Can I Buy Just Fire Insurance on a House?

LoveInTheHouseMarch 14, 2011

This house that I'm trying to get is a fixer-upper. It's also 100-years-old. That's what we want and love. I started calling around for homeowner's insurance quotes. The house is in NJ and I am in VA. I was getting quotes triple, or more, what I expected. Some companies wouldn't insure it at all because of the age. All the wiring, plumbing, heat, windows, everything is brand new--it just has to be put back together again which will take us a month. We can't get a certificate of occupancy until we do this and so can't move in. Some insurance companies said it's effective age will be 25-years-old because of the new systems but they won't insure it either because it's still in renovations. Other companies want to insure the outbuildings that we don't want insured because they want them in good condition. They want us to repair these outbuildings and we plan to do that but not right away. For example, one company wants a roof certification. It's not leaking but no roofing company will certify it because it's not in great shape. Anyway, it's something my husband is going to do himself in about a year. I started asking the companies for quotes on fire insurance alone because that's all I am worried about! I'm not going to have a mortgage so no bank has a say in this. I don't have anything valuable and I don't put claims in. If anything happens to the house, other than fire, we will take care of it ourselves. I want insurance for a fire catastrophe. Is that possible? Are they just trying to sell me products? These insurance companies are leading me to believe I have no choice--"Oh no, you HAVE to insure your outbuildings," and "Oh no, the replacement value is what we go by even though you are paying half that for the house..." The NJ Dept. of Banking and Insurance was no help. I need to find affordable insurance.

Here is a link that might be useful: Smith Mountain Lake Horse Property

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Look, I know you are trying to sell a house, but could you lay off the sales efforts while you are here by not posting links to your house on all your posts?

    Bookmark   March 14, 2011 at 8:48AM
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We had some similar issues when we bought our 100 year old fixer-upper. Nobody is going to issue insurance based on what you plan to do later.

The strategy we eventually had to take was to get insurance with a company that would insure the house in its current condition and unoccupied. Yes, it was more expensive than we hoped, but we needed insurance. We made a list of the things the more reasonably priced insurance companies would need fixed to become insurable and prioritized them. Once we got those in place, we just switched companies and got on the lower rate.

So, when you are looking at this, don't think you are stuck with a rate for life or even a year. If you can get some of the major stuff done in a month, then you will only have a month or 2 of higher payments.

    Bookmark   March 14, 2011 at 8:58AM
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LoveInTheHouse - I think you need to curb the advertising part of your property by including the link in every post. It is against the forum rules to advertise. See the bullets at the bottom of the main thread page.

Sounds like Billl has good advice.

    Bookmark   March 14, 2011 at 10:19AM
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Thanks Bill.

Oops, I had no idea I was breaking a rule. I wasn't thinking of my house-for-sale website as advertising since I'm not in business. Sorry.

How about some fun country life stories?

Here is a link that might be useful: Greener Pastures--A City Girl Goes Country

    Bookmark   March 15, 2011 at 11:56AM
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I just read a bit of your blog, you complain about lenders not giving your buyer a mortgage for your property. But you stress further down that your property is a "working horse farm".

That will exclude it from any conventional, FHA or even USDA rural housing loan program. These programs give mortages for people to buy a home to live in, not to buy a working farm. Your buyer will have to find a farm loan, and those are few and far between.

FYI .. I live on a small hobby farm myself ...

    Bookmark   March 15, 2011 at 12:21PM
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Pam, I meant working horse farm versus a house on ten acres with a shed out in the back that some people are calling horse properties. Our farm is not a business. It's not even in Farm Assessment. Around here, a lot of people keep horses in ramshackle sheds and barbed wire. I have a barn that you could practically live in with real box stalls, mats, electric, hydrants, an arena, everything. There is value to that but it is not a business. I probably shouldn't have called it a "working" horse farm. I actually spoke to FHA themselves about it. They told me that they do not exclude agricultural properties and suggested that my buyer try to get an FHA loan through another lender. They said it was the way the lender was interpreting their rules but they do not have a rule against acreage or barns or agricultural zoning unless the acreage is more than the surrounding properties. And mine is not. It's one of the smaller pieces in the neighborhood. I told my buyer all this but I think she got cold feet because she stopped pursuing it.

I guess I have to be really careful about how I describe it. Good grief, I can't believe I'm getting penalized because my barn's too nice! Maybe I ought to just replace the board fencing with barbed wire, take out the mats, disconnect the hydrants, and let everything get all overgrown! As they say around here, it don't make a lick a sense, lol.

    Bookmark   March 16, 2011 at 11:19PM
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You are correct, gentleman farms can be OK to some lenders .. others just plain don't want them regardless. But a prescribed working farm is a problem ... terminiolgy is important ... also important is how much value is supposed to be placed on the horse barns, etc. Lenders want the majority of the value to be in the house, and not the out buildings.

Even calling it a hobby farm will scare off some lenders. I actually claim Farm income, sch. F on my tax returns, so that excludes me from most conventional lenders programs.

    Bookmark   March 17, 2011 at 1:07PM
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You may think you only need fire insurance, but you also need wind storm (tornado) and hurricane insurance. Plus you also definitely need liability insurance. Sorry, but that's just the way things are.

Insurance companies will get ansty if they think that all you want is fire insurance on an unlived-in house. To them that may smell like a precursor to arson/fraud. Not suggesting that's your intent, of course, but that could raise unintended red flags. Get whatever insurance you must have, at whatever cost. Make necessary repairs for CO, move in with your stuff, and then shop around for a better-priced policy.

BTW, if you're getting a mortgage or building loan, the lender will usually require homeowner's insurance to protect their interest. And they will stipulate the perils covered and amounts, etc.


    Bookmark   March 17, 2011 at 2:08PM
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"working horse farm"

Still just a hobby unless you are making money.

You might change to say 'out-buildings for horses' and leave it at that.

    Bookmark   March 17, 2011 at 5:03PM
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liriodendron, no, I'm not getting a mortgage or a building loan. I see I'm probably going to have to get whatever insurance I can get and then shop around later.

And I see I have to be careful about how I describe the property I'm selling. It can't sound too good! lol

    Bookmark   March 17, 2011 at 10:01PM
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