Can You Sell a Home with an Open Insurance Claim?
When dealing with home damage—whether from storms, fires, or accidents—many homeowners file insurance claims to cover repairs. But what happens if you decide to sell before those repairs are completed? Can you sell a home with an open insurance claim? The short answer: Yes, but the process comes with challenges.
If you’re considering selling your home while an insurance claim is still open, here’s what you need to know to navigate the process smoothly.
Key Considerations When Selling with an Open Insurance Claim
1. Who Receives the Insurance Payout?
If you’ve already filed a claim, the payout may not go directly to you—it often goes to your mortgage lender first if you still owe money on the home.
Many lenders require proof that repairs have been completed before releasing any funds. If you’re selling the home as-is, you may not be able to access the full insurance payout.
If the claim hasn’t been finalized, the new buyer may be able to take over the claim (in some cases), but this requires coordination with the insurance company.
Tip: Always check with your insurance provider and mortgage lender to understand where the payout stands before listing your home.
2. Full Disclosure is Essential
Legally, you must disclose any insurance claims and damage history to potential buyers.
Even if you plan to fix the issue before closing, the buyer has the right to know about past damage and ongoing insurance claims.
Failing to disclose an open claim can lead to legal consequences and lost buyer trust.
Tip: Be upfront with potential buyers about the status of the claim and any work that has (or hasn’t) been completed.
3. Selling to a Traditional Buyer vs. a Cash Buyer
Traditional Buyers: Most traditional buyers use mortgage loans, and lenders are often hesitant to approve financing on homes with active claims or unresolved damage. The sale could fall through if the lender requires the damage to be repaired before closing.
Cash Buyers: Since cash buyers don’t rely on mortgage financing, they can purchase the home as-is, without waiting for insurance companies or lenders to sign off on repairs. This speeds up the selling process significantly.
Tip: If time and convenience are priorities, a cash sale can eliminate many of the obstacles associated with an open insurance claim.
4. Can the Claim Be Transferred to the Buyer?
Some insurance policies allow claim transfers, meaning the new buyer can complete repairs and receive the insurance payout.
However, not all policies allow this, and buyers may be hesitant to take over a claim they didn’t initiate.
If the claim can’t be transferred, the seller may need to close the claim or use any received funds to negotiate the sale price.
Tip: Check your policy terms and speak with your insurance company to see if a claim transfer is an option.
5. Potential Delays in Closing
If the insurance claim is still pending or the payout hasn’t been processed, it can delay closing.
Some buyers might be willing to move forward while the claim is still active, but others may require the claim to be closed before finalizing the purchase.
Working with a cash buyer helps avoid these delays, as they can often work with the existing condition of the home and finalize the sale quickly.
Tip: If your timeline is tight, consider selling to a buyer who specializes in as-is purchases to avoid lender-related setbacks.
How Midwest Cash Offer Helps Homeowners with Open Insurance Claims
Selling a home with an open insurance claim can feel overwhelming, but Midwest Cash Offer has helped thousands of homeowners navigate this process with ease. Here’s how we can assist you:
We Buy Homes As-Is – No need to complete repairs or deal with contractors. We purchase homes in any condition, no questions asked.
Fast, Hassle-Free Closings – Since we pay in cash, you don’t have to wait for mortgage approvals or lengthy negotiations. In many cases, we can close in as little as 7 days.
We Handle the Details – Insurance claims can be complicated, but our team helps guide you through the process and ensures a smooth transaction.
No Fees or Commissions – Unlike traditional sales, you won’t have to pay realtor fees or hidden closing costs, allowing you to walk away with more cash in hand.
If you're dealing with an open insurance claim and want to sell quickly and stress-free, Midwest Cash Offer is here to help. Contact us today to discuss your options!
