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Q & A - Why is there a Property Insurance deadline?

By
Real Estate Broker/Owner with House to Home, Inc. - Denver Real Estate - 720-231-6373 DRE# ER40011786

Q & A  - Why is there a Property Insurance deadline?

 

Over the last few years, property insurance deadline has been added to the Contract to Buy and Sell and some buyers questions why we have to have insurance in place within a couple weeks of going under contract.

 

Home Insurance

Colorado has had many tornadoes, floods and forest fires which have increased rates and or made areas difficult to attain insurance.    If you are buying in the foothills, you may have to make many calls to locate a company that will insure a detached family home due to forest fire danger. 

 

This date gives the buyer time to call insurance agencies to be sure the home you are purchasing is insurable.    Is the home in a flood zone?    Does the home have real shake shingles?     Has the home had many water claims?     Another factor to attain insurance on your home is the buyer's FICO score, and determines how much you are to pay.

 

It is wise to contact your insurance company early in the transaction to be sure your home is insurable, especially if you are using financing.    The lender will need the insurance information when the file goes to underwriting.   

 

The Insurance Property Deadline is a safety net to be sure a buyer can insure their potential home, and/or live with the rates that are quoted.

 

 

 

 

 

 

Posted by

Joan Cox
Broker/Owner, REALTOR®
House to Home, Inc.

Serving the Denver Metro area including all suburbs


Helping Buyers and Sellers achieve their real estate dreams, one house at a time!

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Comments (21)

Clint Mckie
Desert Sun Home, commercial Inspections - Carlsbad, NM
Desert Sun Home, Comm. Inspection 1-575-706-5586

Hi Joan,

Better safe than sorry they didn't get the quote fast enough.

Have a nice day in Denver.

Best, Clint McKie

Mar 16, 2014 12:30 AM
Roy Kelley
Retired - Gaithersburg, MD

Thanks for telling us about the insurance deadlines. Prospective purchasers should consider the insurance availability and cost before submitting a contract.

Mar 16, 2014 12:31 AM
Hella M. Rothwell, Broker/Realtor®
Carmel by the Sea, CA
Rothwell Realty Inc. CA#01968433 Carmel-by-the-Sea

I had a closing almost held up because the insurance company didn't have a PHOTO of the property and so would not issue the policy. Small thing, but...

Mar 16, 2014 01:11 AM
David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

You are SO right on this post! Many dont give it a second thought but for this we have a list of excellent insurers who are fast and have great rates and have saved many people money and time by using them

Mar 16, 2014 01:21 AM
Wayne Zuhl
Remax First Realty II - Cranford, NJ
The Last Name You'll Ever Need in Real Estate

Joan,

This is very helpful for the people looking to buy a home in Colorado.  Great explanation.

Mar 16, 2014 01:49 AM
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

I had no idea a FICO score affected insurance availability; makes sense I guess.

Mar 16, 2014 01:59 AM
Shannon Milligan, Richmond VA Real Estate Agent/Associate Broker
RVA Home Team - Richmond, VA
RVA Home Team - Winning with Integrity.

We don't have this in our contract but we should as, even though we remind our clients, many forget and wait until closing!

Mar 16, 2014 02:04 AM
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Joan,  Yes buyers are wise to call early on this and check around for pricies.  Have a great Sunday!

Mar 16, 2014 02:28 AM
Adrian Willanger
206 909-7536 AdrianWillanger-broker.com - Seattle, WA
Profit from my two decades of experience

Joan, gone are  the days when anyone or any home could get insurance easily. Yes you certainly don't want to get to the closing table only to find out your quotes are through the roof or even worst that your denied. 

Mar 16, 2014 03:30 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

That's a good idea to give buyers a deadline. We don't have that in our contracts or, if it's buried somewhere, it's not adhered to. I had the shock of my life when we bought our home and found out how difficult it was to find an insurance company to insure us because our home was built before 1950. It never occurred to me that we'd have a problem.

Mar 16, 2014 03:48 AM
David Burrows
Classic Realty - Fairfax, VA
No Pressure, Just Seriously Devoted to Real Estate

We don't have this in our contracts as well. It is truly a good thing to plan ahead and know the deadline for purchasing Insurance. Thanks Joan for sharing.

Mar 16, 2014 06:24 AM
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By Real - Alexandria, VA
Alexandria Virginia Homes For Sale

Joan, this is excellent information on why there's a property insurance deadline in Colorado. Buyers would be in excellent hands with you representing them. It's details like these that they need to be aware of to make the process smooth.

Mar 16, 2014 06:48 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Joan that is much different than here in CT.  Here the Buyer just has to have secured homeowners insurance before the Closing and we normally advice them not to get it until the loan is approved.  Goes to show how different things can be through out the country.

Mar 16, 2014 10:40 AM
Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in Southern RI and beyond

Ours falls under the week before closing Joan but I think it should be sooner and I always push the buyers to line it up early & know the exact costs...good share.

Mar 16, 2014 11:17 AM
Silvia Dukes PA, Broker Associate, CRS, CIPS, SRES
Tropic Shores Realty - Ich spreche Deutsch! - Spring Hill, FL
Florida Waterfront and Country Club Living

Joan, it's so important for buyers to find out about their insurance and the cost early in the process. It can make a big difference in their monthly payment/expenses.

Mar 16, 2014 09:46 PM
Maria Gilda Racelis
Home Buyers Realty, LLC-Manchester, Bolton. Vernon,Ellington - Manchester, CT
Home Ownership is w/in Reach. We Make it Happen!

Good Morning Joan: With the new legislature passed by the Senate regarding the flood insurance, hopefully this will alleviate the financial burden imposed by it.

Regarding the deadline, normally, buyers here in CT are required to furnish a binder or have it prepaid days prior to closing. There is no deadline but it is among the final conditions for a full mortgage commitment or clear to close funding.

However, I will second Sylvia's comments that it is better to get a quote for the premium earlier on in the process so that the buyers can have a better grasp of the total costs involved in home ownership.

 

Mar 16, 2014 09:57 PM
Shanna Hall
Real Estate Solutions - Kirkwood, MO
I love selling houses!!!St. Louis, MO 314-703-1311

Joan- great blog topic- I think so many people ignore this contingency and wait until the end then some have no choice but to pay outrageous rates due to lack of time and the need to close!

Mar 17, 2014 01:13 AM
Nick T Pappas
Assoc. Broker ABR, CRS, SFR, e-Pro, @Homes Realty Group, Broker/Providence Property Mgmnt, LLC Huntsville AL - Huntsville, AL
Madison & Huntsville Alabama Real Estate Resource

Joan, that is interesting, but considering the bad weather you've had along with companies reluctant to insure those properties it does make sense.  However, as long as the buyer has coverage by closing that's all that's required here.

Mar 17, 2014 06:48 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

There are many reasons a buyer may not get insurance on a home, and wise to get this secured after getting a property under contract.

Mar 17, 2014 11:54 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Joan:  Great info ... and timely too.  I'm always having a hard time getting insurance in a timely manner.  Seems everyone wants to wait until the final moment.  That's stressful on client and professionals alike. 

Gene

Mar 18, 2014 03:40 AM