INSURANCE INFO FOR BUYERS AND SELLERS IN NORTH CAROLINA
Homeowner insurance rates are regulated by the State of North Carolina and the State guarantees up to $250,000 - if the insurer is an “admitted” insurance writer regulated by the State. Other companies can write insurance but it would not be guaranteed by the State. Only 7 companies currently write east of Interstate 95, so ask your Real Estate agent for the list and other advice on insurance. Even though insurance companies are regulated and a commission establishes uniform rates for certain areas, they do not all necessarily charge the same. A Buyer should get quotes from more than one company. There are many extra endorsements to consider adding for such losses as wind driven rain and refrigerator and freezer food.
NC Coastal homeowners must be cognizant of their property’s flood zone status since the lines have been redrawn. Flood insurance is administered by the Federal Government and will be a separate policy. A mortgage company will require flood insurance if the home is in a Special Flood Hazard zone - an Elevation Certificate will be required which must be provided by an appraiser. Even if not in a Special Flood Hazard Zone, it is wise to have flood coverage. Flooding is any water rising from the ground up, and Wind & Hail policies do not cover flooding. If a property does not have sufficient coverage, FEMA will only give a 4%-8% loan to re-build, not pay off the mortgage.
No insurance company will write new coverage on a home when a tropical storm is approaching the NC coast and the home is in a certain “box” on the storm map. The closing will be delayed at least until the storm passes and a Buyer would be advised not to try to rush to close.
When closing on a property, the Seller should not cancel the insurance until the check has actually cleared – not automatically on the day scheduled for closing. The Buyer should have a binder for that day and until the closing takes place. If the Buyer moves in ahead of closing, there should be a rental agreement and he should get renters insurance. The Seller should get a temporary Landlord binder. A “Possession Before Closing” is not sufficient. If the Seller moves out ahead of time, he should make arrangements with the insurer since the property must be owner-occupied to be covered under a normal policy.
Condominiums in North Carolina are not all structured and insured the same. An HO6 is the usual coverage for contents, but a Buyer must read the ByLaws and Declarations. Some condo owners may be responsible for more than others, such as windows and doors, so they may need an endorsement for dwelling coverage. Owners could also be assessed for part of the HOA’s deductibles. A buyer should let their bank/mortgage underwriter know about the structure of the condo documents early in the process since delays have been encountered with some types of condo set ups. Contact Michelle Clark at mclark@intracoastalrealty.com if you have any questions about insurance or mortgage lenders in the Wilmington and Wrightsville Beach area.