2

After entering an escrow for a home purchase we have received an email (legit) from a company affiliated with Chicago Title with quotes. I hadn't yet come to this step mentally. We're still in the contingency period. Before I explore further, should I consider insurance companies that insure my car (Geico, Progressive, for ex) to see if they have better rates?

This seems like a quote for home insurance but similarly for title insurance. What are the factors to keep in mind when choosing one (provider) over another?

1

If you get a mortgage for your new property you will need to have proof of casualty insurance (fire, ice, slip'n'fall, all that) at the time of the closing, of course. This proof of insurance is sometimes called a "binder."

Yes, definitely, ask the insurance companies you already deal with about casualty insurance for your new place. I've had a package discount for car and home insurance for a long time.

Chicago Title is legit. But they're in the title-insurance business. In some jurisdictions, or for some properties, title insurance is wise. It covers you against claims that the person who sold you the place didn't own it (or own it all) in the first place. Your real estate agent or closing lawyer knows what's needed here. Ask. (Dodgy subdivision deals many decades ago, lost records in registries of deeds, that sort of thing, can make title insurance wise. And some mortgage lenders require it.)

As a householder-to-be you're a prospective customer for casualty insurance. Your expected lifetime value as a customer is quite high so insurance companies are scrambling to get your business. And you're on a deadline (your closing) to buy. Somebody bought Chicago Title's list to market to you. No harm or scam in that.

In my opinion, here's how to proceed. If you deal with a real-estate agent, ask her.

  1. What casualty insurance company or companies do you recommend to your clients and why?
  2. Is my car-insurance company's recommendation viable?
  3. Please disclose any business relationship you or your firm has with the companies you recommend.

The closing lawyer also knows about these things.

You'll probably get a good suggestion or two. You'll certainly get steered clear of shady deals: real-estate agents never forget when things go wrong with stuff like insurance. They do this all the time.

Keep this in mind: if you can manage a high deductible your insurance premiums will be smaller. That is, if you can pay the first $10,000 of any loss, you'll pay less per month than if you can only pay the first $500.

| improve this answer | |
1

First of all home insurance is not the same as title insurance. Sometimes you will see home insurance called fire insurance, even though it covers much more than just fire damage. Title insurance comes in two types, both deal with mistakes in the title. One covers the lender and you must purchase. The other covers you if there is a problem with the title, and you should look into it.

So I am assuming that you want to discuss fire insurance.

In the Unites States many, but not all, insurance companies offer home, auto, and life insurance. If you have auto or life insurance, then taking a look at their home insurance policy makes sense. If you have multiple types of insurance with one company they will usually offer a multi-line discount, some call it a bundle. If you are happy with your insurance policy you already have, it is generally a good place to start.

Besides customer service, the big issue with any insurance policy is do they have the resources to pay what the policy cover if there is damage. In the United States all insurance regulation is done at the state level. You can do research at the state insurance commission website to see if there are complaints against the insurance company.

In some parts of the country there can be changes to who will write home insurance policies. This can happen if there are a series of natural disasters: forest fires, tornadoes, hurricanes. These events can destroy many homes, and over time some companies will want to get out of the business in that state.

If you have a mortgage they will require you to get home insurance. You will have to have made arrangements for a policy before you go to settlement. You may have to show proof of coverage and payment as part of the settlement process. Your real estate agent or the settlement company should be able to provide additional information about the proof required. The mortgage company may have specific requirements regarding amount or coverage, and if things like flood or earthquake insurance is required.

If there is no lender home insurance isn't required, but you will still want it to protect your investment.

For me if the insurance company is solid, then price is the biggest concern. Make sure that when you get quotes it is for the exact insurance coverage you are going to purchase. If you can't do an apples-to-apples comparison then comparing quotes is impossible. So talk with the lender or the state if there is no lender about what is required.

Also if you don't have life insurance already then look into it. You mention we in the question and adding a home to the mix makes it more likely that you will need life insurance. If you already have life insurance then this is a good time to review how much you need and have.

| improve this answer | |
  • This is useful information. Indeed the email called it Fire insurance and so I was wondering if I have to look for separate policies for each kind of hazard. Thanks for clarifying.My wife and I have separate insurance for our cars. We both have life insurance through employer and/or personal policy. I am taking the mortgage but looking to have my wife on the title as well. – perennial_noob Jun 10 at 19:30
1

The thing to consider most is cost and coverage. It is very difficult to compare policies because you want to make sure that you are comparing like coverages and companies have different minimum and maximums for different coverage areas.

The nature of your question suggests that this is your first home purchase. As such, I would recommend doing what ever is easiest for you. Buying your first home is a mental strain and nerve racking. You may want to shop your car insurance company for a quote, if you are happy with the way they handle your auto claims. However, if that proves difficult just go with the one suggested. You can always make it a goal to change in a few months.

If you are good with money and have no problems saving enough money to buy expected items (like car tires) you may want to explore doing your own escrow. You would have to save enough money to pay the property taxes and insurance premium each year, but just set aside an amount in your monthly budget. When I purchased my first how the escrow company was a total pain.

Most insurance companies are fine, they are regulated by the state and eventually pay claims. Some are easier than others. Personally, I had to take State Farm to court in order to get them to pay legitimate claims. It is a mystery to me how they are not closed by regulators.

Congratulations!

| improve this answer | |
  • This indeed is my first home purchase and this is indeed stressful. I think we may have gone too far to now do our own escrow. (I didn't even know this could be done but also my agent was perhaps looking to put the seller at ease as well.) – perennial_noob Jun 10 at 19:33
  • The example with State Farm is the sort of thing I worry about. Is that a norm with the big insurance providers like Geico, Progressive, State Farm, etc? With the auto insurance I have had close to zero hassles with Geico, so far. – perennial_noob Jun 10 at 19:34

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.