| Very important warning for home buyers, sellers & owners about Homeowners Insurance
Homeowners Insurance companies are changing the rules for Owners & Landlords.
Please see the links at the bottom of this article for more information and stories of local people who have been hurt by changes in the rules.
Previously, if you had one or even two water related claims on your policy, you were usually OK. Now the insurance companies have a database where most insurers record water based claims against the property and against the person. Now, one claim, even if it is denied, could result in non-renewal.
This means that we have to carefully weigh the cost of the claim, both in immediate dollars, and in long term rate increases. One claim could double your premium and 2 or 3 claims in 5 years could more than triple your monthly premium. And that does not take into consideration the value of your time while you shop companies and rates to find a new Insurance Co.
Before you file a claim (or even ask your agent about a claim) you have to make a decision. Is this claim something I could absorb financially or do I have to use my insurance. Be VERY careful what you tell your insurance agent. Agents do not necessarily have your best interests at heart. If they do not document your conversation, they are putting their jobs at risk. A very good agent (one who scores high in client care) told me that she has to write everything down but she can
make a decision not to enter it into your PERMANENT record in the computer.
Most agents will put it into the computer. Once in the computer, it follows you whenever you deal with this company. A simple question to your agent could easily affect your rates and your ability to stay with the company.
Home Buyers: Most contracts allow you 14 days to do your "due diligence" and determine if there is any reason you
should not buy the home. Now, obtaining Home Insurance MUST be part of this 14 days. If your lender figured $80 per month for insurance (insurance is required by the lender for the duration of the loan) and it is determined that the home you want to buy has had too many water related claims or you, personally, have had too many claims or a combination of both, you may have to pay up to $300/mo+ for insurance. That difference in insurance cost is the same as the payment on a $30K mortgage. It could disqualify from getting the loan and you could loose your good faith deposit if you discover this after 14 days. Get an insurance commitment in writing!
Home Sellers: You must disclose to the buyer, early in the process, if you have had ANY water leaks or water related claims. If you do not, the transaction could fall apart at the last minute. Worse yet, you could be sued after the closing.
Homeowners: If you might be selling your home, think carefully about the condition of your plumbing. If it were to leak, and you filed one or more claims, your Insurance could go up significantly for you, as well as for your future buyers. If their cost of buying/owning your home is higher than if they bought the neighbors, your
home's value will probably go DOWN. Remember, every $70 in monthly costs
(HOA dues, Mello-Roos, insurance) is the same as the interest on $10K. As costs go up, value goes down.
Multiple claims at a particular address of any type: Water damage, fire, etc. can affect you. And finally, if there are excessive losses in the neighborhood, this can give the prospective insurer another reason to rate the property as a higher risk [meaning a higher premium] or decline to cover it altogether. If you can't get the property insured, you're never going to be able to finance it. And if you are able to get it insured-but at a much higher annual premium level-you'd better know this and factor this added cost into your monthly house payment, or risk a rude and
expensive awakening in the near future.
Here are several articles you may want to read concerning Homeowners Insurance.
Insurance companies in California are using a national database to
blacklist not only homeowners who file damage claims - causing
them to lose vital coverage - but also their houses, making it
more difficult in most cases for them to sell their homes.
Home owners who've suffered homeowners insurance premium hikes as high as 35
percent could face yet another increase - this one for 20 percent more. A new
study says despite recent rate increases and underwriting actions to reduce the
industry's exposure to growing numbers of moisture- and catastrophe-related claims,
the industry has yet to raise premiums high enough to offset the industry's growing
cost of capital.
Also, home insurance shopping tips:
Continued here http://www.realtytimes.com/rtnews/rtcpages/20021016_hminsurance.htm
Non-Renewal and shopping for insurance at: http://www.realtytimes.com/rtnews/rtcpages/20020902_insurance.htm
What to Do If You Can't Get or it is hard to get Homeowners Insurance http://www.realtytimes.com/rtnews/rtcpages/20020812_hminsurance.htm
Prevent Water Problems From Becoming Insurance Claims http://www.realtytimes.com/rtnews/rtcpages/20020719_waterproblems.htm
Tips for Reducing Your Homeowners Insurance Costs http://www.realtytimes.com/rtnews/rtcpages/20020218_hminsurance.htm
What Does Your Homeowners' Insurance Policy Cover? http://www.realtytimes.com/rtnews/rtcpages/20000412_insurance.htm
More info on the CLUE national insurers database, how to get a copy and
how to dispute the wrong information. http://www.bendover.com/clueless.asp
Thank you for reading. If you want to make a difference... Write to the people below and tell them that the Insurance companies need more regulation.
CONTACT CONGRESS
Any House or Senate member. http://www.visi.com/juan/congress/
CONTACT SACRAMENTO
Contact your state lawmaker, any Assembly or Senate member http://leginfo.ca.gov/yourleg.html
CONTACT THE DEPT OF INSURANCE
www.insurance.ca.gov
Please feel welcome to use us as your Real Estate Resource.
Oh, by the way, if you know of, or talk to, a friend or relative who is
considering buying or selling Real Estate, please let us know so we can
offer them the same valuable service we give to you.
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