My wife and I are looking to close on our first home. In 2010, this area was hit by a large hail storm and as a result, insurance companies seemed to be dishing out money left and right for roof repairs (some were justified, others just seemed to be frivilous payments). Anyway, the house we are buying was given a large claim in 2010 for hail damage to the roof. Insurance company X paid the owner $11,000 to get the roof repaired. She instead chose to forego the roof repairs after contractors said it was in good shape and instead replaced her windows. We also have company X and have been told by them that in order to insure this home they would put on a roof exclusion but insure the home and require us to have the roof repaired within 2 years. In checking around for insurance quotes, we checked with company Y and they also gave us a quote but did not say a word about the roof damage and did not give us the stimpulation that we needed the roof repaired nor would they exclude the roof. Both companies are well known, very reputable companies. We've had someone inspect the roof and they agreed it definitely has some good life left in it. Are we in any way obligated to tell insurance company Y what company X said or inform them that there was a claim in 2010 and no repairs were made? I dont want to be in any kind of fraud situation (but I guess we didnt get the payment anyway) or put myself in any kind of bind down the road, but after the inspection and confidence the roof is good, I'd like to have a policy without an exclusion or 2 year stipulation attached. Thanks
Sounds to me like company X paid for a new roof on that home and wants it on there regardless of who's pocket it comes out of. Wonder if they can do anything to the previous owners? I couldn't imagine you would have to disclose anything to company Y as they paid nothing and you filed no claim. Other than the fact you placed it in the Internet you have no prior knowledge of such claim and it's not like you're looking for a claim directly after closing. You could always call company Z and run it by them to see what they would say?
No im pretty sure you don't have to disclose that to them. Go through the process, see if they ask the question if you know of any other defects
We had the same thing here in 2005 with storms. My neighbor got a check and didn't put on a new roof, but got a new pick up. After a year or so the insurance company came by and did inspections and they had to pay for a new roof out of their pocket. I'd definately do some investigating on the laws in this situation.
Usually the insurance company only pays you actual cash value for your damages until the new roof has been installed. Then you get the full amount for replacement cost. I'd ask the company if they have ran your CLUE report yet for that address. Any claims on your home should appear then. If not, I wouldn't worry about it.
I don't think you would be held responsible for the previous person and what they did. If your roof is fine, then I would assume youre fine. But hey it never hurts to ask your insurance company. Worst they'll do is make you fix it before insuring you, just make sure the seller fixes it.
Not that it makes up for a less than perfect roof, there are some upgraded windows in the place. Whether it was into the windows or the roof the money was used to improve the house.
Most companies subscribe to a clearing house of claims information (CLUE) like buttombuckmaster mentioned. Company Y has likely not ran the CLUE report yet but will when it comes time to issue the policy. If they find where the roof has been paid for but not replaced, they have every right to make the same demands as X. The same roof should not have to be paid for twice.
^^ This & what Fletch said... It will be disclosed to you officially at closing so there is no hiding it - that roof is 'flagged' as damaged until it's been repaired... So if you have a hail storm come through this summer and you sustain a bunch of damage - your pretty much SOL getting Ins. to pay a claim.... We bought a house with the same issue once (hail damaged roof and owner pocketed the money)... I made him put on a new roof and wouldn't let him use that in negotiations either since he had already received the money to have it fixed...
We got the owner to drop her price asking to cover the cost of a new roof. I would rather replace the roof myself and have control over what shingles go on, etc. Had she not adjusted her asking price, we would have alked away. So I guess I am too honest of a guy but I couldnt try and hide this from the new insurance company. Anyway, we have State Farm and the claim was also paid out by State Farm. Insurance company Y was American Family, so I stopped at his office today and told him the whole story about the claim, payment, and no repair. He worked with his claims adjusters and told us we'd be able to insure the house, roof and there would be no stipulation as to when it needed to be fixed assuming when they look at it there arent missing shingles, curling shingles, etc (which there is none of as we've had it looked at). If a hail storm came in May and damaged the roof, we would be eligible for a claim if needed. Feels good to lay everything out on the table!
You did the right thing by just being honest...you don't want anything coming back to bite you later on
Glad that worked out for you. I still would not be surprised if push comes to shove that American Family may discount any future damage to the roof due to prior non-repaired damages. Either way, you have done the right thing and the home price was discounted to cover the cost of a new roof. I think we will soon see a day that all roof coverage will be on an actual cash value basis. Replacement cost coverage on shingles was a dumb idea to begin with. Companies should have never offered replacement cost on something that only lasts 15 to 25 years. Too many people just wait until the roof is about to rot off and pray for a storm. Insurance was never meant to be used for general maintenance items. Best of luck with your new home purchase. Thats exciting stuff!
Definitely good you made them drop the price. Dont worry about being too honest, ive talked myself down on the price of my own car I was selling.
THis does unfortunately show that there is a problem with how insurance claims are run. In this case, the claim money went into new windows, but there are so many other claims that go into things like new trucks, vacations etc.
If there is a mortgage on the home and the claim is for more than a few thousand dollars, the mortgage companies will hold the funds in escrow until the repairs have been made and they have inspected. That is the way it should be. Without a mortgage, most companies just pay up the actual cash value of the loss and hold the replacement value difference until they are presented with proof that the repairs have been made. Then they also have the option of inspection before releasing.
So bottom line, you got new windows and a new roof? The seller ended up losing out to their own deceit. Valuable lesson.
I also agree with this. If they were paid to put a new roof on and choose not to they would have commited insurance fraud.
Glad others chimed in, I've never known how claims and such worked but now it makes sense. Here's what I'm curious about now. can the general public do a CLUE search somehow? Is there like a carfax for homes? Be interested to see if any claims have been filed on my home in the past 15 years or so(only been in it 2 years), realtor never mentioned it and I was in a hurry up and move situation.
No you don't have to tell the new insurance company. They came and looked at the property and gave you a quote. They want your business. So the old owner lowered the price to cover a roof... or a driveway or whatever. All she did was lower the price..... probably to closer to where it should have been. Buy the house and worry about the roof when you need one.
