The New Home Insurance Process….our point of view

A several part blog….Get excited!

 

PART ONE:

There’s a lot of information out there about what you need to do to be pre-approved for a home mortgage loan. There are checklists and step-by-step guides to increasing your credit score, saving for a down payment, searching for the right mortgage broker, and what to expect during the process.

When you are pre-approved and searching for that home, the internet is full of tips about convincing the current homeowners to sell to you, what to look for in a fixer-upper, how to read and understand a home inspection and how to negotiate closing costs or things that show up on that home inspection.

What’s NOT out there and NOT easy to understand, is how the home insurance process works. Typically, once your offer has been accepted, you receive a checklist of what your bank wants for the closing-and most likely the only thing you’ll see on there is “Homeowners Insurance Binder” or “Hazard insurance binder”. This is when the magic starts on our end.

You’ll call us, and explain you are buying a new house, and the bank wants a binder. We’ll be excited, and ask lots of questions….and congratulate you!

 

First Step in the process…

We’ll ask you some information-your current address, the new address/property information, your date of birth, name of anyone buying the home, and the closing date. If you know the bank “mortgagee clause” (how the bank wants their name listed on the policy) its helpful.

Frequently asked questions about this part:

         **Why do you need my current address?

The insurance companies will do a check on your claim’s history-and if you have owned a home before and have filed claims, it will show up in their rating process. Its also just a must for some companies so they can match up names and addresses with information we put in.

  **Why do you need my date of birth?

Insurance companies (most of them) require an agent to complete a credit-based insurance score. Its not the same as a Credit Score (for when you were being approved for a mortgage loan for example). AN insurance-based credit sore usually looks at your payment history, outstanding debt, and credit history length, pursuit of new credit and credit mix.

    **Why do you need exact closing date?

That’s the date we make the policy effective, so we need that date. As sometimes rates change, we usually know a month or two ahead of time, so we want to be sure we are rating it correctly too. If you call us on May 15, but aren’t closing until June 30, and one company is having a rate change effective June 1, we need to know we aren’t writing this policy effective May 15.

We may ask some other questions too-items you may be concerned about (fine arts? Jewelry?) along with some basic underwriting questions. We need to know about pools, trampolines, and year of updates for your home. Its not always a BAD thing for us to know these things-you may find with recent updates your home qualifies for a discount or potentially a better company. With things like pools and trampolines, its possible we want to discuss adding additional coverages for these things, or increasing your liability (more on that later).  We’ll ask about other discounts-how will you be paying your homeowners insurance-maybe you’ll qualify for a paid in full discount, or a “green” discount for not receiving a paper invoice. “Bundling” your home and auto or cross discounts can save also. We’ll ask a LOT of questions, but we promise its for good reasons.

Once we gather all the information we need, its time to get down to the fun part -quoting the best coverage we can find, with the right company for you.

Keep an eye out for Part 2!