RE/MAX Real Estate Guide and FAQ - Questions and Answers for Real Estate Home Owners
RE/MAX Valley Real Estate, Boardman, Ohio

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RE/MAX Valley Real Estate

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RE/MAX
Valley  Real Estate
1006 Boardman - Canfield Rd.
Boardman, Ohio
(330) 629-9200

RE/MAX Real Estate FAQ - Buying Your Home, Working With A Real Estate Agent

Home Ownership - Questions and Answers
'Hazard Insurance'

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What kind of home insurance should I get?
A standard homeowners policy protects against fire, lightning, wind, storms, hail, explosions, riots, aircraft wrecks, vehicle crashes, smoke, vandalism, theft, breaking glass, falling objects, weight of snow or sleet, collapsing buildings, freezing of plumbing fixtures, electrical damage and water damage from plumbing, heating or air conditioning systems, according to the Insurance Information Institute, a Washington, D.C.-based nonprofit group for the insurance industry.

Such policies are "all-risk" policies, which cover everything except earthquakes, floods, war and nuclear accidents. A basic policy can be expanded to include additional coverage, such as for floods and earthquakes and even workers' compensation for servants or contractors. Home-based business-coverage, an increasingly popular rider, does not cover liability associated with the business. Insurance experts recommend that homeowners obtain insurance equal to the full replacement value of the home.

On a 2,000-square-foot home, for example, if the replacement cost is $80 per square foot, the house should be insured for at least $160,000. For personal items, homeowners can increase their coverage beyond the depreciated value of items such as televisions or furniture by purchasing a "replacement-cost endorsement" on personal property. Some experts recommend an inflation rider, which increases coverage as the home increases in value

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What are 'credit based' insurance scores?
Your credit score, can affect more than just your ability to get a loan! Most insurers now use 'credit-based insurance scores' when reviewing new applications for homeowners insurance. Put simply, this means that a homeowner with a good insurance score will usually pay less for insurance than someone with a poor score. An insurance score is a numerical ranking based on a person’s credit history.

The 'Insurance Information Institute' point to studies that show that 'how well a person manages his or her financial affairs' is a good predictor of future insurance claims. Statistically, people who have a poor insurance score are more likely to file a claim. You should also be aware that some companies have started using credit based insurance credit scores to deny renewal of coverage regardless of whether a claim has been filed or premiums have been paid on time.

Insurance scores do not include data on race or income because insurers do not collect this information from applicants for insurance.

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What is CLUE?
CLUE is the Comprehensive Loss Underwriting Exchange. CLUE tracks insurance-claim histories of both people and properties, and can be another  detour on the path to selling your home. Any losses reported for a property during the past 7 years, whether owned by the current owner or not, will be shown on the CLUE.

Many REALTORS recommend that a buyer never buy a home without getting a CLUE from the seller. Here's why . . .

Even if the buyer has never made a claim on any of his own policies, or even  owned a homeowners policy, they may be rejected for insurance coverage on your house,  because you have a large number of recent claims against your homeowners policy. The house itself has a poor CLUE record -  and CLUE evaluates not only the prospective policy holder but the  property under consideration for coverage as well. Many homeowners are completely unaware that their numerous insurance claims may have made their home un-sellable!

Note: Decisions about insurance coverage and/or rates are made by the insurance companies - not by C.L.U.E.. Each insurance company develops underwriting decisions based on its own business requirements. Insurance companies evaluate claim history reports according to their own proprietary strategies. Other information besides CLUE, such as application data, credit reports and/or insurance scores, may also be evaluated as part of the insurance underwriting process.

Unless the buyer is paying cash, s(he) can't get insurance, and without insurance will be denied a mortgage for the home.  Even if they do pay cash  they will  find that they have to pay severe premiums just to get basic coverage and may withdraw from the deal.

There's further risk for the buyer. There's the  possibility of closing the deal on your home -- with an insurance binder issued -- and then have insurance denied after closing. Now they're in breach of their mortgage contract, which requires them to keep the property  protected. The lender could then demand payment in full and if not forthcoming, foreclose on the home.

Home buyers cannot directly access a CLUE report. Only businesses, property owners or individuals with permissible purpose can access this consumer report.  Savvy REALTORS, however, will  ask the home seller to obtain their property’s loss history report and make it's satisfactory review by the buyer a condition of sale. Under federal law, you can get one free personal CLUE report a year.

Sellers may obtain the CLUE report at  http://www.choicetrust.com  There, the home seller can obtain a Home Seller’s Disclosure Report, providing a five year insurance loss history for a given address, without divulging personal and private information about the home seller. If the report for the property indicates that insurance losses have not occurred within the past five years, the buyer can feel comfortable that insurance loss history of the property should not impact the availability or pricing of Homeowners insurance. At the time of this writing, the cost of the report to homeowners is approximately $20.00.

For consumers who do not have Internet access, the loss history report can be ordered by telephone at 1-866-527-2600 or by mail at:

ChoicePoint Consumer Disclosure
P.O. Box 105108
Atlanta, Georgia 30348-5108.

