Carlsbad Buyers, Why You Need to Check the Insurability of Your Home
A key component in the due diligence phase of purchasing your home should be to check in the insurability of the property you are trying to buy. You also want to know about any past claims.
Whether or not your home can be insured, and for how much, is essential information.
You certainly don’t want to purchase a home that insurers won’t touch, due to multiple past claims, or possibly where insurance costs could be prohibitive due to certain factors such as fire risk, location in a flood zone or direct ocean front.
In any case you need to know what the policy would be so you can make an informed decision.
In California the issue of insurability is specifically mentioned in the Residential Purchase Agreement (RPA) in paragraph 10 (“Buyer’s Investigation of Property and Matters Affecting Property”), and is something to check on during the contingency period (normally 17 days unless otherwise negotiated).
In addition to checking on insurability of the property (and yourself) with your current carrier, or another provider, you will want to request a C.L.U.E. Report (Claims Loss Underwriting Exchange) that will check the claims history database and report any past claims. Insurance providers will review this database as well.
If you are financing your lender will require appropriate insurance, normally paid in full by the time you close. If there is an issue with obtaining insurance you will likely not be able to get a loan.
Any prudent homeowner paying cash will also want to be sure their property is insured appropriately.
Regulations regarding insurance may vary from state to state so check with your REALTOR® and your intended insurance provider, as well as your lender so you know what is required.
Be aware that requirements for coverage in the case of condos or PUDs (planned unit developments) may be different because of master insurance policies that are in place.
Comments(4)