One of my listings is now vacant and under contract contingent on the Short Sale process with two lenders.
The seller received cancellation of Insurance on the property as the Insurer had determined the property is vacant and the policy is for owner occupant only. The seller tried to work with the insurer to continue coverage during the Short Sale but they would not cover the property. The seller is concerned about not having coverage as she does have assets and wants to do the right thing if possible while we are in Short Sale.
Has anyone found a carrier that is affordable to insure vacant homes that are being sold? The seller was quoted $650 for 3 months coverage today, $500 should cover the property for a year if it was owner occupied, her Auto policy insurer will not cover it (State Farm).
Thoughts...Ideas? The seller really wants to keep it insured if possible but at a reasonable cost.
It's very difficult to get a policy on vacant property. The 3 month policy may be the best she can do. The other option is just let the lender place a forced policy on it. Let the lender know the insurance was canceled and the seller can't afford to replace it. They'll usually step in and take care of it.
Doug, I agree with Brian -- it's VERY difficult! If she has an offer of a policy for $650, that will probably be the best she can do. This insurance is extremely expensive, because the house is vacant and subject to all sorts of problems, i.e., vandalism, theft of anything that can be removed easily, even theft of the water pipes, furnace and hot water heater, as well as the toilets, cabinets, etc. However, if she is nearing an approved offer, then I would suggest that she try the 3-month policy and see if they have an extended pay plan for it.
I'm with Bryan too. I worked in loan servicing with one of the largest private direct lenders. Have the homeowner call the lender and ask for the insurance department. Ask them to force order a policy. It will be expensive, but the lender will pay for it. It will only cover the property - personal property will not be covered.
Thank you, Laura. I hadn't even thought of a forced policy. That would probably be the easiest way to get it covered, if it can be covered at all. Having said that, though, forced policies are extremely expensive for an owner-occupied home. I'm sure they're more expensive yet for a vacant property, true?
Yes. Force order policies are very expensive. When I handled assets for a large bank, I had to place force order policies all of the time. If this is a short sale, it shouldnt matter how much it is. It is the lender that will order the policy and pay the premium. I can guarantee that they do not want that property uninsured. If you have an authorization to release information on file with them, you may be able to speak with them directly. Ask the customer service department to transfer you to the insurance department. If it lapsed more than 30 days ago, they may have already done this. Good Luck!
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