The fires are causing a multitude of problems, as everyone knows. And there are some other real estate-related implications of this.
I understand from my insurance broker (due to a closing I have next week) that there is a moratorium through the insurance companies to not issue any homeowner's insurance policies until the fires are under control. What this means is that buyers will not be able to provide an insurance binder here in California to satisfy the lender's requirements for insurance, which in turn means their escrow may be delayed.
NOTE: I assume that this only affects those counties in Southern California where fires are actively burning, and not the state as a whole
This impacts buyers, sellers and agents in a significant way.
Agents will want to confirm this with their own insurance companies, brokers and or insurance brokers. And of course we need to be prepared to deal with the resultant issues with either our buyers or our sellers.
ONE OPTION - the California Fair plan WILL issue a policy that reportedly meets the lender requirements (but obviously that must be verified as well) so that escrow can proceed. This may take several days because of the paperwork. It is important to note that this policy is NOT as comprehensive as the typical policy. Homeowner's may proceed through escrow if the Fair Plan is approved, and then obtain a new policy through their preferred insurance company once the moratorium is removed.
I think we need to keep in mind that insurance will likely be much more difficult and/or costly in certain areas in the future because of the fires. We have yet to understand the potential impact this may have on our clients down the road.
And I suspect we will see some insurers refusing to insure homes in some areas, and others may even cancel current policies. I sure hope this does not occur but we have to be aware of, and prepared for, the possibility, just as some do not insure against landslides, or living on the water.
It seems prudent for agents to look into this further right away to confirm what I have been told, and to otherwise make appropriate contingency plans. Obviously if the fires are contained and the moratorium is lifted soon then these possible delays may be eliminated.
If anyone has more information, or details that might contradict this, please let us all know. It impacts, potentially, a lot of people.
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