Reviewed by: Brandon Brown  

Selling a Home with an Open Insurance Claim: What You Need to Know

You can sell a house with an open insurance claim, but it’s not always simple. Buyers may hesitate, and lenders often won’t approve a mortgage if there’s unresolved property damage. That can make the process frustrating if you’re a seller looking for a quick and easy way to move forward. But here’s the good news—you have options! Some sellers choose to complete repairs before selling, while others sell as-is to avoid the hassle. If you want a fast, straightforward sale, FlipSplit makes it easy. We buy homes in any condition, so you don’t have to worry about repairs, delays, or insurance claim complications. In this guide, we’ll get into the basics of open insurance claims and how you can sell a property that has one.

What is an Open Insurance Claim?

An open insurance claim happens when a homeowner has reported property damage to their insurance company, but the claim hasn’t been fully processed, paid out, or resolved. This means the insurance company is still reviewing the situation, waiting for repairs to be completed, or determining how much coverage they’ll provide. For sellers, an open claim can complicate a home sale because buyers, lenders, and insurers may be cautious about purchasing a property with pending repairs or unresolved issues.  

Key Considerations When Selling a Home with an Open Claim

Disclosure Requirements

If you’re selling a home with an open insurance claim, you have to disclose it to potential buyers. Many states require full transparency about any insurance claims and damage to the property. Failing to provide this information can lead to legal issues, financial penalties, or even a canceled sale. With this, a Comprehensive Loss Underwriting Exchange (CLUE) report can help. It’s a report that details a home’s insurance claim history, which buyers may request before purchasing. Having this documentation ready shows that you’re being honest and upfront.

Who Receives the Insurance Payout?

One of the biggest questions homeowners ask is: “Who gets the insurance money if the home is sold before repairs are done?”

• Some insurance policies let the buyer take over the claim, meaning the insurance company will pay them instead of you. This is called an Assignment of Benefits (AOB).
• Other policies require the seller to complete repairs before receiving the payout. These anti-assignment clauses prevent buyers from taking over the claim.

Before selling, check your insurance policy or contact your insurance company to understand how the claim proceeds will be handled.

How an Open Claim Affects Traditional Buyers

Selling a house with an open insurance claim can make things tricky for buyers—especially if they need a mortgage. Many lenders won’t approve financing on a home with pending repairs, leaving sellers with a smaller pool of potential buyers. Buyers may also worry about homeowners insurance premiums increasing due to past claims on the home. Even if they’re willing to proceed, they might negotiate the sale price or ask for a repair credit at closing.

Adjusting the Sale Price

If your house has unresolved damage, you might need to lower the sale price to attract buyers. Some buyers will request a repair credit, while others will want full documentation about the insurance claim and what’s covered. A better option? Selling to a direct home buyer like FlipSplit, where you can skip negotiations and get a fair cash offer quickly.

Options for Selling a Home with an Open Insurance Claim

Complete the Repairs Before Selling (Best for maximizing market value)

If you have time and money, fixing the damage before selling can help you get the highest sale price.

• Use the insurance payout to cover repair costs.
• A fully repaired home attracts more buyers and increases the likelihood of mortgage approval.
• But this can take time and may require extra out-of-pocket expenses if the insurance payout isn’t enough.

Transfer the Insurance Claim to the Buyer (Only possible if the policy allows it)

If your insurance policy permits it, you can transfer the open claim to the buyer so they can complete the repairs and receive the payout.

• Some buyers may be open to this, especially if they plan on renovating anyway.
• Requires careful legal documentation to ensure the claim transfer is valid.
• Not all insurance companies allow this, so check your policy first.

Sell to a Direct Home Buyer for a Fast, As-Is Sale (Best for avoiding delays and costs)

If you want to avoid the headaches of repairs, insurance paperwork, and traditional buyer negotiations, selling to a direct home buyer is the easiest solution.

• No need to fix damage—sell your home as-is.
• No dealing with agents, negotiations, or closing delays.
• Skip the stress of insurance claims, disclosures, and legal issues.
• Get a fair cash offer and close fast.

At FlipSplit, we specialize in buying homes with open insurance claims. We take care of everything—from repairs to paperwork, so you don’t have to. If you need to sell your property fast, we’re here to help.

Other Things to Consider When Selling with an Open Claim

Does a Home Insurance Claim Affect Property Value?

Yes, it can. If a home has a history of frequent insurance claims, insurance companies may see it as a higher risk, leading to higher homeowners insurance premiums for the next buyer. This can make the property less attractive and impact its market value.

Can You Use an Escrow Holdback to Sell a Home with an Open Claim?

Sometimes, lenders will allow an escrow holdback, where a part of the sale proceeds is set aside to cover repairs after closing. This allows the sale to go through while ensuring the repairs get completed.

How Do State Laws Affect Selling with an Open Claim?

Some states have specific regulations requiring sellers to resolve insurance claims before selling. For example, in Florida, certain laws affect how claims can be transferred to buyers. Always check your local laws or consult a real estate attorney before moving forward.

What If You Need to Sell Quickly?

If you don’t have time to navigate insurance paperwork, repairs, or buyer negotiations, selling to a direct home buyer is the fastest and easiest option. FlipSplit buys homes in any condition, meaning you don’t have to worry about insurance claims, repairs, or closing delays.

Sell Your Home Without Insurance Claim Complications

Selling a home with an open insurance claim can be complicated, but you don’t have to go through it alone. Whether you choose to complete repairs, transfer the claim, or sell as-is, there’s a solution that fits your needs. If you want to skip the stress and sell your home fast, FlipSplit makes it easy. We buy homes in any condition, so you don’t have to deal with insurance claims, repairs, or traditional buyer negotiations. Avoid delays—get a no-obligation cash offer from FlipSplit today!

Reviewed by: Brandon Brown

As a long-time Asset Manager, Investor, Real Estate Agent, and Broker/Owner of BayBrook Realty in Orange County, Brandon Brown is one of FlipSplit’s lead Real Estate experts. Having worked on over 2,000+ real estate transactions, Brandon brings a depth of knowledge that ensures clients are appropriately treated with honesty and integrity. His insights and advice have been published in numerous blogs beyond FlipSplit, and he keeps a close eye on market trends and statistics, which are updated weekly on his social media pages. Outside work, you can find him participating and serving at church, cycling, mountain biking, surfing around Orange County and beyond, and enjoying time with his wife and two daughters.