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#2192530 - 09/13/18 04:52 PM Estimates of Hazard Insurance
Likes to Comply Offline
Platinum Poster

Registered: 11/07/08
Posts: 780
Loc: In the mountains
How are you estimating hazard insurance on purchase transactions?

We cannot get a quote within the time needed to get the LE out, we don't generally know who they will obtain the insurance through, things like credit score and past losses make a difference in an individual's premium, not to mention some insurance companies charge more than others for the same coverage.

We have done an analysis of purchase transactions over 1 year and there just isn't a clear cut way to estimate with any accuracy what the premium might be, the premiums for similar valued homes can range between $600 and $1600.

How are you handling this at your institution?
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#2192577 - 09/14/18 09:50 AM Re: Estimates of Hazard Insurance [Re: Likes to Comply]
RR Joker Offline
10K Club

Registered: 11/15/02
Posts: 20206
Loc: The Swamp
We do the best we can based on what we know and see...that's all I know to do~!
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My opinion only. Not legal advice.

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#2192583 - 09/14/18 09:53 AM Re: Estimates of Hazard Insurance [Re: Likes to Comply]
Dan Persfull Offline
10K Club

Registered: 08/28/02
Posts: 45148
Loc: Bloomington, IN
I did a Google search to find the average cost for our area for a $250,000, $500,000 and $750,000 home based on value alone.

I broke those costs down per 1,000 and put together an Excel worksheet that will calculate the estimated cost based on the homes estimated value.

Homes up to $375,000 are based on the cost per 1000 for the $250,000 home.

Homes $375,001 to $625,000 are based on the cost per 1000 for the $500,000 home

Homes $625,001 to $1,125,000 are based on the cost per 1000 for the $750,000 home.

If the home's value is greater than $1,125,000 then a quote is required.

We've been tracking this for about 4 weeks now. Our estimated quotes so far are within $250-$700 of the actual premium, dependent on the insurance company.

HO insurance is not subject to a tolerance and this method of estimation gives us a documented and consistent procedure for estimating the HO insurance.
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The opinions expressed are mine and they are not to be taken as legal advice.

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