Hi All,

I hope Canie won't mind me posting this off topic post, but I think this consumer alert needs more circulation in regard to a current nearly nationwide problem with purchasing property insurance. As we have quite a number of readers at this site, I have no doubt that sometime during the next year one or more of them may purchase a new home or rental property, so here's a heads up from your insurance industry agent.

The crisis today centers around water damage claims and possible resulting mold claims. I know we spoke briefly about this a few weeks ago, but I feel the need for the public to know the ramifications of this issue may be far more costly than you can imagine.

From those who have had water damage claims in the past three years and are facing non-renewals, to those who wish to purchase a property and learn later it had a prior water damage claim, coverage through a common insurance company in California and many other states is no longer available. Therefore, these properties must be covered by high risk carriers. The policies issued do not have the wide, comprehensive coverage one would usually expect, the deductibles are very high and the cost is as much as six times higher than normal.

In the normal disclosure statements issued through the real estate purchase process there is no requirement to disclose prior water damage claims. The insurance industry has a database system which logs all insurance claims by property address. Before a policy is written, this report is run. If it reveals a prior water damage claim, an individual who makes an offer to purchase a property may find they can only purchase coverage at an extremely elevated price which will continue from three to five years. Imagine paying $6,000 for three years of property coverage?

As I have contact daily with many folks who are in the middle of an insurance crisis while trying to close a loan on a new property purchase, they are caught in a time constraint. The coverage cannot be purchased on short order and their budgets are not set in anticipation of such an event either. At times funding is held up while waiting for insurance to be purchased.

This is a very serious crisis and I hope by sharing this information with our readers, anyone who intends to purchase a home may wish to talk to their insurance agents first and have them run a special property loss report and find out before signing on the dotted line if this property has suffered any water damage claims in the past five years. If they have, you may want to make some provisions in the purchase of the home contact. It could save you thousands in premiums and chaos when you least expected it.

Thanks Canie for the bandwidth.

Petra