Insurance companies’ refusal to write new policies for island property could put the brakes on real estate deals.
George Wheelwright, of Jaret & Cohn real estate in Camden, said denial of insurance isn’t just occurring on islands, but the remoteness of offshore properties exacerbates the problem. A broker for 22 years, Wheelwright said he is seeing contracts starting to include the condition that the purchaser be able to buy homeowner’s insurance. Where once obtaining insurance was routine, some buyers are now finding insurance companies reject their prospective properties, period.
The Maine Association of Realtors has for the first time suggested that its member brokers add a clause to contracts giving the buyer an out if insurance can’t be found. Insurance companies are trimming customers – and risk – in the wake of the 2001 terrorist attack on the U.S., and in the midst of a weak economy.
Carlton Johnson, a broker with Rubenstein Realtors in Thomaston, agreed that even mainland real estate deals are being affected through tighter insurance company policy. More properties are being disqualified as unacceptably risky, for things like a deteriorating roof or old wiring.
Curtis Fish, a lawyer and agent for Sharon Drake real estate in Bath, said his agency is now putting the insurance contingency into purchase-and-sale agreements. About once a month, a deal falls through because a buyer is unable to find coverage, something that wouldn’t have happened in the past.
Diane Hall, of True Hall Realty in Tenants Harbor, said so far she has been able to sell several properties on an island off Port Clyde without any insurance hang-up. She pointed out the island has fire protection from the town of St.George. She believes island real estate is so appealing – partly as an escape from hectic life on the mainland – that people will find a way to make a deal. A former insurance agent herself, Hall said the excess lines market is an option for those turned down for conventional homeowner’s insurance. She doesn’t expect island sales to fall off, but she wondered if inability to obtain insurance might affect value. She suggested island homeowners may have to do more to protect their homes, to qualify for insurance.