Insurance cost disclosure in home sales

In most of the country, a seller does not have to tell you what homeowners insurance will cost, and no state law we found requires it. What sellers may have to disclose is the property's history: known defects, past water damage, and in a growing number of states past flooding or flood claims. If you want the premium, the claims record and the insurability answer, you have to ask for them and get them during your contract's inspection period, before the deadline to back out.

Why premium is not a disclosure item

A seller's disclosure form is about the condition of the house as the seller knows it. A premium is a price quoted to a particular buyer on a particular day, and it depends on your credit-based score, your claims history, your deductible choice, the carrier you choose and the market that month. The seller's current premium predicts almost nothing about yours, especially if the seller has had the same policy for years or is a long-time customer with legacy discounts, or if the seller's company has stopped writing in the area.

That gap has become a real problem. Premiums vary enough by state, ZIP code and roof that a home's insurability can change the monthly cost of owning it by hundreds of dollars. See how rising insurance costs affect home prices and sales and home insurance as a share of what you pay for housing. Proposals to require some insurance-cost or insurability disclosure at sale have appeared in state legislatures. For example, a 2023 Florida bill, SB 1398, was described in a search summary as seeking disclosures at the time of sale about how a property could affect insurance costs, but we could not confirm it became law. Treat any such proposal as unadopted unless you verify it in the statute.

What sellers may be required to disclose

The rules are state law, and they differ more than most buyers expect. In general there are four categories.

Known material defects. Many states require or expect sellers to disclose known problems with the roof, plumbing, electrical system, foundation and water intrusion, either on a state form or under common-law duties not to conceal. Defects that affect insurability, such as active leaks, an old roof or outdated electrical panels, fall here, but a state form rarely says "this may be hard to insure."

Insurance claims. Whether a seller must volunteer past claims is unsettled in most states. A North Carolina Realtors Q&A citing the state real estate commission says the duty to disclose prior claims is decided case by case, and that a property that is uninsurable or insurable only at exceptionally high rates may carry a material fact that should be disclosed. A claim is not itself a defect, but the damage behind it often is. Check your state's form and ask your agent about local practice.

Flood history. This is the area with the clearest statutes. Florida requires a seller of residential real property to give the buyer a flood disclosure at or before the time the contract is signed under Fla. Stat. § 689.302. It asks whether the seller knows of flooding that damaged the property during the seller's ownership, whether the seller has filed an insurance claim for flood damage, including through the National Flood Insurance Program, and whether the seller has received flood assistance, including from FEMA, and it tells the buyer that standard homeowners policies do not cover flood. Read the statute for the current text. Other states have disclosure laws of varying strength. Louisiana, according to a summary of state laws, asks whether the property has flooded and how often, whether it is in a FEMA-designated flood zone and whether the seller or a previous owner received federal disaster aid. A 2024 NRDC analysis, reported by E&E News, counted 28 states with flood disclosure requirements it considered at least adequate, while earlier analyses ranked many states weak. Rules are changing, so check yours with the home insurance rules by state.

Federal requirements. Federal law makes lenders determine whether a house is in a special flood hazard area and warn borrowers, and it requires flood coverage in those zones for federally regulated loans. See Flood zones and FEMA flood maps explained. These duties fall on the lender, not the seller.

What you can do as a buyer

Because disclosure is thin, buyers have to build their own file. This works best if done in the first week of your contract's inspection or due diligence period.

1. Get insurance quotes before you remove contingencies. Give agents the address, year built, roof age and material, square footage and a rebuilding cost estimate. Use the homeowners quote comparison worksheet. If three carriers decline, you have learned something the form did not tell you. The full routine is in check insurability before you buy a house.
2. Ask the seller for a CLUE report. The seller can order the property's CLUE report, which lists claims tied to the address. Put the request in the offer or ask during due diligence. A buyer cannot normally pull the report on the seller's behalf. See CLUE reports: how claims history follows you and your house. Ask also whether claims were paid and repaired; a paid water claim with no repair receipts is a warning.
3. Request the seller's current declarations page. It shows the carrier, the coverages, the deductibles and the endorsements, and whether the seller carried flood coverage. It does not show what you will pay.
4. Order the right inspections. Older Florida homes may need a four-point inspection; coastal buyers should ask about a wind mitigation inspection, which can lower the premium, and about the roof's remaining life.
5. Check the flood zone and flood history. Look up the address on FEMA's map service and ask neighbors, the city floodplain manager and the seller about past water. If a flood insurance policy is in force, an NFIP policy can sometimes be assigned to the buyer; confirm with the agent.
6. Read the HOA documents if it is a condo or townhome. Master policy coverage and special assessments belong in your cost estimate.
7. Make the contract work for you. Where your state allows, add an insurance contingency that lets you cancel if you cannot get coverage at or below a stated premium or from carriers you accept.

A hypothetical comparison

Say a seller's disclosure form lists no known issues, and the seller says the house has "never had a claim." Three quotes arrive at $3,800, $4,400 and $5,100 a year, and the cheapest requires a new roof within 12 months. The listing price did not change, but your monthly costs and near-term capital needs did. Only the quotes and the roof inspection told you. Numbers in this example are invented to show the mechanics and are not market prices.

The debate over mandated insurance disclosure

Supporters of broader disclosure say the buyer is the party with the least information and the most at stake, that insurance cost now influences home values, and that sellers and agents sometimes know about nonrenewals or high quotes. Opponents, including many real estate groups, say a seller cannot predict a buyer's premium, that an estimate could be wrong and invite litigation, and that buyers can already get quotes during due diligence. A middle path discussed in some states is a notice form telling buyers to get insurance quotes and check flood history before closing. Both sides agree on this: the buyer's own quotes are the reliable number.

Key takeaways

• No state law we found requires a seller to disclose expected premiums, because premium depends on the buyer.
• Sellers may have to disclose defects and, in a growing number of states, flood history; Florida's flood disclosure statute is Fla. Stat. § 689.302.
• Whether to disclose past claims is unsettled in many states; ask for the CLUE report on the address.
• Get real quotes and inspections before your due diligence period ends, and add an insurance contingency if you can.
• Check your state's current rules rather than relying on the seller's form.