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
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.
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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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.
Important points to remember about 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