Buyer's insurance co wants info on seller's old claim - ??

windlassJune 29, 2009

We're currently under contract, selling our house. Several years ago, we filed an insurance claim for an issue that was repaired, taken care of and closed out. Today, the buyer's agent says that their insurance company won't issue them any insurance until they know what the claim was for. Is that normal? We disclosed the repairs on the disclosure form, but not the fact that it was an insurance claim. Our agent is saying that the insurance co may want receipts etc for the work, and I'm not sure we even have those anymore.

Is it common for an insurance company to require information on a previous claim before issuing insurance to a new buyer? And if so, exactly what data will they ask us for? We're due to close very soon, and now I feel like our house has a terminal "pre-existing condition" or something... How often does this scenario happen?

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It's becoming more common as the insurance industry faces mounting losses. I've heard of instances where mold and water damaged properties have become uninsurable.

I have a friend who put in a contract on a home -- they ran something called a CLUE report which gave them a claims history on the home and the CLUE report revealed that the seller had filed a claim to replace the roof after a wind storm. Only problem is that the roof wasn't replaced, the sellers pocketed the claim money. When my friend found this out she was able to successfully ask for the funds for replacing the roof to be held in escrow.

Provide all the information you can to the buyer's insurance company and hope for the best.

    Bookmark   June 29, 2009 at 7:33AM
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So, if they ran a CLUE report, according to what I just googled about CLUE, then the insurance company already has all the information that they just asked us for, is that it? Was this just the buyer's way of getting information from us?

    Bookmark   June 29, 2009 at 12:56PM
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Cordovamom is %100 correct.

If I remember correctly a Clue reports list the claims on a property for the last 7 years, showing the date, the type of claim, amount of the claim, and who the payer and payees are.

It does not tell if the payees actually used the money to repair the damage or if a quality repair was done.

Requesting a CLUE report and the associated info of any repairs for claims on the report should be standard operating produre in todays market.

The buyers and their insurance company are not accusing you of anything, they are just protecting their interests.

This is just smart business with all the the claims regarding mold,water, fire, wind and other major damage.

Relax, give them what you can. Perhaps you can go back to the original contractor(s) and get the supporting docs for the repairs.

BTW, your said that your agent said that you may have to provide the info. to the buyers and their insurance. I'm not sure about the insurance company access, but you have to give consent to private parties to run a CLUE report on property that you own.

Good luck!

    Bookmark   June 29, 2009 at 2:00PM
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