information, thanks.
Patricia
Jeff, drats! They already gave you a coveted gold star! And I wanted to include this on my Sunday Summary!
Great points Jeff! Thanks for sharing this valuable info. Many homebuyers don't give this much thought and others just want the lowest possible premium. I try to suggest to buyers that they check carefully when shopping for insurance to find out about loss of use policies, building code and ordinance upgrades etc. When buyers know why a particular policy may cost more than another, they're usually ok with it because of the added protection.
Hi Jeff -- You raise some excellent points, and these oftentimes go overlooked until something bad happens. The CLUE report, one huge database, that can track by property, by person, can result in a new policy being denied or very high rates as you say, I've been there and done that and it's not fun to scramble at the 11th hour.
Teresa - Excellent points. And so often missed. And yes, palm trees and other outdoor plants are decorated with lights. Today was a shorts day! Are you jeaous? LOL
Richard - true, and I suspect many folks are not aware of that.
Jeff
Great advice and I think it is wise to always be aware of where you stand with regards to insurance.
I bet there are quite a few more insurance issues in your neck of the woods Jeff. Nice just putting together this list of things to think about.
Richard,
Good summary. In older homes, often an insurer will not insure "knob and tube" wiring. That can be a $20,000 repair job, arising at the wrong time.
Brian
Elizabeth - so true. There are plenty of homes I have seen that are not in a designated flood zone but have had flooding issue. And of course the rains can cause mudslides, too.
Travis - thanks for your thoughts from the insurance perspective.
Lee and Pamela - good approach. And I suspect we will see more and more changes in te insurance industry, as we have already.
Karen - absolutely. I should have specifically mentioned that as part of the due dliligence buyers should be doing.
Jeff
Hi Jeff, For sure this is an important issue and more more attention needs to paid to it. For a while it was a real hot button and now, it seems to died down again. Insurance is critical in most cases and either the insurance companies or the real estate professional needs to be sure that homeowners get the nudge of just how important the issue is. It is long past due that the condo's get included in the mix. the Studs in policy is a reasonably good and should become universal. The homeowners caught on the wrong side of being under insured is so unnecessary with good counseling from the insurance specialists. That lenders are asking for it, in most ways is beneficial.
John - just wanted to respond to your comment here - thanks for the reblog. You are right, there can be some tough issues in CA for folks who are unaware. Have a great holiday.
Jeff
.., i agree... having an insurance is a must... nobody knows what the future holds