At a recent meeting of the Silicon Valley Association of REALTORS®, local insurance agents told REALTORS® homeowner insurance policies have different levels of coverage, deductibles, costs and limitations. “It’s not a slam-dunk that you will obtain insurance, so it’s best to find out early,” said Megan Collins, an agent with Integra Insurance Services in Campbell.
Los Gatos State Farm Insurance agent Laura Peterson said not all homeowner policies are equal. Certain factors affect eligibility and can drive up the cost of coverage. She said insurance coverage and cost of premiums vary depending on the age and construction quality of the house, the shape and condition of a roof, wiring, whether the house has a pool or spa, and location of a property. Is the property located in a flood or earthquake zone? How close is the nearest fire hydrant to the property?
New homes are easier to insure than older homes because they would have up-to-date electrical wiring, new pipes, a new furnace and a new roof. Insurance credits are given if the property has an alarm system, a shut-off valve, and other extra features that add better security to the home.
With regard to earthquake, fire or flood insurance, the agents advise homeowners to find out the deductible and coverage. Even with a high deductible, if a homeowner has no equity in the house, it may be a good idea to obtain insurance.
According to the agents, flood insurance is driven by the lender. If the property is located in a flood zone, it would be helpful if the seller already has a flood elevation certificate.
Insuring a property can have as much to do with the client as the property being insured. Having a dog or a type of dog, or a home business can affect eligibility and coverage. If you have a low credit score, you may be considered a high risk and have to pay a higher premium.
Peterson likewise pointed out, “Occupancy affects eligibility because it affects where we place the risk.”
Factors that can affect eligibility are if the property is vacant (property has no contents or occupant) or unoccupied (property has furniture but no occupant), or whether the property will be occupied by the owner or a renter. Remember that a homeowner policy is different from a landlord policy.
If a buyer plans to tear down the property, or rent out the property after purchase, they need to let their REALTOR® know before purchasing the property and notify their insurance carrier because it could affect eligibility. Once they have insurance, if circumstances change, they need to inform their insurance carrier.
“Clients need to be totally honest with their broker about their plans for the property,” stressed Collins.
The agents also noted a claims history follows the client and not the property, so if you have a claims history, you may be required to pay a higher premium or, worse yet, you may be denied coverage. Before submitting a claim, consider the estimated cost of a claim, how much your insurance carrier may surcharge the policy, and what it would do to your claims history.
Both agents said the ease of obtaining insurance and the right coverage for a property boils down to good service by the insurance agent. It is always best to have a local agent whom you can trust and with whom you can form a good relationship and approach whenever circumstances change.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term “REALTOR®” is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please contact Rose Meily at SILVAR Public Affairs, e-mail rmeily (at) silvar (dot) org, or phone (408) 200-0109.