Question:
“You should warn your readers about this… I just bought a property for cash and found out after closing that I had NO INSURANCE! I had told my insurance company well in advance, and assumed escrow would be sure I was insured. But they all dropped the ball. Thanks goodness nothing happened.”
Answer:
Thank you for letting me know about this.
It’s crazy, but escrow companies generally do NOT have insurance on their closing checklist.
Escrow only makes sure you have insurance because the lender requires it. So if there’s no lender, they don’t necessarily make sure you have insurance.
This actually happened to one of our clients. We reminded them to get insurance, but they forgot. And guess what? They actually had some faulty plumbing FLOOD their home the day after closing!
Fortunately, they bought from a more-than-ethical flipper who repaired everything at his cost. They really dodged a bullet.
The bottom line is, if you’re buying cash, don’t just tell your insurance company to arrange insurance. Double-check with escrow a week before closing that it’s in place.
