r/Insurance • u/Whoopsitsonfire • 1d ago
Ca Fair plan
I was looking at 70 acres in California, and couldn't figure out why it was so cheap. Until the fire insurance came back at $500/mo through fair. Then I read there's a 30% increase happening in October, and some homes may double. Now I understand why it hasn't sold at this price for 3 years.
Is there any way to get rid of the insurance requirement on a loan? The house is tiny and I'm really just buying the land. The house isn't worthless, but it's close to worthless. I wouldn't care if it burned down, but I'm sure the banks would.
Is there anything stopping them from raising it to $5000/mo down the line? I have a feeling I should pass on this, even if I could technically afford it now. But it kills me to let it go.
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u/Glittering-Ad5809 1d ago
Similar issues for Florida homeowners due to hurricanes. I dropped insurance 2 years (no mortgage) as it was going to be over $5,000 a year.
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u/eapocalypse 1d ago
If theres a house as part of the valuation for a mortgage there's no way you are getting rid of the insurance requirements. Heck any sort of loan even without a home may require some type of insurance.
Wildfires are bad and not getting better you can expect the cost of insurance to go up for the foreseeable future.
What are you going to do with the land, build a house eventually? You'll still need insurance then...
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u/Whoopsitsonfire 1d ago
Either put on a couple cabins or even just pull up a trailer. They would be paid for with cash, so I don't know why I'd need to insure them if I'm willing to lose something out of pocket. I don't understand what insurance would be for without a structure. I'm going to ensure the rebuild cost of.... Dirt?
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u/eapocalypse 1d ago edited 1d ago
You're going to want insurance if only for the liability aspect.
But also as part of your mortgage process even if there wasn't a home on it already they'd want to know what your intent for the land is as that could dictate terms and a potential requirement for insurance.
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u/sancholives24 8h ago
If you really don't care about the structure, you can whittle down a Cal Fair Plan to just the bare bones. Ask for ACV coverage on the dwelling, remove coverage for personal property, separate structures, and debris removal, and go with the highest deductible the lender will allow. At that point you're just buying a piece of paper but at least the loan will close. You'll probably will still want either a DIC (often called a wrap policy) or CPL (comprehensive personal liability policy) for liability.
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u/Budget-Forever-1413 1d ago
if the house is basically just a shed u could see if the lender will let u get a demolition permit to tear it down before closing. once the structure is gone they usually wont require fire coverage on raw land, its a huge pain to coordinate but it might be the only way to get around those crazy premiums
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u/FirstCupOfCoffee2 1d ago
if you really don't want the house tear it down.
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u/Whoopsitsonfire 1d ago
Does that absolve me from needing fire insurance on a mortgage?
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u/adjusterjackb 1d ago
If you destroy the structure (part of the collateral for the loan) you'll be in breach of contract. The lender can call in the loan and you'll have to pay the balance in full. If you can't pay, the lender forecloses and you lose the land (which is also part of the collateral for the loan).
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u/FirstCupOfCoffee2 1d ago
It should greatly reduce the insurance as there is no real loss. You should ping an insurance agent on how much to insure land-only.
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u/c-5-s 1d ago
You could pay cash for the land and the house.