Running into a slight snag. Buying a SBO property, and clear to close (right now trying to coordinate dates). The insurance company now sends me a correspondence (after first already providing me a policy #) indicating they cannot insure me due to slight modifications needed on the property. So while I can probably close, considering the insurance doesn't expire a month from today, I'm certain I'll run into the same issue with the other insurer.
Here's my question: Should this fall under the seller to fix or provide me with funds to fix or is it now my problem, because I should've caught it during my walk through (I had a contractor inspect, but apparently he missed it). The fix is outside shingles missing, and the front door "rotting" and paint peeling (it seemed fine to me honestly), but if they're claiming those two things preclude insurance, then most of this area is not insured...(being facetious).
This begs another question. What happens when you buy a property that needs significant rehab, say 40K worth??? As I'm currently under contract with...from what I understand the bank requires insurance for you to close is this a true statement?
Any help is appreciated.
I am an insurance agent in Indianapolis but I do not focus on distressed properties. That being said, here is my understanding of the process here. Every property is ‘insurable’. Even the most distressed. Not every company insures high risk properties though. Reach out to agents in your area and they can typically refer you to someone who offers high risk insurance for distressed properties. It will most likely come at with a price increase since there is more risk on the table, but you should be able to find someone to cover this new property. Hope that helps! Shoot me a message if you have any other questions... I am sure I can find someone if you are unable to.
Thank you, @Brook Vosler . Will do. This already has been a painful process, and now I get blindsided by this.
Sometimes insurance companies need to know your plan and timeline. Many companies will accept things they usually wouldn’t if you lay out a plan as to how you are going to fix the major issue of concern. Be sure to make your plan known as well.
A builders risk policy
We buy rehab homes. We have used Farmers insurance.
On a few homes we needed to show documentation of upgraded electrical panel and plumbing once the work was completed on the property.
Our agent has always been helpful through the process. Sometimes the premiums are a little more until the updates are completed. There may have been a time line to complete the work.
Hope that helps.
I use Farmers insurance for all my rehab property’s also, the coverage and terms are pretty good, hope this helps good luck!
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