Good lenders care about their borrowers’ insurance coverage- not just price.

run down houseInsurance costs are a component of the debt to income ratio (DTI) used to qualify a borrower for a loan, so it’s logical that lenders pay attention to the costs of their borrowers’ policies. But should they care about the coverage of their borrowers’ policies?

Aside from making sure that the replacement estimate meets the appraised guidelines, or ensuring that the borrower carries flood insurance in a required flood zone, do Lenders need to care about other policy details?

ABSOLUTELY!

A bad policy, or deficient coverage can put the lender’s asset, against which the client is borrowing, at tremendous risk. Two areas in particular can create problem scenarios.

Deductibles. 

Clients that chooses high deductibles simply to save on annual premiums, put themselves and their lender in jeopardy. If borrowers don’t have the income or savings to cover a high deductible following a loss, it could lead to the property falling into disrepair thus increasing the foreclosure risk.

Inadequate or Missing Coverage.

Borrowers will frequently reduce coverage, or waive coverage recommendations altogether, just to save a few dollars on annual premiums. Here are some key coverage facts that lenders and borrowers should know:

  • Homeowners’ liability coverage is inexpensive. Stripping a policy down to $100,000 in liability coverage will only save a few dollars a year, and greatly increases the insureds exposure. COMPARITY recommends a minimum of $300,000 in liability coverage for all insureds, and suggests that insureds buy the maximum coverage available if possible.
  • Older homes should always have “Ordinance & Law” or “Building Codes” coverage. Failing to have this coverage could result in the insured having a large out of pocket expense in the event of a loss. COMPARITY automatically recommends this coverage to any homebuyer that is purchasing a home that is more than 20 years old.
  • Make sure that policies have “Extended Replacement” Coverage. This helps guard against inflation and rising building costs that could threaten the insured ability to be made whole following a loss. COMPARITY requests that all agents quote at least 25% extended replacement on all homeowners’ insurance quotes.

Insurance is another area where Lenders can help borrowers make good decisions. Always recommend that your borrowers compare their options, seek the advice of a knowledgeable agent, and remember that saving a few dollars today isn’t as important as properly protecting the borrowers most important asset. It’s important to be price conscious, but don’t be “penny wise and pound foolish.”

Scott Hunter

Founder/CEO

COMPARITY LLC

Are you a loan officer or loan processor?

Let us show you how can simplify insurance for all of your loans:

 

5 things to know when shopping online for insurance

Online shopping is great, right? From the convenience of a search engine or favorite online retail site, we can browse any product, compare options from different sellers, and click to buy what we want, when we want it. When it comes to shopping for home and auto insurance, however, it’s a much different story. Although it’s been around for several years now, online shopping for property and casualty insurance still does not meet expectations of buyer or sellers. There are both good and bad reasons for missed expectations. The brief article covers what we consider to be the most important aspects of online insurance shopping.

1. Instant estimates are not quotes

Online shoppers expect immediate results. There are insurance shopping sites that claim to provide instant prices. More often than not, these prices are rough estimates and don’t represent actual quotes on policies that can be purchased. In order for a price to be a valid quote it must be based on a completed application that has been through some form of underwriting. If a shopper enters only contact information and the year, make, and model of their car to get back an instant price they are getting an estimate. That estimate could change drastically once driving record and credit history are checked and those can’t be checked without more information from the customer.

2. Hard referrals are hard

All the information people provide to so-called insurance shopping sites must be provided separately to the insurers. That’s because the only relationships between online shopping web sites and insurance companies are strictly for marketing services. Most sites that claim to offer online shopping for insurance are really just digital versions of familiar marketing gimmicks. That should make you wonder, “what does that insurance shopping site do with my information?”

3. Your information is sold

Always read the fine print when it comes to your personal insurance, starting at the beginning when you are ready to shop. If you do read the fine print you will see that the way most online insurance shopping sites work is by selling customer contact information multiple times. We assert that people’s information is sold so many times that it become effectively worthless to everyone.