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What is guaranteed replacement cost insurance?
Guaranteed replacement insurance is a more comprehensive policy. It tends to cost more, but it promises to cover the complete costs -- less deductible -- of replacing a destroyed house. With these sorts of policies, limits on the policies are not as common, because complete coverage is more explicit.

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Does my homeowners insurance cover mold?
The Insurance Information Institute says that mold, like rot and insect infestation, is generally not covered by a homeowners insurance policy. Standard homeowners policies provide coverage for disasters that are sudden and accidental. They are not designed to cover the cost of cleaning and maintaining a home. If, however, mold is the direct result of a covered peril such as a burst pipe, there could be coverage for the cost of eliminating the mold.
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I’m installing a pool. what kind of insurance do I need?
All pools — from a simple above-ground kiddy pool to an aquatic extravaganza — can be dangerous and need to be properly insured and comply with local safety standards.

Read more here. >> Pools and Insurance

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Should I Insure My Home For Flood Loss?
Standard homeowners policies do NOT cover flooding. You can purchase flood coverage directly through your homeowners insurance agent. However, the policy is provided by the Federal Flood Insurance Program ( 888-379-9531, http://www.floodsmart.gov ). According to the Insurance Information Institute (I.I.I.). more than 20 percent of all flood insurance claims are filed in low-to-moderate flood-risk areas and too few homeowners realize that affordable flood insurance is available through the Federal Emergency Management Agency’s National Flood Insurance Program (NFIP).

Read more here. >> Flood Insurance

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Can an insurance company cancel my homeowners insurance?
Your policy will detail conditions that may cause your insurance to be cancelled. However, the company must send you written notice at least 30 days before the cancellation date and that notice, in Ohio, must explain procedures for applying to the Ohio FAIR Plan.

You are not entitled to a 30-day notice if the company cancels because of your failure to pay the premium, evidence of arson, misrepresentation or fraud.

In addition, the insurance company may also cancel your homeowners policy if you file too many claims. Habitual filers of claims are highly likely to lose coverage, particularly if your claims are small. Just two to three claims within five years makes you a candidate for non-renewal.

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What should I do if I can't get insurance?
In Ohio, If you cannot find insurance coverage for your home, you can apply through the Ohio FAIR Plan Underwriting Association. The State of Ohio created the Ohio FAIR Plan to insure property that insurance companies will not cover.

Important points to remember about the FAIR Plan.

  • You do not have a guaranteed right to buy FAIR Plan coverage
  • The FAIR Plan will inspect your house to determine whether you are eligible.
  • Every company selling property insurance in Ohio helps fund the FAIR Plan.
  • Coverage in the FAIR Plan is likely to cost substantially more than through the standard insurance marketplace so be sure to exhaustively search before resorting to the FAIR Plan.

 You can apply to the FAIR Plan through any insurance agent who sells property insurance. Or you can call the FAIR Plan directly at 1-800-282-1772, their web address is www.ohiofairplan.com

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How can I prevent claims and keep my home safe?
The Ohio Department of Insurance recommends:
  • Prevent water damage by regularly checking your roof, down spouts, water pipes and sprinkler system for clogs or leaks.
  • Repair loose or broken posts and check all safety latches on fences, especially around pool areas.
  • Discourage break-ins by using exterior lights at night and installing deadbolts on all doors. Be sure to close lower-level windows when not at home and before going to bed.
  • Turn off the propane gas when you are finished grilling.
  • Use timers on inside and outside lights, especially when on vacation.

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How do I take a home inventory and why?
If your home were destroyed by a fire, would you be able to remember all the possessions you’ve accumulated over the years? Most homeowners could not. An up-to-date home inventory help's you get your insurance claim settled faster, verifies losses for your income tax purposes, and help you determine the amount of homeowners insurance you need.

Start by making a list of your possessions, describing each item and noting where you bought it and its make and model. Clip to your list any sales receipts, purchase contracts, and appraisals you have. For clothing, count the items you own by category -- pants, coats, shoes, for example –- making notes about those that are especially valuable. For major appliance and electronic equipment, record their serial numbers usually found on the back or bottom.
  • Don't be put off!
    If you are just setting up a household, starting an inventory list can be relatively simple. If you’ve been living in the same house for many years, however, the task of creating a list can be daunting. Still, it’s better to have an incomplete inventory than nothing at all. Start with recent purchases and then try to remember what you can about older possessions.
  • Big ticket items
    Valuable items like jewelry, art work and collectibles may have increased in value since you received them. Check with your agent to make sure that you have adequate insurance for these items. They may need to be insured separately.
  • Take a picture
    Besides the list, you can take pictures of rooms and important individual items. On the back of the photos, note what is shown and where you bought it or the make. Don’t forget things that are in closets or drawers.
  • Videotape it
    Walk through your house or apartment videotaping and describing the contents. Or do the same thing using a tape recorder.
  • Use a personal computer
    Use your PC to make your inventory list. Personal finance software packages often include a homeowners room-by-room inventory program.
  • Storing the list, photos and tapes
    Regardless of how you do it (written list, floppy disk, photos, videotape or audio tape), keep your inventory along with receipts in your safe deposit box or at a friend's or relative's home. That way you’ll be sure to have something to give your insurance representative if your home is damaged. When you make a significant purchase, add the information to your inventory while the details are fresh in your mind.
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