The array of insurance and warranty policies that come into play during a real estate transaction can be overwhelming for first-time buyers and first-time sellers, too.
Home warranty policies, sometimes purchased by home sellers, real estate agents or home buyers, are also an option to provide financial coverage and contractors to repair appliances and systems in a home.
Now a new option has come into play: an insurance policy that protects home buyers during their first year of ownership to cover issues that may have been missed on a home inspection.
“Home buyers often need help with their anxiety over making a home purchase and they especially get distressed if they face unexpected repairs during their first year in a home,” says Daniel Blanaru, chief growth officer of Hippo, a home insurance company. “We introduced our Inspection Protection insurance policy to provide peace of mind for buyers that they have insurance to cover a big-ticket structural repair.”
Hippo’s policy covers up to $100,000 in repair costs for structural items such as walls, roofs and foundations. For most homes, the policy costs $350, Blanaru says.
“Anyone can buy the policy if they schedule a home inspection through Hippo,” says Blanaru. “In our pilot program, 85 percent of sellers who were given the option purchased Inspection Protection when they had a presales inspection. For sellers, this is like pre-certifying the home.”
During the pilot program, buyers were four times as likely to waive a home inspection, and transactions speed up by three weeks from the listing to the contract because of the presales home inspection and the insurance policy, says Blanaru. Buyers can opt for their own home inspection even when the sellers have a presales inspection and provide Inspection Protection.
“Inspection Protection is a complementary product to a home warranty, because a home warranty won’t cover structural elements of a home,” says Blanaru. “If a home inspector misses something such as a roof leak, your homeowner’s insurance policy may not cover that because it could be from lack of maintenance rather than storm damage.”
One claim that Hippo’s Inspection Protection covered during the pilot program involved drywall that was destroyed by a hidden leak behind a washing machine.
“The leak and the damage weren’t discovered during the home inspection because inspectors don’t normally move an appliance,” says Blanaru. “A home warranty policy replaced the leaking washing machine hose, but homeowner’s insurance wouldn’t cover replacing the damaged wall because that was a preexisting condition before the buyers moved into the home.”
Hippo’s Inspection Protection is available in 23 states where the company operates, including Maryland. While the company plans to continue expanding, it is not currently available in D.C. or Virginia.
“While the policy provides financial protection and peace of mind for buyers, it also benefits sellers and agents because it can streamline the transaction and alleviate the risk for sellers and their agents associated with missed home inspection items,” says Blanaru.
This report was updated to reflect expansions in Hippo’s services.
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