Editor’s Note: This is the second of a three-part guest post series. I asked David Jenkins, who last wrote here about vacant homes and homeowners’ insurance, to answer three common questions that homeowners have. Also, this is a link to a CLUE (loss) Report.
An inspection was done on the home, why does the insurance company need to see if any losses occurred at the home or come out and see it?
This is a two-part question that relates to safety and precaution. Any time there is a new purchase, an insurance company will run what is called a “loss report” to see if the buyers have had any previous claims, and to see if the home they are buying has had any losses.
If the buyers have had claims, it could affect the premium and eligibility of getting new insurance. Although less common, if the home that is being purchased had a claim in the last 5 years, it could affect the insurance as well. For many companies, this is not the case, but a buyer would want to know if there were any prior repaired losses on the home they are buying. If the buyer knows that there was a loss before the inspection occurs, he/she can instruct the inspector to make sure that the necessary repairs were done and there is no hidden damage. Since the buyer cannot order a loss report on a home they do not own, it’s important to have the insurance company involved early on in the process.
Although some insurance companies do not personally inspect the homes they insure, others do. Our agency personally inspects each home we insure. This is not to interfere with the buyer’s inspector, but to make sure that the home is safe and that there are no insurance risks. Again, if brought into the process early enough, the insurance agent can give advice as to what those risks may be before the purchase, such as any overhanging tree limbs or branches.
Part Three – What’s the relationship between the sales price and replacement cost of the home?