Even under the best of circumstances, the process of filing an insurance claim then receiving the benefits can move slowly, and sometimes homeowners may want to sell their property before the claim has been completed. In most cases, an open insurance claim does not inhibit your ability to sell your property, but there are some important considerations to keep in mind during the process.
Read on to find out what you should know if you’re looking to sell your house with an open insurance claim.
Can I sell my house with an open insurance claim?
When selling a home with an open insurance claim there are two options. You can either:
- Assign the benefits of the insurance claim to the buyer, or
- Retain the benefits of the claim, and reduce the purchase price.
Each option brings different considerations. If you choose to assign the benefits of the insurance claim, have the assignment of insurance benefits agreements reviewed by an attorney prior to signing.
If you choose to retain the benefits of your insurance policy, you are likely going to be unable to recover the recoverable depreciation or Replacement Cost Value of the damages. A condition to this recovery is that once the home is sold, you’re incapable of doing the repairs.
For more information on selling property with an open insurance claim, see Amy Currotto’s post, Who Collects the Insurance Claim Proceeds if the Damaged Property Is Sold?
Additional Considerations if you Retain the Benefits from an Open Insurance Claim
Here are a few additional suggestions if you retain the benefit of your insurance policy.
- Clearly note how much you have reduced the sale price of the home in the seller’s disclosures form.
- Ensure that all necessary inspections are completed.
- Ensure that you notify the insurance company that you intend to sell the property, and give them time to reinspect if they request to.
What should sellers in Florida know about open insurance claims?
Sellers of property in Florida have an affirmative duty to disclose latent defects or damages that are not readily apparent and that have an impact on the value of property. That’s why you should always be open and honest with your realtor. Discuss the damages to the home, and ensure that they are disclosed to any potential buyers.
How long does homeowners insurance have to settle claims in Florida?
In Florida, once an insurance claim has been officially filed, insurance companies have 14 days to acknowledge the claim and send the policyholder the proper paperwork and instructions for making a sworn statement about the scope of damages and/or injuries. Once all the paperwork has been received, the insurance company has 90 days to make a decision and render payment on any undisputed parts of the claim.
Does home insurance have cash value?
When you’re buying homeowners insurance, you can choose between what’s called Actual Cash Value (ACV) or Replacement Cost Value (RCV) for your personal property coverage. Actual Cash Value reimburses homeowners for the value of lost or destroyed property minus depreciation. Replacement Cost Value pays for the full cost of replacing any lost or damaged property and thus is generally worth more than the Actual Cash Value.
Are property insurance proceeds considered income?
Settlements from homeowners insurance generally aren’t considered taxable income, though you may owe taxes on your proceeds if you end up profiting from the payout. This isn’t as unusual as it may sound, given the difference between the value of a home when you bought it versus the current value for which it may be insured. However, depending on how you use the insurance money you receive, there are ways to avoid taxes by reinvesting the money in the house. It’s best to speak with an attorney to find out exactly what your tax liability might be.
Where can I learn more about insurance claims?
If you still have questions about insurance claims and your rights, we’ve created several ebooks to help you navigate the world of insurance law:
- What To Expect With Insurance Adjusters
- Insurance Company Response Time
- Filing A Property Insurance Claim
- Hiring The Right Insurance Attorney
Let Merlin Law Group be your advocate
These are just some of the considerations one needs to take into account when selling property with an open insurance claim and is by no means an exhaustive list. If you’re currently looking to sell your property while you still have an open insurance claim, you should retain an attorney to handle the claim, advise them of the potential sale, and seek their input and advice before moving forward.
At Merlin Law Group, our attorneys have been representing insurance policyholders throughout the U.S for over 30 years. We’re licensed to practice in 25 states and have the industry expertise and wherewithal to see to it that you get all of the insurance benefits you’re owed. Contact us to speak with an attorney.