Tips for Your Real Estate Clients on Choosing Home Insurance
Depending on where your real estate client is purchasing a home, they may be required to get homeowners insurance by their home loan provider. Everyone with a financial interest in the property wants to make sure their investment is covered in case something unexpected happens. It makes financial sense!
With all of the homeowner’s insurance providers refusing service to California homeowners, it can be difficult for a potential home buyer to know from which company to buy insurance. This is your time to shine as their real estate agent or broker. You can provide the best advice on what to look for when shopping around for homeowners insurance.
How to Explain What Homeowners Insurance Is
First things first, if you have a client new to real estate, they might not know what it means to insure a home. More often than not, commercials are out there discussing home warranties, but there are few and far between advertising for homeowners insurance. Since it isn’t LEGALLY required, and new home buyers aren’t exposed to the homeowners insurance concept, you’ll probably need to know how to explain what homeowners insurance is and how it differs from home warranties.
The easiest explanation: homeowners insurance covers damages and loss from fire, burst or leaky pipe flooding, or if a tree lands on your house. It can also cover legal fees if someone gets hurt on their property.
Now home warranties are more for broken appliances, or home systems like their central AC decides to die on the hottest day of the summer and the homeowner has to replace it immediately without going bankrupt!
Helping Your Client Shop for Insurance for their Home
Once you’ve had the chance to go through what homeowners insurance is with your client, now’s the time to chat about what to look for in a provider when choosing home insurance. The most important thing to instill in your client: NOT ALL INSURANCE POLICIES ARE CREATED EQUAL.
Home Insurance Policy Types
Make sure your client knows there are various types of insurance policies for insuring your home.
All-risk policies are also known as open perils policies, which help owners repair the home or property after a fire, theft, or a flood caused by burst or leaky pipes. But, they’re extremely basic and normally don’t cover termite damage, sewer backups, floods caused by a natural hazard, or mold removal. Make sure they understand FULL COVERAGE will often require not just this basic policy, but additional policies.
Named perils policies will only help owners repair damage caused by a SPECIFIC peril named in the policy. Even though these are less expensive than All-risk policies, they don’t cover multiple situations. It may cover fire, but it won’t cover a flood. Insist your clients ask the insurance agents lots of questions so they make the right decision for their needs and budget.
Replacement cost policies are often required by home loan providers, as it bases the costs of home repairs or home rebuilds on current costs regardless of the age or condition of a home. However, deductibles vary, so make sure to remind your clients to review all the various options so they don’t end up paying too much for the policy, but also make the home loan provider happy.
Deductibles
When hunting for the right insurance coverage for a home, a homeowner can often save a little on the policy payments by choosing a higher deductible. Most people are familiar with this idea, however, remind your clients that some insurance companies base the deductible on a percentage and not on a set dollar amount. It’s important to do the math and choose the best options for coverage.
Company’s Record
A real estate client will probably ask for your recommendations for a home insurance provider. They may not always take your recommendation and will go off on their own to research a vendor that is more budget-friendly. If this is the case, just recommend that they check the complaints on record along with if their license is up-to-date!
Discounts
Always make sure your clients know to ask about discounts an insurance company might offer if the homeowner gets an alarm system, or manages not to put a claim in for a certain amount of years, and of course, the always popular bundling homeowners insurance with other insurance policies.
Other Important Insurance Coverage Policies to Consider
Flood Insurance Coverage
Liability Coverage
Extra Coverage
Policies Covering Windstorms and Hail Damage
Earthquake
Fire (make sure you look into this as it is a hot topic in California)
Always give your clients the heads up if they’re moving to an area where exclusions may affect their chances of getting certain types of coverage.
Review What an Insurance Provider Will Need for an Insurance Policy Quote
Like a good scout, your clients should be well-prepared for what their insurance provider will need to provide an accurate home insurance policy quote. Whether your client’s a first-time buyer, or an experienced buyer, it’s always helpful to have a reminder! We’d even encourage you to create a checklist for clients, and brand it with your logo and contact information, too!
Beyond the basic information like names, dates of birth, social security numbers, previous addresses and even their partner’s personal information, you’ll also need to provide the following:
Are there outdoor structures on the property that might be a liability, like a pool, trampoline, or even a treehouse?
Is the home fashioned with a security system that includes fire or smoke detectors or fire sprinklers?
Are there dogs that will be living in the home, and do they have any incidents they were involved in (basically, have you been sued because of a dog biting or attacking someone)?
What’s the overall condition of the home? Did the home have any renovations or upgrades?
We also recommend mentioning they should review their policy, once they choose one and have all the paperwork done, to make sure everything discussed is included on the policy. Each time their policy is up for renewal, review it and shop around again to see if the policy still meets all their needs, and the needs of the home loan lender.
Always Have Time for Your Real Estate Clients
Providing valuable advice and information to your real estate clients solidifies your clients’ trust in you. Trust in you results in happy clients, and we all know when clients are happy they will come back again when they’re looking to buy or sell another home. They’ll often share your details with others they know, because if they felt taken care of and that they could trust you, they know anyone they send your way will be well taken care of, too.
Work with a great team so you have the time and energy to be your clients’ ultimate resource for all things real estate!
