After a long search, you’ve finally found what feels like the perfect home for you.
But there’s an open insurance claim on the property, meaning there’s unrepaired damage that the current owner’s insurance company has yet to address.
While you don’t necessarily have to back away from the sale, you should familiarize yourself with the implications of buying a house with an open insurance claim and how to protect your financial and legal interests during the transaction.
Understanding Open Insurance Claims in Louisiana Real Estate Transactions
Louisiana law does not prevent a property owner from selling a house that has an open insurance claim.
However, the existence of an open claim imposes certain obligations on the seller and provides the buyer with critical legal protections.
First, buyers have the right to notice of an open insurance claim for a prospective property. The seller must disclose any property damage — especially latent or hidden damage — that they know about, as they have already filed an insurance claim.
Second, buyers and sellers can negotiate what will happen to any insurance benefits paid by the seller’s homeowners’ insurance company after it has processed the seller’s claim.
Risks and Challenges of Purchasing Property with an Open Claim
Buying a property with an open insurance claim can involve certain risks and challenges.
A buyer may face unexpected repair costs if the seller’s insurance claim is denied or closed before the sale. Buyers and sellers may need to negotiate an assignment of benefits, which usually requires the insurance company’s written approval to ensure the buyer receives any claim proceeds.
Additionally, unresolved claims can make it harder for a buyer to obtain a new homeowners insurance policy, which is often required to secure a mortgage.
Key Factors Buyers Should Consider Before Purchasing
Buyers should keep the following considerations in mind before purchasing a property with an open claim:
- When does the insurance company plan to resolve the open claim?
- Will the seller agree to assign payment of benefits?
- Will the benefits cover the full cost of repairs?
- Will the insurers issue a new policy despite the open claim?
When to Consult a Louisiana Insurance Claim Attorney
You should contact a lawyer as soon as you learn that a potential home has an open insurance claim. An insurance claim attorney can review the existing insurance policy and the claim paperwork to advise you on your rights.
FAQs About Buying a Property with an Open Insurance Claim in Louisiana
Below are answers to common questions about buying property with an open insurance claim in Louisiana.
Can you legally sell a property with an open insurance claim?
The law does not prohibit an owner from selling their property with an open insurance claim, provided the seller discloses damage giving rise to the claim to the buyer.
What happens to insurance benefits after a purchase and sale of a property with an open claim?
A seller may choose to keep the insurance benefits after closing on a sale, although parties typically negotiate an assignment of benefits to the buyer.
Can I obtain a new insurance policy after purchasing a property with an open claim?
Many insurance companies refuse to issue new policies for properties with open claims due to the risk of potential liability for pre-existing damage.
Contact a New Orleans Insurance Claim Lawyer for Guidance
Have you discovered that a property you wish to purchase has an open insurance claim?
If so, an experienced attorney from Insurance Claim HQ can help you avoid the pitfalls or mistakes that could jeopardize your financial or legal interests.
Contact our law firm today for a free consultation.
