08/01/2022
Buying a new house? Have you checked if you can get insurance for it?
FIRE INSURANCE IS BECOMING A BIG DEAL IN MANY AREAS
Investigating the availability and cost of fire insurance is the responsibility of the Buyer. A Buyer who is not satisfied with either the availability and/or cost of fire insurance would ordinarily have the right to cancel a contract but only during the Buyer’s investigation contingency. If an offer is made without an investigation contingency, or if that contingency is removed, a Buyer who backs out of a contract because of the anticipated cost or availability of fire insurance could be in breach of contract. Even if a loan contingency is still in effect, and the lender refuses to make the loan because the Buyer has not acquired a fire insurance policy either because of its costs or coverage, the lender’s failure to loan would be due to the Buyer’s affirmative decision and would not justify exercise of the loan contingency.
THE IMPACT OF CALIFORNIA WILDFIRES HAS IMPACTED THE CIST AND AVAILABILITY OF FIRE INSURANCE.
Buyers should be advised by their agents to investigate the cost and availability of fire insurance before making an offer, just like many Buyers investigate loan rates and terms, and obtain a prequalification or preapproval from a lender or loan broker in advance of making an offer. Buyers should discuss fire insurance possibilities with an insurance agent. Factors to consider are the location of property in a state or local fire zone, fire hardening of potential property, proof of compliance with defensible space laws, whether an insurer is admitted in California, and the scope of coverage available, including policies from the California Fair Plan.