Insurance requirements are constantly changing, and this is just one more of many to come.
Insurance claims remaining with both Sellers and Buyers is old news, but insurance claims now remain with properties as well.
Insurance companies have access to a central database known as the “hits” site. This site allows them access to information that will indicate if there have been any claims against individuals or property locations. Cost to access the “hits” site is approximately $15.00 per access, therefore insurance brokerages are reluctant to check sellers, buyers and property addresses each time a buyer is looking at a different property. Checking this information each time could become costly and take up a lot of time. Insurance companies are hesitant to advise potential Buyers of any previous claims against specific properties citing “privacy legislation”.
When a Buyer puts an offer on a property, insurance companies will write a “binder policy” so the conditions can be waived, but then they can turn around 45-60 days later, often after closing, and refuse to write the policy. Or if they are writing the policy, will exempt coverage for those areas that they feel could continue to be a problem, (example: if a property incurred a septic backup the insurance company will exclude septic backup damage as the property may be “susceptible” to this type of damage and unless measures are taken to rectify the reason for the backup, no insurance will be granted in this regard).
Some options worth considering that may help to safeguard against finding yourself in this predicament are:
- getting a home inspection from a reliable home inspector
- paying the $15.00 fee to get a “hits” report upfront
- asking an insurance broker to shop around for an insurer that will write a policy