Buying a Home Insurance Terms to Remember When Buying a Home

Madison, WI — Buying a home is one of most important financial decisions most people make during their lifetimes. “The home-buying process contains many unique terms and concepts, including those related to purchasing homeowner’s insurance,” said Sean Dilweg, Commissioner of Insurance. “It is important for consumers to know what these terms mean.” As part of Money Smart Week WisconsinSM, the Office of the Commissioner of Insurance (OCI) today announced the release of “Buying a Home – Insurance Terms to Remember When Buying a Home.” This fact sheet – available in English and Spanish – identifies and defines several insurance and real estate terms to help home buyers understand some of the terms that they will hear during the home-buying process. The fact sheet is available in English and Spanish.

    C.L.U.E. report: A C.L.U.E. report is a claims history report generated by ChoicePoint, a consumer-reporting agency. Insurance companies use consumer claims information when they are underwriting or rating an insurance policy. The report generally contains up to 5 years of personal property claims history. Before buying a home you should ask the current homeowner for a copy of the house’s insurance loss history report.Homeowner’s insurance: A package policy that combines more than one type of insurance coverage in a single policy. Homeowner’s insurance covers damage to your property, loss of personal belongings and provides some personal liability protection. Additional coverages such as sump-pump, sewer back-up, or scheduled personal property can also be added to the package for additional premium.Home warranty: An insurance policy that covers the mechanical breakdown of individual pieces of a home. Coverage extends over a specific time period and does not cover the home’s structure. Typically, the warranty will cover the electrical and plumbing systems, the furnace and range, roof, and other items, for one year from the date of closing. Home warranties have exclusions and limitations that can greatly restrict the product’s usefulness.Market value: A real estate term that describes what the current value of your home would be if you were to sell it – including the land. This amount is generally not involved in determining what amounts to purchase under a homeowner’s insurance policy. The anticipated cost to rebuild the home should form the basis for the amount of coverage purchased.

Money Smart WeekSM Wisconsin was created by the Governor’s Council on Financial Literacy which Governor Jim Doyle formed last year to improve financial literacy in Wisconsin. The second-year campaign is modeled after similar promotions run by the Federal Reserve Bank of Chicago in the cities of Chicago and Detroit. It is envisioned as ongoing from year to year. Wisconsin’s initiative has the support of the Federal Reserve Banks of both Chicago and Minneapolis.

For more information contact: Mikaela Reck, Public Information Officer, (608) 267-9336 or mikaela.reck (at) wisconsin (dot) gov

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