The One Question Homebuyers Forget To Ask Their Agent
There are probably a thousand questions that homeowners ask throughout the course of buying a home. What’s the neighborhood like? How’s the school district? What’s the square footage? How close are we to town, or to local parks? Is the roof in good shape? Yet, there’s one burning question that seems to come up the least, despite the serious investment associated with it — and that’s home insurance rates.
Home insurance rates aren’t standard across the board. There are actually myriad factors that go into calculating the specific rate you’ll pay, ranging from the age of your home to your proximity to a fire hydrant, the deductibles you choose, and even how close you’ll be to a fire station. Your zip code also has an influence on your insurance rate. “Even within the same zip code you can have very different insurance rates,” explains Kelly Klee’s President, Bob Klee, CPRIA.
We were speaking to Klee via video chat, something that’s actually the norm for our remote team, when he began to tell us that homebuyers can actually save themselves a lot of grief by reaching out to their insurance agent as soon as they’re serious about a property. Klee explained that your insurance broker can run a CLUE (Comprehensive Loss Underwriting Exchange) report, something insurance companies use to keep a record of insurance claims, no matter how small, every 5-7 years.
“All of the carriers participate in this, like a credit bureau. But they all do it voluntarily, and it’s the only way to find out if there’s been a loss on your home previously, because it’s not public information,” Klee explained. “It provides information on things like water loss, fire loss, and tells you when it happened and what was paid. So, say you have a water loss in the master bathroom, the odds are, it’s going to have another loss in the next 24-months. We can help you look at these claims, assess them and make sure the underlying issues have been fixed correctly.”
The information from a CLUE report can provide key insights into the quote you were given by an insurance carrier. But, it can also help you better assess the condition of your home, something Klee says a real estate agent just doesn’t have access to.
According to Aspen Sotheby’s real estate agent Craig Morris, it’s not something that ever really comes up for discussion, saying just ten percent of his homebuyers ever ask him about home insurance rates. “It usually comes up as we’re approaching closing, as we’re talking about the utility transfer and such.”
A majority of the homes Morris sells are remarkable vacation homes, which he says puts his clients in a unique position, explaining that since they already have an insurance agent they trust, they rely on them to get the right advice and a good deal.
Klee notes that especially when shopping for a second home, you need to speak with your insurance broker (or find a good one) and do the proper insurance research as early in the process as possible. That’s because these properties, which are often near bodies of water or in forested areas, can have their own insurability issues associated with natural disasters — like fires and flooding. “With Western states especially, I recommend getting in touch with us to see which areas are insurable at a reasonable rate before you fall in love with a specific property. Even before you go house hunting, give us an address, zip code or general area and we can tell you what to avoid and look out for.”
By bringing your insurance agent into the process of working with your real estate agent, you can ensure that you get a home that meets all of your needs. Now, before you keep browsing around the blog and Kelly Klee site for advice, Klee has a few last insurance and house hunting tips to leave you with.
You can get a discount for having an alarm system in place
Klee says this is typically required of homes that are going to be insured over $1.5 million dollars. But, he stresses that these alarm and warning systems can be far more helpful than getting you a discount or protecting your valuables. “I tell folks, you can replace the house and the Sub Zero fridge and the television, but you can’t replace the memories. So the number one monitoring system I recommend is a good, centrally-monitored fire system. Because if my house goes up in smoke, so do all my memories.”
Use smart-home apps
Klee himself has an app called Flo by Moen which allows him to closely monitor his home’s water usage and even shut off the system entirely — it’s so great he now recommends it to clients as another form of loss prevention. He says it’s great for clients who live in colder climates. "I know people who use this app on cold nights to control water flow in their pipes and help prevent them from freezing.” This kind of investment can save you thousands in home insurance discounts, deductibles (if you have a claim), but most importantly, in general grief and time spent with lengthy repairs after a leak.
3 main things to look out for in terms of insurability
Klee says roofing and piping are the top two things home buyers should ask about when house hunting. These will not only be the most expensive things to fix, but they’ll be big determinants for your home insurance rate. In older homes, he says it’s also important to look out for outdated and even dangerous electrical systems. “Back East, you might buy a brownstone in New York that was built in the late 1800’s to early 1900’s and it is outfitted with old knob and tube wiring, and that’s just going to be nearly impossible to insure.”
Looking to buy a home and need advice? Don’t hesitate to get in touch with our team for insight as well as access to complimentary CLUE reports.