What should I do about my insurance situation?

Question

Hey all,

I just got my first offer accepted on a 2003 duplex in Lehigh Acres, FL, and I couldn't be more excited! Unfortunately, the roof hasn't been replaced since, so insurance companies either 1) don't want to insure it 2) will insure it at an extremely high premium or 3) require the roof to be replaced before closing. Ideally, it will be replaced before closing. If this is the case, who should pay for it? What happens if I pay for it but then we don't end up closing?

On the other hand, if it is not replaced before closing, what should I do?

Do any insurance companies accept a roof replacement contract as proof, to then lower the initial premium?

Thank you!

Rod Hanks · Answer

In Florida you won’t find any company to insure it with a bad roof. Has to be replaced prior to closing and the seller should pay for it or offer a credit on the HUD.

Frank Avallone II · Answer

Hi @Marcos Carbi, I may have the perfect solution for you. Can potentially pivot the loan structure into a renovation loan to address the roof after closing that way you can have the costs financed and resolve the immediate issue. Some agents will be able to recognize this an adjust premium to the after renovation standing of the house.

I want to hear a little bit more about the situation. I'll send you a connection request!

Jasmine H. · Answer

@Marcos Carbi we had this happen to us last year on our 4plex after we closed on the property.  I ended up getting a ccd with a promotional rate of 0% apr for 16 months, got 3 quotes chose the one with the best value and paid that puppy off before the promotion expired.

Kimberly Elson · Answer

If a licensed inspector can show it has 3 years of life left and no leaks, you should be able to get a citizens insurance policy. Another option if you’re trying to get it done prior to close is there are FL roofers that will charge the roof as a lien to the property, or short term finance. You put in writing w seller that you will pay off at close. That way, if it doesn’t close you don’t buy them a new roof.

Marelyn Valdes · Answer

As a seller, I had to submit a signed contract for a new roof and leave an additional $1,500 over the contract price in escrow at closing.  I received the difference back after the new roof passed inspection.  The original listing stated a new roof was included for a full price sale at seller's expense.  If it wasn't full price, no new roof.  The roofer didn't charge me any deposit to start work since he was assured the funds were available with the title company.

Jerry V. · Answer

( I copied/pasted this, from a similar discussion about a week ago) ...

This is an ongoing issue and one that we (in the Roofing industry) 
have been seeing more and more of.  Tis true, that there are many 
Roofing companies that file claims, when they shouldn't!  I/we've been 
on numerous jobs where you can't find one mark at all from any hail etc,
 but the client will say "oh?  But xxx AND xxxx said it should be 
totaled and replaced! (I'm sure they did say that! haha)  And even some 
that the Adjusters totaled too! (that shouldn't have been)  Most of the 
adjusters, not all, are also 3rd party independants, and DO make more 
money per volume of claims they write up.  Thus, the more they write up 
(total), the more $ they make.  It shouldn't be this way!!!  But alas, 
it is.

To note and remember:  Most policies, the ins co only pays 
to replace a full roof for Hail or Wind damage.  NOT wear/tear or old 
age.  And for small repairs or damage, it's usually just better to get 
it fixed yourself withOUT getting the ins co involved.  (anything under 
your deductible amount, is out of your pocket anyway!)

I assume 
your talking about a "shingle" roof, because other than Stanley above 
(having a tile roof), I've only heard of the Shingles roofs being 
scrutinized for the 15yr + thing.  It's funny, as the Insurance industry
 wanted the Roofing industry to come up with longer lasting and better 
materials, so they wouldn't have to pay so much or so often.  BUT, 
places like FL and here in Texas, we are very prone to Hail and 
Tornadoes (hurricanes there in FL), so ... you ARE usually going to have
 a claim in 10-20years.   AND, with the Roofing sales people (we have no
 salesmen), the independent adjusters, the fraud of the whole system, 
and the frequency of the "valid" storms that do warrant ins replacements
 ... yes, our areas have increased Costs and pricing.

FYI, I 
actually got our business GL policy provider (ins co) out of Cali (they 
are licensed in 3 states) to cover my personal house ins, with more 
coverage, for 1/2 the price that Geico was raising it to!

Not sure
 where it's all going to go from here or what may happen... Roofing 
industry made better and longer lasting materials, but now the ins co's 
are restricting longevity to 15yrs (not State Farm from what I was told,
 by a St Farm agent).. If anyone has any deeper insight to this, please 
do message or email me! :)

JsRoofing.com

Jerry

Deb S. · Answer

@Marcos Carbi I am sure the seller is very aware of the roof situation in Florida and the impact for trying to get insurance.  I would most definitely ask for a credit at closing for AT LEAST 75% (negotiate from there down to 50% if needed).

Any other buyer of this property is going to run into the same issue.  The seller knows the roof needs to be replaced - anyone in Florida knows about roofs!  So now that the seller has squeezed all the juice from the lemon he's trying to pass the cost on to you.  I wouldn't pay the whole thing.  No way.  The market is cooling off and sellers don't have the leverage they had a few months back.  Ask for the credit and see what happens.

Marcos Carbi · Answer

@Kimberly Engeman Great, thank you!

Marcos Carbi · Answer

@Frank Avallone II That's a great idea. Thank you, Frank!

Cameron Moore · Answer

A new roof will definitely help the premium if it will be added before the insurance is effective. Most insurance companies will not accept the risk until then, because they are basically accepting to lose money immediately in that case.

What should I do about my insurance situation?

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