4. You aren’t really shopping

There are some web sites operated by legitimate insurance companies that claim to compare options among their competitors. However, no insurance companies that want you to come their site in order to buy insurance from a competitor. All insurance companies know that if they are the first to engage you then you will probably buy from them no matter what. The fact that it’s hard to shop for and buy insurance has a lot to do with it.

5. You can take control

Whether we’re talking about digital marketers selling contact leads or insurance companies claiming “we’ll show you the other guys’ prices”, it should be clear by now that so-called online insurance “shopping” is really online insurance selling. Furthermore, what masquerades as online insurance shopping can undermine the interests of buyers and sellers, alike.

In order for online shopping for insurance to meet our expectations, as either buyers or sellers, it has to work the same way as online shopping for anything else. Sure, there are some things that make shopping for insurance inherently different, but we know these can be overcome. To meet expectation, insurance shoppers should have the ability to fill out one insurance application to get back many quotes. Insurance sellers should be able to offer a quoted product online without having to pay to put it in front of the customer. The products that are offered should be the products that are sold, and not resemblances of the products. When the transaction is complete, everyone should be assured that the only role of online shopping was to connect buyers with sellers in a convenient and efficient way.

That’s what we do at COMPARITY: https://www.comparityins.com

3 ways home insurance can derail mortgage closings

image: www.geograph.org.uk

Many home buyers don’t start thinking about home insurance for their new homes until their lenders ask them about it during their closing process. Inexperienced lenders can be late to check on their clients’ insurance.  Too often, things come up that can have a negative impact on loan closing and even wreck deals. We’ve handled enough panicky phone calls and emails from mortgage lenders and home buyers to know. But home buyers and lenders don’t have to worry if they keep a few things in mind.

Environmental Conditions

We at Comparity live in an area where both hurricanes and flooding threaten homes on an annual or perhaps more frequent basis. But even areas not as infamous for damaging weather can face environmental conditions that force insurance carriers to adjust their underwriting criteria, increase rates, and restrict policy issuance. Regional restrictions vary by carrier over time and change frequently. Homebuyers often expect to go to their current insurance carrier for a new policy only to find the carrier has temporarily halted issuance of new policies in the area.

Excessive Claims

At some point during every closing process both home buyer and lender should be protected by a Claim Loss Underwriting Exchange (C.L.U.E.) Report. No home buyer or mortgage lender should do a deal without a C.L.U.E Report. The C.L.U.E. Report details the insurance claims history of a property. If there have been many claims on a property the cost of insurance on that property can increase, no matter what carrier. But again, all carriers have different appetites for risk so their policies will have different costs for excessive claims properties.

Debt-to-Income

For any number of reasons, including the two aforementioned, the cost of a home insurance premium can put a buyer over a legal limit on the amount of debt they can carry relative to their income. Hazard insurance policies often vary by thousands of dollars across carriers.

Shop and Compare

Anytime someone is buying a home they should shop and compare their options for home insurance. Mortgage lenders should encourage their clients to shop for home insurance well before closing. There are too many variables in every homebuyers situation to assume that they can find the right coverage for the best prices by going to only one seller, even if that seller represents multiple insurance carriers.

 

Announcing: Industry-First Integration Between Hazard Insurance and Loan Origination Software

FOR IMMEDIATE RELEASE

Contacts
Kevin Curry Angelo Jones
757-333-0712 678-781-7209
kevin.curry@comparityins.com angelo@williammills.com

Comparity, LendingQB Partner to Provide Industry-First Integration Between Hazard Insurance and Loan Origination Software

Virginia Beach, Va., Feb. 15, 2017 – Comparity, LLC, an insurance technology company whose mission is to simplify insurance shopping, has partnered with Costa Mesa, Calif.-based LendingQB to integrate its home insurance platform directly into LendingQB’s loan origination and loan processing software.

The industry-first integration imports mortgage loan application data directly into Comparity’s home insurance application. Home insurance applications require many of the same inputs as mortgage applications, and home insurance is required in order to close on typical home loans. The integration makes processing home insurance during the mortgage closing process more simple, transparent, and streamlined for both lenders and homebuyers.

