Dear Loan Officer... Sincerely, Insurance Agent
So, if you’re in the mortgage lending industry, you’ve handled an escrow or two. If you’re good, one of the first things you do when you begin to process a loan is invite a couple insurance agents to offer a quote to your borrower. If you don’t do this, you will undoubtedly end up at the end of your escrow, ready to close, then risk getting hung up because your borrower didn’t go out & secure insurance to cover the home (which is required before the lender will fund the loan). How many of you had to learn the hard way?
Example: Loan docs come in, everybody signs. Title then goes down its list… uh oh, no insurance. A newby loan agent will think, “No big deal, we will get an agent to just whip us up one quick”. Well, then you find out the home has unacceptable features like a shake roof, or a pool with a diving board, or has some other issues making it so that you can’t find a policy in 5 minutes. The deal could really get bungled up right at the end. Here is what a GOOD insurance agent wants to tell you.
10 things every Loan Officer needs to know about home insurance policies.
1. Not All Insurance Policies Are The Same.
If you don't read anything else on this page, I'm glad you've gotten this far!
2. Independent Agents offer multiple policies.
And they can meet the needs of both your buyer AND your financing requirements. Get to know an independent agent. It’s a win/win.
3. Sometimes the cheaper policy IS the best coverage, sometimes it isn’t.
Higher cost doesn’t always mean better. You can not use price as an indication of the better policy. Some policies are not worth the paper they're written on! And they can be the same price as the ones that ARE good.
4. The difference between a GOOD policy and a bad one is as little as $50 per year.
That is about $4. Will that $4 REALLY kill your deal? Probably not. But, if it will, talk to the agent, let them handle that part. At Executive Edge, we know how loans work, we can help you close that deal without any drama.
5. Take this example & remember it forever:
Some policies cover pools with diving boards/slides, some do not. Most do not, in fact. If your borrower is buying a home with one of those, it might not be considered at the time the policy is issued if everyone is working too fast to pay close attention, your borrower could end up with a HUGE lawsuit down the road that isn’t covered if someone is injured using that diving board. If you & your chosen agent carefully select 3 policies at the beginning of your career that you can confidently forward to your clients because you KNOW they’re solid, you will do them a great service! To note: our Safeco policy has no exclusions for diving boards, slides, or trampolines. Executive Edge tends to favor that policy in many cases BUT, what IF it isn’t always rock bottom cheapest? Please know that it's usually the best value & not much more in cost. Independent agents understand VALUE.
6. You should go to lunch with your favorite agent at least once.
ASK them what you need to know in order to gain confidence in your referrals. Taking that 30 minutes will improve your career and your value to your client. If you enjoy the time spent, go out a second time and ask to understand your own home insurance better, afterall, you are in the HOME industry. When your borrower asks you, “Well, who is YOUR policy with?” You can answer confidently why you chose the policy you have.
7. You aren’t expected to replace the insurance agent.
However, you are in a key position where the borrower strongly considers your referral, and you should do all that you can to increase the integrity of your referral. That way, if the client doesn’t pay close attention to the policy, at least you got them off to a good start.
8. Your agent will always attempt to get your mutual client in the seat at some point.
Why? To discuss IN DEPTH coverage & options, but many homebuyers will want to put it off until they get settled into the house and the stress and anxiety of it is lessened. Starting them off in the best position is ideal, just in case they never make it in. We will reach out to them at renewal time.
9. Here are some things you can think about, in case you never make it to the lunch with the agent:
A good policy should have few exclusions for people's yard toys like slides & trampolines. It will also offer an Equipment Breakdown feature that will pick up where the home warranty ends. This covers things like AC units, Water Heaters, Pool Pumps, expensive electronics. And, if it’s a Safeco policy, it won’t raise their rates if they file a claim on the Equipment Coverage. It might even cover things like cell phones, laptops & cameras. This leaves the door open for your client after escrow is closed, they will have flexibility whereas if you just rush a policy at the last minute, they could lose that. And likely they’d never know they could have had it.
10. Consider allowing Executive Edge to be your choice Agency.
There are many policy options available at Executive Edge, you can ask us for 3 quotes from 3 different companies to have on file.