As we get further into fire season, we risk the threat of insurance moratoriums. What does this all mean to you? This means if you are in the middle of purchasing a home (in escrow) then a moratorium could add days and weeks to your closing. The seller may not be willing to wait. 

What is an insurance moratorium? If there is a wildfire in your zip code, chances are high that insurance companies will stop issuing policies. Consequently, if you are in the middle of buying a home and your insurance agent hasn’t bound your policy, you will not be able to close escrow until the moratorium has ended.

What can you do to prevent the stall of your home purchase? Purchase homeowners insurance as soon as you are in contract. You can bind your insurance policy ahead of time with a future effective date to take place on your scheduled closing date. Binding insurance is a promise of insurance by the insurance company. Ask your insurance agent or your lender for the binder.

If you do not get your insurance bound ahead of time and a moratorium is put into place, an appraiser will need to return and confirm the house is still standing after the moratorium has ended. This can add a week or more to your anticipated closing date.

It’s very important that you stay in contact with your real estate agent and ask lots of questions. 

Homeowner Tip: Review your homeowners insurance policy with your insurance agent because rebuilding costs have gone up significantly within the last 12 months.

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