7 Insurance Questions Your Buyers Need to Ask Before They Sign a Contract
Real estate agents often receive dozens of questions about homes long before buyers decide to invest. They may want to know about local schools. Some ask about the area’s resale value or want to know the type of tile in the basement bathroom.
These are all good and important questions, but those related to home insurance are even more critical. Home insurance is a vital investment for home buyers. Property owners never think their homes will catch fire or their sweet pups will bite a visitor. Yet, data from the Insurance Information Institute shows that 5.3% of all homes in the U.S. saw a claim.
How can you help? Educate your home buyers about home insurance as much as possible (we have a virtual hangout planned to give you the home insurance 101 you need). Then, before your buyers purchase insurance, encourage them to ask the following questions.
Before signing a home insurance contract, buyers need to know the answers to these questions:
- How Much Coverage Is This Quote For?
Know the exact value of the coverage provided, such as $300,000 or $800,000. This should accurately represent the cost to rebuild the home and meet the lender’s requirements.
- What Are the Exclusions on the Policy?
Exclusions are those types of incidents (perils) not covered by the policy. Common exclusions include:
- Flooding, unless a separate flood insurance policy is purchased
- Wear and tear associated with aging
- War
- Earth movement, including earthquakes
- Nuclear and radiation accidents
- Neglect
- Mold
- Government action
- Intentional damage caused by someone in the home
- Rodent, termite, and pest damage
- Do I Need Separate Flood Insurance?
Most home insurance for properties within FEMA flood zones does not automatically include protection. As an agent, you know the importance of flood zone disclosures and previous local flooding concerns. Buyers can use FEMA Flood Maps to help them know if their properties are in a high-risk zone and warrant coverage.
- What Is the Value of the Content Coverage?
Contents coverage provides financial protection for damaged personal property within the home. In the ideal situation, insurance should cover the true value of those assets either as replacement coverage or actual value. However, many people underestimate the value of their personal property.
- What Is the Deductible on the Policy?
The deductible is the portion of any claim that the property owner must pay before the insurance company kicks in. Homeowners with a higher deductible tend to have lower premiums, but they need more money on hand to meet their emergency needs.
- Are All Structures Covered?
It’s also critical for property owners to have a clear understanding of what’s covered on their properties. Homes with detached structures, such as outbuildings or garages, may need to have those structures mentioned explicitly in their insurance policies.
- What Additional Home Insurance Amendments Do I Need?
Property owners with highly valuable assets, such as rare collections or expensive electronics, may wish to purchase additional coverage for those assets. This process involves adding endorsement to the policy, which will specifically list the inclusions covered. Coverage for those items can also be critical if you live in a high-risk area for flooding, wildfires, hurricane damage, or earthquakes.
Overwhelmed? Remember that you’re not a home insurance agent and you don’t know all the details about coverage. We are here to help you connect with the right insurance provider for your needs.
