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Broker packages insurance, home sale

Coldwell Banker has seen home sales plummet because buyers couldn't find affordable property insurance, so it offers a one-stop shop of sorts.

By TOM ZUCCO
Published August 4, 2006

After watching real estate deals collapse because potential buyers couldn't find or afford property insurance, Coldwell Banker Residential Real Estate Inc. decided to intervene.

The state's largest real estate broker started offering its residential customers in Florida a wide range of insurance, including auto and homeowners policies, through NRT Insurance Agency Inc. of Waltham, Mass., an affiliate of Coldwell Banker's parent company.

Coldwell is banking on the notion that the marriage of real estate and property insurance could be a key to selling houses in a cooling market. With 168 offices in Florida, Coldwell handled about 70,000 transactions last year worth more than $23-billion.

"We have seen for months the impact of the insurance crisis on commercial transactions," said Budge Huskey, president of Sarasota-based Coldwell/NRT in Florida. "And on the residential side, we're now beginning to see transactions lost."

Coldwell Banker says the arrangement, billed as a form of one-stop shopping for prospective home buyers, will offer clients a choice to find property insurance on their own or through NRT, formerly known as Coldwell Banker Residential Insurance Agency.

Policies will be offered by regulated insurers such as Travelers and Liberty Mutual, as well as through "surplus lines" companies such as Lloyd's of London. Coldwell Banker is also considering extending the insurance service to developers and commercial clients.

"We're not trying to insure every resident in Florida," Huskey said. "It'll just help close the deal."

It could also help point to the issue of affordability, rather than availability, as the root of the insurance crisis.

"This proves insurance is available in the residential market," said consumer advocate Bill Newton, executive director of the Florida Consumer Action Network.

"If they (Coldwell Banker) are selling insurance, it exists," he said. "So there's no capacity problem. There is a price problem."

Still, company officials acknowledged this isn't all things for all people. In some cases, Citizens Property Insurance, the state-run insurer of last resort, may be the only alternative, especially when a residential property is located in a coastal area such as Pinellas or Pasco county.

What's more, only Coldwell's customers can use NRT's service, and only NRT-owned brokerages will participate.

Franchised Coldwell Banker offices are not in the program, and the sale of policies will not financially benefit the Realtor who finds the buyer.

"We may end up having two or three layers of insurance, including Citizens," Huskey said. "But in other areas, we're prepared to provide full coverage."

Huskey acknowledged that Coldwell might not always be the least expensive, but said it will be competitive. Prospective buyers are under no obligation to use NRT, which is licensed in all states

Tom Zucco can be reached at zucco@sptimes.com or (727) 893-8247.

[Last modified August 4, 2006, 01:00:04]