If you saw any national news story this past month, it likely started with 'FIRE' and ended with dizzying statistics. 87,284 acres (High Park Fire) or 11,000 people evacuated (Waldo Canyon) or 347 homes destroyed (Waldo). The impact of these numbers will have a huge effect on our Colorado communities as they try to return to normal. But will that ‘normal’ mean the return of their lost homes?
How many of those 347 homes will be rebuilt? Statistics say less than half and its not for the reasons you might think.
Surprisingly, most of the time homes that are destroyed by wildfire do not cause the owners to rethink the location. Exposure to fire, just as to higher snowfall or tougher wind or more friends of the carnivorous variety are just part of the experience of living in areas outside of the traditional subdivision. This is usually not a significant deterrent in rebuilding efforts.
The Bank Decides
The major determinant is actually the primary leinholder on the home. That’s right – the bank decides. Provided that there was fire insurance in place (as is required with a mortgage), the insurance will pay the full claim to the primary leinholder and that entity determines whether the home will be rebuilt or not. Shocking, no? In many cases, especially where there is a lack of or deficit in equity, the bank will simply take the payoff and allow the owner to ‘own’ the land free and clear but without a home on it.
There are some insurance policies that may cover rebuilding only and will not payoff a mortgage and some mortgage companies that will not accept a payoff and force a rebuild. Either way, the moral of the story is this:
ALWAYS check your insurance policies on an annual basis. Its better to be covered now than recovering later!
(and if you need a good Northern Colorado Insurance agent just let us know – we have a few good friends who take VERY good care of our clients and family.