Lots of people where I live can't get their current homes covered by home insurance, as a fire destroyed 1,000+ homes a few miles away in a matter of hours.
The situation sucks, but their continuing to live there and be insured has to be subsidized by somebody somewhere. The area is clearly insanely risky to the point where no premium justifies offering coverage.
If coverage was offered, who should be the one subsidizing it? Private companies? No way, they never would. Government? That's just a regressive policy funneling money to a relative well-off (homeowners) group of people.
>The area is clearly insanely risky to the point where no premium justifies offering coverage
Perhaps this was lost, but areas where insurance companies are deeming too risky to live is growing given climate change is real and weather patterns are shifting - sometimes drastically - to create more powerful storms.
This is just going to continue to happen in a game of Russian Roulette.
Nor should they. If they could pay that ridiculous rate then they wouldn’t have a problem not having insurance. You’re presenting it as someone that buys a 300k house and gets a $1500/mo mortgage doesn’t “want” to pay $8500/mo in home insurance.
It’s better insurance just isn’t available at any price. You can know going into the purchase that the home will be uninsurable so your financial picture needs to account for that.
Also in general I don’t believe you can get a mortgage without home insurance? So people buying these properties would have to come in cash.
>but their continuing to live there and be insured has to be subsidized by somebody somewhere
I think insurance companies cover customers because the customers pay for the insurance.
You're saying that because profits for insurance companies aren't at the level the insurance companies want, that they can say - because it's illegal to own an uninsured home, where people can and can not live?
That seems like an overreach of power of a private company.
They don't need to abandon their homes, but those homes are becoming uninsurable without heavy subsidies (like FEMA flood insurance). Houses should simply not be built in many of these places.
Maybe. Or maybe if their municipality got serious about fire breaks, fire prevention, and invested in their fire department they would be insurable again.
Does it matter? The problem isn't that the fire started, that's always going to happen sometimes, the problem is how much it spread and how much damage it did.
I can't remember the specific terms of my mortgage, but as I recall, the first level was 'you must have home insurance with certain parameters including having us as a named insured, etc; if you don't, we will obtain home insurance at your expense'. But I don't know what the recourse is if home insurance is unobtainable.
Certainly, it would be a lot harder to get a new mortgage underwritten, which makes refinancing mostly impossible and makes selling difficult.
Given that the property would be difficult to sell, I'd imagine even if the contract allows it, lenders wouldn't foreclose for lack of insurance if insurance is unavailable.
Really, I think the way to move forward on the issue that so many homes are built in areas they shouldn't be is to make available insurance policies that cover permanent relocation, rather than rebuilding in place. You can still live there until it burns down, at which time, you must move elsewhere and the lot is deemed unbuildable for the forseable future. With some sort of provision to manage windfalls from changes in conditions allowing safe construction in the future. (It's not fair if you force people out, but ten or twenty years later, let people in again; OTOH, maybe one hundred years later, it will make sense?)
> But I don't know what the recourse is if home insurance is unobtainable.
The recourse is usually foreclosure when the borrower doesn’t meet the essential terms of the mortgage agreement. It doesn’t matter why the borrower can’t get insurance any more than it would matter why the borrower couldn't make payments on the loan.
about a decade ago, purchased a home half a mile away from a river. For the last 50 years, the river bank has been has been slowly moving outwards out due to erosion. I bought the house for a million, it's now worth two.
Last year, a thousand houses a few miles downstream fell into the water. This year, my insurance company cancelled my coverage, and I can't find anyone else who will insure me. What I'd like is for premiums to be raised for people who bought their homes in a safe area, to pay me my million dollars in profit when my house falls into the watter. This is my Current home. Am I supposed to just abandon it because no one will buy it?
So, the answer to your question, is yes. Home prices go up and down. Yours is now worth zero because of your bad decision. It is not the job of other people, to pay you for your mistake.
they should not. the fact that you did not understand this is what I was saying, suggests a lack of practice in social interaction. now this is not meant as a personal attack. think of it like this: you are teaching an arithmetic class - something for which fully functional members of society need to have the skill. you explain that 5+2*2=9. someone corrects you that it is in fact 14. what would you suggest this person do?
this also applies to basic language skills. i suggest that whatever advice you have for the previous hypothetical person, you apply to basic social interaction in your own life.
but maybe I'm wrong, and you did not read the comment to which I was replying. in that case, I suggest that when you read a comment, you should see the comment it's rebutting, prior to posting yours. this also, is a basic social skill.
I'll start you off: I do not own a house at all as I travel internationally and move around too much to stay in one place over a few years. I would also never purchase one in a risk zone, since there are thousands of others available w/o the risk, and they don't cost more.
Are these people to abandon their homes outright?