4 insurance tips for home sellers
When you sell your home, you're opening up your property to the eyes of strangers. Many realtors say that you're at increased exposure to theft, and you're liable for any injury that occurs during the viewing. So what can you do to protect yourself from financial losses in either case?
"A typical homeowner's policy should provide standard liability protection for injuries to a Realtor or potential buyers who enter a home that is on the market," says Merle Scheiber, South Dakota's director of insurance. However, you might want to purchase additional insurance to protect yourself from potential lawsuits or medical claims.
Here are four insurance tips for home sellers.
Insurance tips for home sellers
1. Update your insurance policy.
Sometimes when people are about to sell their home, they stop updating their home insurance policy because they're not going to have the home much longer. This can be a serious error is you make improvements to your home prior to selling it, but don't update your home insurance policy to reflect the upgrades.
Not updating your policy means you might not get reimbursed completely if your home is damaged when you're trying to sell it. For example, if you upgraded your kitchen floor from linoleum to marble tiles and linoleum is listed on your home insurance policy, your insurer will only replace flooring for the value of linoleum, says Nicole Ganley, director of public affairs for the Property Casualty Insurers Association of America, West Region.
Ganley recalls a story of a friend who had copper pipes stolen from his home while selling his property. Luckily for him, his home insurance policy was up-to-date and the pipes were replaced.
2. Don't skimp on necessary repairs.
Fixing up your home isn't just about selling it. A small hole in your wooden floor could cause a woman walking in high heels in your home to trip. A prospective buyer falling down a flight of stairs because of a loose railing or a step that needs repairing is an unnecessary and costly injury to the home seller, says Chris Hackett, director of personal lines policy for Property Casualty Insurers Association of America.
Examine every room of your house, look for any problems that could cause an accident and fix them.
But don't just look for repairs. Practice "safety staging" by scanning your home every morning for safety hazards. For example, make sure mopped floors are dry before you leave. Don't leave out cords that could cause someone to trip, Ganley says.
3. Lock valuables in a safe.
In an open house situation, it's nearly impossible for realtors to watch their clients' every moment, says Frank Kowalski, Realtor and regional vice president for the National Association of Realtors. "Sellers need to be sensitive to this and lock up valuables and anything that can) be easily pocketed. I've seen diamond engagement rings open and out without a care in the world in mind at open houses)," Kowalski says.
He also recommends locking medicine cabinets or putting medicine in a safe, as prescriptions and medications are sometimes stolen during open houses.
An added bonus: A home that is tidy and organized is more appealing to buyers, Kowalski says.
4. Consider changing coverage amounts.
The more people walking through your home, the more you are at risk for a claim against your homeowner's policy. A typical home insurance policy covers $300,000 for liability and $5,000 to $10,000 for no fault medical payments for guests in your home, Hackett says.
However, $10,000 won't cover much medical care for a serious injury; for example, the medical costs of a bad leg break could cost over $10,000, he says. A catastrophic injury, such as a spinal injury caused by a fall, could cost $500,000 in medical costs. If the homeowner was at fault for the accident, the liability portion of his home insurance policy would cover the first $300,000 of that cost - but the homeowner would be responsible for the remaining $200,000 out of pocket.
Hackett recommends that home sellers should buy additional liability coverage for short period of time - say a month - while prospective buyers are viewing their home. This coverage, known as an umbrella policy, can increase your home insurance liability limits up to $1 million.Also, home sellers should check with their insurer to see what that they'll pay out of pocket if an injury occurs and they have to make a claim -- typically, a home insurance deductible is $500 to $1,000.
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