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A coworker has a closing in jeopardy. Ready to go in for the clear to close, only missing Homeowner's Insurance.
Come to find out, the borrower has had 3 claims in under 3 years. She was living in Texas, moving to Virginia. I kind-of understand, Texas has had some crazy storms. The only other time I have seen this is in California. Roof inspections are huge with the fires out there. I believe CA has gone to "assigned risk" like they do here in VA for the DUI drivers for auto insurance. I do not know if that exists in VA. I called my agent and asked what they recommended and they provided the name of an insurance broker they send their declines for coverage. Only comment I got from them is I hope she has a wide wallet; I have to assume the premium is going to be a killer (1.92M purchase) if they can take her on.
I've seen force-placed insurance many times. That's never pleasant, but almost always able to be corrected. Too many times a borrower will cancel coverage and go elsewhere without notifying us. Or, the buyer is paying their own escrows and do not send in their annual dec page.
I am convinced insurance is going to be the next RE crisis. Premiums are climbing with coverage being refused - sometimes after closing! (The policy was written subject to inspection). Beware and do not let your buyers go to the 11th hour - even without 3 claims. Coverage is getting tougher.
Here in San Diego, I saw a local news report that said that many escrows have been postponed or some even cancelled due to buyer unable to obtain insurance. Fire is the big issue here. Not to mention that several large ins companies have pulled out of CA completely.
one can have the property owner run a CLUE report on the property .
CLUE tracks all claims that are paid regardless of fault ….clue can flag problematic properties..
it can make insurance impossible
Here it is so expensive with heavy non-refundable money just to get a property to contract, a buyer is at the mercy of the seller.
We used to have an insurability clause in our standard contracts, and that was replaced by a due diligence period.
With properties still moving so fast, buyers are stuck if the seller doesn't provide a CLUE report in disclosures, and very, very few do. I actually never saw one myself.
What does it look like for New Construction? Significantly easier?
Yes! I recently bought new and the rate was 75% of what I paid on a smaller/cheaper 20 yr old home.
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