The Top 9 Insurance Insights for Homebuyers
Jun 16, 2023 brooklyn,Brooklyn Buyers Agent,Brooklyn homebuyers,brooklyn real estate,brooklyn realty,buying a home,Buying in Brooklyn,homeowners insurance,homeownership,new york
One of the most overlooked aspects of the buying process is the acquisition of homeowners insurance. Like any type of insurance, it’s important to protect your home from all sorts of unpredictable occurrences – and most times, if you don’t, you’ll end up learning the hard way why you should have.
But aside from common sense, most condos & co-ops require you to acquire homeowners insurance – and if you’re acquiring a mortgage, then homeowners insurance is a must. You’ll be required to show proof of homeowners insurance at your closing table & to your mortgage company – another hurdle to getting those cherished new set of keys.
That being said, the world of insurance is not built equal – some companies have better deals than others, and it is a competitive market (Allstate commercials? Liberty Mutual? Lemonade? Some of the most memorable of the bunch!). So it’s important you do your homework. Lucky for you, we have some tips shared with us by Justin Keats at Keats Agency that will help you sort the whole process out:
1. Rule of thumb:
- For properties under 1000 sqr feet.. usually the condo/coop policy cost is within $100+- of the square footage of the apartment.
- This is for owner occupied units.
- The liability should be $1Million (at least), it has almost no impact on cost. This will meet most building requirements.
2. Occupancy matters
- Insurance carriers must be clear on who will live in the unit/property. Tenant, Owner, Under Renovation, Vacant.
- Each type of occupancy requires its own distinct policy.
- Renovation is usually the most costly.
3. Insurance Agents vs Insurance Brokers
- Agents (represent only 1 insurance company) can only help you find a good deal within their own company. (i.e. less options)
- Brokers represent multiple carriers and can help you find the best deal in a sea of insurance agencies.
- There is no extra cost for working with either.
4. Best time for a buyer to be connected with an insurance broker
- When everyone is celebrating the signing of the contract, this is when buyers should start speaking with an insurance broker to vet their options.
5. Don’t be afraid to branch out
- Even if you have an insurance agent or broker you work with, this is still a good time to vet other options and see what else is out there. It’s a great opportunity to take advantage of promotions!
6. What is the biggest driver of cost?
- Dwelling – the cost to rebuild the interior of the unit back to the way it was before the loss.
- Some carriers will assess a rebuild value of $250/sqr foot for dwelling, high end up to $700.
- Jewelry and other factors play a role.
7. Insurance and the Co-Op board
- Be sure to work with an insurance agency that can provide a future effective date of closing to the board.
- The board’s requirements should be shared with the insurance agent as soon as possible in advance so as not to delay the closing.
- It’s also possible to get a refund from an agency if the closing does not go through.
8. Insurance and the mortgage
- The bank will require the first year be paid in full for the insurance to close, with a rebuild calculation.
- The bank will want evidence the policy was purchased about 3-4 weeks before the closing date. Again, if the closing does not go through, you’ll want to be working with an insurance company who offers a full refund in that case.
- The bank cannot issue the clear to close until this happens.
9. If you’re buying in a TRUST LLC CORP
- There are fewer carriers who can handle these, so it’ll take more research than a personal purchase. It’s not necessarily more expensive but there are less opportunities.
It’s a lot to digest, and seems like a lot to add to your plate while in the midst of an arduous process. That’s why we always advocate for you to have a solid attorney & agent who will figure out how much your insurance needs to cover, and any other quirky requirements your managing agent might enforce. Plus, we have been through this before – personally & professionally – and have plenty of places for you to start.