If you don’t understand home insurance, you will close on fewer homes, especially if you live in California or Florida. As you likely know, insurance companies have had some fairly high-profile breakups with many states due to increasing natural disasters, rising construction costs, and strange scams. As if Taylor Swift and Joe Allwyn’s breakup last year wasn’t bad enough, Farmers Insurance dramatically walked out on Florida along with AAA, leaving the state with almost no options for affordable homeowners insurance. Additionally, State Farm and Allstate have drastically limited their coverages in California.
This is disturbing, but it is essential to know that there are still many options for homeowners insurance out there in every state, though in certain markets you have to be much more educated and savvy about where to look. If you’re a real estate agent who is used to letting homeowners insurance work itself out for your buyer, it might be time to do a hard reset on your approach. In many states, becoming a real estate agent who is fluent in homeowners insurance will help generate more business.
I know that the word “insurance” somehow sounds both stressful and boring, but addressing insurance concerns early on in each transaction can actually make you more money. One of the best things you can do in any market right now is to form relationships with a number of insurance agents. As a real estate agent, you do not want to mislead the buyer into thinking that you are an insurance professional. However, being able to direct the buyer towards a number of different insurance options and agents is crucial to your bottom line; by the time closing comes around, you want your buyer to clearly understand their homeowners insurance options and their cost, so that they aren’t blindsided by insurance issues just before closing.
In California, it’s important to understand the FAIR Plan, which is last-resort fire insurance offered to California homeowners who have been denied coverage by other companies. This is generally more expensive than other forms of fire insurance, and is bare-bones coverage; however, combining this plan with Difference in Conditions coverage can fill the gaps of the FAIR Plan. Being able to speak fluently about these policies and steer your client to insurance agents who can advise them will make your client understand that there are actually far more insurance options than they may have thought. Additionally, being able to identify possible risks regarding homeowners insurance coverage, and being able to identify possible advantages of certain properties (like upgraded and updated sprinkler systems) can help save your client money and increase the likelihood that they will be able to afford their home.
Most real estate agents have home inspectors and mortgage lenders that they routinely recommend to clients. It’s time to add insurance agents to your list, and advise your clients to consult with them as part of the homebuying process. Of course, it’s best to have a few agents in mind so you can allow your client to choose their own.
There is a lot of hyperbole about how difficult it is to get insurance in many states, but there actually are far more options than you may think, if you know where to look. Addressing insurance issues from the very beginning might help you make more money; if this doesn’t make insurance sound thrilling, I don’t know what will.
https://www.policygenius.com/homeowners-insurance/difference-in-conditions-insurance/
https://www.bankrate.com/insurance/homeowners-insurance/florida-homeowners-insurance-crisis/#curb
https://www.cnn.com/2023/06/19/business/homeowners-insurance-more-expensive-climate/index.html
