Get a CLUE! Getting Insurance on a New Home
April 25th, 2008 categories: Garden Valley Buyers, Garden Valley Real Estate, Garden Valley Sellers
Picture it! You are all packed and ready to move in.
You can’t wait. You have finally sold your house in the suburbs and have found the home, in the mountains, that you have always dreamed of.
AhOh! The insurance company calls to let you know that the premiums will be double what you expected. The higher insurance premiums where not calculated into your budget for the new house. This is going to crimp your style.
How can this happen?
Have you ever heard of the Comprehensive Loss Underwriting Exchange (CLUE) database? All claims filed against a property are captured in the CLUE database. The CLUE database report provides insurers with an insurance claim history. This report is one tool used by insurers to perform a risk assessment. A look at claims on the property is valuable in identifying damage history. The data may even be indicative of probable future claims activity.
A CLUE report on the Buyer is also used as one benchmark to determine insurance risk.
Hypothetically, a CLUE report that shows a claim paid for flood damage, on a particular property, could result in higher premium payment for a future home owner. Should the new home owner have a CLUE history that reflects frequent insurance claims, the combination could lead to insurance sticker shock.
Insurance companies will also evaluate a Buyer’s credit score to way in on payment risk. Factors in the credit score history may be an indication of the likelihood that premiums will be paid on time.
How to Avoid Surprises.
- When preparing to purchase a new home, contact your insurance company to inquire about your insurance health. Some companies may refer to this as your insurance score.
- Know your credit score, or FICO score. Take steps to increase your credit score, if necessary. This might help in your insurance costs. Higher credit scores may also earn you better loan terms when financing a new home. Get your free, annual, credit report at www.annualcreditreport.com.
- Once you’ve chosen a home to purchase, ask the Sellers to provide you with the homes CLUE report. Property owners are entitled to one free CLUE report each year. They can find their CLUE report at www.choicetrust.com.
- Talk to your Realtor about insurance contingencies when offering to purchase a home. A guarantee of affordable insurance may be an important factor to you.
- Apply for insurance immediately after an offer to purchase is accepted. If you wait until the last minute, the insurance company will offer initial coverage pending a review of the property. You don’t want to discover, after the fact, that they cannot insure the home for some reason.
Surely, you know the Girl Scout motto. “BE PREPARED“.
Part of your fiscal responsibility includes being aware of your financial health. Know your credit score. Consider your credit health when making major purchases or applying for credit. Talk to your insurance agent about your insurability. Find out what the company policies are for reporting to the CLUE database. Do they only report claims or will an inquiry about a possible claim appear on the database?
Take care of yourself. Schedule a fiscal checkup each year when you schedule your physical checkup.
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