“Everything in the mortgage industry is driving toward digital. It seems obvious for hazard insurance to be integrated but business and regulatory constraints have been obstacles,” said Scott Hunter, Managing Partner and Chief Executive Officer at Comparity. “We created a technical solution that enables homebuyers to shop privately with the most carriers using their mortgage application data. This integration also helps lenders track their clients’ hazard insurance requirement, validate estimates, and download evidence of insurance,” he added.

“To be competitive in today’s market, lenders need to remove as much waste from their workflow as possible,” said Tim Nguyen, President of LendingQB. “The partnership with Comparity eliminates hours of wasted time finalizing hazard insurance applications that can be leveraged through the existing data in the LOS.”

LendingQB’s LOS is completely web-based and designed to provide lenders a flexible, innovative workflow. Its open-architecture application protocol interface (API) enables lenders to select the tools, like Comparity, that best help their efficiency. Comparity’s technology and distribution platform is designed to fit specifically with the lender’s workflow and bridges the gap between a digital mortgage and hazard insurance.

About Comparity

Comparity is an insurance technology company whose mission is to simplify insurance shopping so everyone wins. Comparity connects buyers and sellers of personal insurance through an online, side-by-side comparison of multiple policy quotes from multiple companies using a single insurance application. Comparity reaches more insurance carriers than any other company, including carriers no other company can compare. Learn more at https://www.comparityins.com

About LendingQB

LendingQB is a provider of Lean Lending solutions. The Lean Lending solution consists of a 100 percent web browser-based, end-to-end loan residential mortgage origination system, best of breed integrations with key industry partners and ‘adoptimization’ services that result in faster cycle times and lower costs per loan. For more information, please call 888.285.3912 or visit www.lendingqb.com.

InsurTech for Insurance Agents

Agency Owners: watch to find out how we can send you completed insurance applications from home buyers for free.

Licensed in 50 States

We reached another important milestone last Friday: Comparity is a licensed insurance producer in all 50 states.

Now our technology can be used by insurance shoppers to compare options and buy insurance from any agency in the country. Our technology gives both buyers and sellers the “shopping cart” and “buy button” they’ve always wanted but could never have until we came along.

Insurance agencies who join our network receive completed insurance applications to quote for free. We receive a fee only for each new policy acquired using our technology. Both independent and exclusive carrier agencies can participate.

We are actively seeking new agencies to join our network in all 50 states, and especially in California, Florida, Georgia, and Oregon.

If you are an insurance agency owner or principal and would like to download our presentation to learn more please click here.

Better Together

Today we reached a milestone for our company and at the same time we contributed something useful to the world of home buying and home insurance. Today we launched our first API integration with a mortgage technology company and it was not only our first integration, it was the first integration of its kind between the home mortgage and home insurance industries.  It will help lenders, borrowers, and insurance carriers alike by streamlining home insurance into the increasingly digital mortgage business. It’s something that lenders have wanted for a long time but was never possible until we came along.

Technically, API integration is quite simple, almost trivial. For technology companies, API integration is expected. You’re not a tech company if you don’t API. But in the mortgage and insurance industries, API integrations are rare. Mortgage and insurance companies are not only decades behind with their technology but layers of regulations, consumer protections, and market forces made any business case for integration between mortgage and home insurance seem untenable.

That’s where we came in. The combination of our technology and business model makes it not only possible to integrate home mortgage with home insurance but profitable for us to do so, and in a way that adds value for everyone in the ecosystem. Lenders get a way to help their clients with hazard insurance that is compliant with lending rules and streamlines their closings. Homebuyers get a way to privately shop and compare the market without any effort. Insurance carriers and their agents get access to desirable customers without any up-front lead fees.

Today we reached a milestone for our company and did something useful for the 5M people who buy homes each year, their lenders, and their insurers. We won’t reach them all right away but we took the first step. That feels good.