12 Nov Home Insurance For Sellers- Know Your Facts
Homeowner Sellers Tend To Ignore Home Insurance
Selling a house is often a daunting journey, even more, for the first-timers. You have to handle more than you think, from staging to showing, negotiations, and paperwork. Finding the right buyer is hard, and getting the best price is even more challenging. You have to meet multiple sellers, deal with realtors, and still struggle to sell. It can take months to close the deal, and things can get more stressful than you imagine. You may end up skipping the seemingly less trivial issues when you have so much to deal with.
Most American homeowners tend to ignore home insurance during the selling process. It is easy to believe that you need not bother about insurance when you plan to sell your place anyway. After all, you may vacate it even before selling or do it shortly after closing a deal. But skimping on it is the worst mistake you can make because it can have dire implications. You need to understand home insurance from a seller’s perspective, even if your property is vacant right now. Let us share the facts you must know.
Assess Your Coverage
A home insurance policy ideally covers accidents, losses, and damages to your dwelling and belongings. The risks include fire, earthquake, flood, theft, and pilferage. It also takes care of the liability for any personal injury occurring to others when they are on your property. Experts recommend that you should review coverage annually, whether selling or not. If you upgrade your home with new features for value addition, consider increasing the coverage accordingly. It makes sense to get a bigger policy even if you have selling plans in mind because it can reduce your risk in the event of an accident or natural disaster during the process. Even if something goes wrong, you have the coverage to repair the property.
Ensure Coverage During Showings
When you put up your home for selling, expect to have a parade of unaccustomed visitors walking in more than once. These include potential buyers, realtors, and home inspectors. At this point, you must ensure ample coverage as the foot traffic goes higher during showings and open house sessions. The liability coverage would apply for injuries to these visitors as they can sue you if a mishap takes place while they are on your property. Such mishaps are a serious concern because they can lead to expensive lawsuits with massive compensation claims. The last thing you will want to deal with while selling a house is a lawsuit.
Never Skimp Even When Selling
You can sell your home without homeowners insurance, specifically if you own the property outright. In this situation, you do not have an obligation to the mortgage provider to keep it insured. But the truth is that selling without homeowners’ insurance is a bad idea. If an earthquake or hailstorm hits the area just before closing, it may lower the value of the property. Even worse, it can torpedo your home sale. It is better to spend a few hundred dollars over the short term rather than risk an asset worth hundreds of thousands. Make sure you never skimp on insurance while selling, even if it sounds like an unnecessary expense on the surface.
Invest In a Vacant Home Policy If Relevant
At times, homeowners move to a new place and put up a vacant property on sale after that. You cannot expect the deal to get closed right away, and it may take a few months, depending on the demand and supply in your area. For example, if you live in San Diego, you must assess the San Diego Real Estate landscape to get a realistic view of the selling timeline. You will need to cover the property with a vacant home policy for that period. You may pick a standalone policy for this purpose. Alternatively, you can have it added as a rider on the current insurance. But before buying additional coverage, double-check the market. If you are in a seller’s market, two months is good enough to offload the property without buying an additional policy.
Stay Ahead of the Necessary Repairs
Fixing up your property is vital for making it sales-worthy. But it matters when you have people walking in to see your property. A hole in your wooden floor can cause slip and fall mishaps during a showing. Likewise, issues like a loose railing elevate the risk of injuries for occupants and potential buyers alike. It makes sense to stay a step ahead of the necessary repairs when you plan to sell. Examine every area of the house, identify problems that could lead to mishaps, and fix them at the earliest. Check for safety hazards like wet floors and cords as they may also cause someone to trip. Prevent injuries in the first place, even if you have the necessary home insurance coverage for your property.
Know When to Cancel the Existing Policy
Another crucial aspect for a potential seller relates to the cancellation of the existing policy. You may consider canceling it at some point after vacating the place, but you must hold it as long as you hold the ownership. After all, the risk is all yours until you transfer it to the buyer. You remain the owner until the closure of the deal, and the responsibility of safeguarding the place is all yours. As a rule, you must maintain insurance on your home until its ownership has been transferred. The buyer’s policy will cover the property the moment the sale closes, and you are no longer liable for any damage or risk.
Shop Around for Insurance for Your New Home
If you plan to upsize or downsize to a new home, you will need insurance for it too. But you cannot simply transfer the current policy to your next home. At the same time, it is not possible to transfer the current policy to the new owner. You will need a new policy for the new place, so make sure you are ready with one. It is a good idea to retail the same company if you are happy with their services. You can bargain a good deal with them, and the paperwork gets simpler. Conversely, you can shop around to find better coverage at a lower rate for the new house. Shop around beforehand so that you need not struggle much to find the best policy when you move into a new home.
Dealing with home insurance during the selling process need not be a tricky thing. Awareness and understanding of these facts keep you stress-free about this aspect of selling. As a rule, you must have adequate coverage for your property as long as you own it. Planning to sell the place does not mean that you can go slack with coverage. Instead, you may need additional coverage if you upgrade the place or vacant home insurance if you move out long before the closing. Make sure you know these facts and do the needful if it applies in your case. A real estate expert can guide you with the steps if you are not sure. Connect with them and get your facts right before going ahead with the selling process.