Wednesday, January 12, 2011

Mortgages and Fire Insurance

Just had to tell a client today that I could not help them close a mortgage on a farm property because, unfortunately, the house and other building on the farm were not insurable. Old knob and tube wiring means it's pretty tough if not impossible to get fire insurance. And no fire insurance means no mortgage. The owner of the farm was quite upset. I had to explain that fire insurance is required because it protects the interests of the lender in the property. If a fire was to destroy the building, and no insurance was available to rebuild, the property value would decrease significantly and, in the event of a default, the lender may not be able to recoup its investment when it sells the property under power of sale or foreclosure. So electrical work should be the first order of business for owners of older homes, both for safety and for financing.

3 comments:

RiskAdviceInsurance said...

Hi Joanne,

First time reading one of your blogs. Obviously not a very pleasant experience for you of course much worse for your client after advising that you cannot help them close a mortgage on a farm property because the house and other building on the farm were not insurable due to old knob and tube wiring.

Too late to still explore other insurance options for your client?

JLT is one of the largest risk management and employee benefits consulting firms in the world and I can at least explore the possibility with one of my colleagues that specializes in this area of insurance?

My contact info is below and I am in my home office in barrie tomorrow so if you have a few minutes to meet tomorrow to discuss?

Best regards,

Steve Benson
Account Executive
Jardine Lloyd Thompson Canada Inc.
Direct Line: (416) 848-6653
Toll Free: 1-877-240-5475 Ext. 6653
Cell: (416) 302-5368
Fax: (416) 848-9897
sbenson@jltcanada.com
www.jltcanada.com

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