It has come to our attention that insurance agents, brokers and companies are asking industry members to provide them with information about properties they are considering insuring. These requests include specifics such as year build, permits, and overall condition of the property to name a few.
The insurance companies will then use the information you provide them as part of their decision to insure a property or not, and how much premium they will charge.
We have received calls from industry members asking us if they should be providing this information, and more importantly, if it would be something covered by the REIX policy. The answer to both of these is no.
First of all, this is not a trade in real estate and as such, in the event of a claim or a lawsuit, the REIX policy would not respond.
The other issue relates to the potential liability you would be exposing yourself to. If an insurer elects not to place coverage on a property based on the information you gave them, you could be sued by the owner/buyer of the property. The same could be said if the insurer decided to place the coverage, but at a much higher premium.
There might be a circumstance where you provided information to an insurer on a property that was incorrect. Down the road, a claim arises and the insurer denies coverage based on the incorrect information. You might find yourself faced with a lawsuit from the owner of the property due to the denied coverage.
In summary, we strongly recommend that you do not engage in this sort of activity, due to there being no REIX coverage, and because it attracts a degree of potential liability.