If you are involved in a residential sales transaction in Florida, the process can be complicated and require extensive effort and meticulous care to consummate the real estate transaction. There are many obstacles that can arise to derail a home sale, which include buyer’s remorse, failure of a financing contingency, non-permitted improvements and many other potential obstacles. Most people do not anticipate homeowners insurance issues will become a problem when selling a home. While the majority of homeowners are relatively conservative about filing claims, filing excessive claims or the wrong type of claim can give rise to potential obstacles during a sales transaction.
Because of the economic incentives of insurance companies when issuing coverage, carriers attempt to minimize their exposure. One tool used by insurance companies to minimize their risk of loss is the Comprehensive Loss Underwriting Exchange (CLUE). This service provides reports of claims and damage to real property. Certain types of claims might make homeowners carriers hesitant to provide coverage. If your home has suffered extensive water and/or mold damage, this might make a homeowners insurance company hesitant to provide coverage. Although the CLUE service was initially established to prevent fraudulent claims, the insurance industry now relies on this tool to screen applicants for coverage.
If your home has suffered damage caused by a hurricane or burst plumbing pipe, you might want to take a number of steps to reduce the risk that the insurance carrier for the buyer will decline to provide coverage. Some of these precautions include:
Seek Legal Advice about Water Damage Claims: If water extensively damages your home, you might want to promptly seek legal advice when evaluating how to handle the problem. If you are considering selling your home within a few years, the water damage claim might cause insurance issues at the time of the transaction. While the damage typically must be disclosed as part of the real estate transaction, proper measures to remediate the damage can increase the likelihood that the sales transaction is not impacted.
Obtain a CLUE Report: If you or a prior owner has submitted insurance claims related to your property, you might want to request a CLUE report before listing your home. A review of the report will alert you regarding any potential claim related insurance issues that might derail the sale.
Do Not Opt for the Lowest Deductible: The natural tendency for policyholders is to avoid a high deductible. However, homeowners are less likely to face insurance issues when selling their home if they repair minor damage because their deductible is higher. Further, a higher deductible will generally means better coverage for major damage.
Make a Claim or Remain Silent: If you are not going to make a claim for damages, you generally should avoid notifying your insurer of the damage. While it might seem unfair to have the damage used against you if no claim is filed, there are cases where this has happened.
Perform Proper Maintenance: Since prior water damage tends to be the type of claim that gives insurance companies the greatest pause, timely maintenance of your roof and plumbing can preempt such claims. If proper maintenance eliminates damage leading to a future claim, this reduces the risk of water damage disrupting your efforts to sell your home.
While there is no guarantee that an insurer will provide homeowners coverage when you attempt to sell your home, these steps can mitigate the risk of an insurer balking at the prospect of providing coverage.
If you have questions about Florida homeowners insurance claims, you are welcome to contact us and speak with an experienced Miami insurance claims lawyer. My law firm represents policyholders in claims disputes in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.