Deeded Interest: Lake Christine Fire put home sales, insurance in spin for a bit
September 15, 2018
Somewhat out of sight, out of mind, I read an update last week reporting firefighters were still mopping up hot spots from the Lake Christine Fire, which started in early July. More than two months later, the fire is still active but now 90 percent contained. It was surprising to learn flames from our mid-summer conflagration are still licking up under some pinyon in the middle of nowhere. Then again, officials did tell us this thing would likely not be completely out until mid-October.
Unfortunately, three homes were lost. That said, what could have been utter devastation was prevented by the valiant efforts of first responders and those near and far that came to help. We are indeed a community in their debt.
The fire, the response and the constant smoke lasted for weeks and stopped showing and sales activity in Missouri Heights dead in its tracks. Activity has resumed, however, with a few closings just in the past few weeks.
But uncertainly and questions remain for buyers and sellers and provide a valuable learning opportunity. The issue of insurability instantly came up in the area as soon as the flames began to spread.
Homes under contract before the fire and set to close after had to be extended during what local insurance experts say was a moratorium. If insurance for the property had not been previously bonded, no new policies were allowed to be written nor any changes to existing policies made. It goes without saying no one in their right mind is going to drop hundreds of thousands of dollars for a new home no one is willing to insure.
The local real estate market aside, of more consequence were the homeowners in the fire's path who found themselves either under-insured or uninsured as flames flickered on hillsides outside their window with no recourse whatsoever.
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According to Todd Fugate, owner of the State Farm Insurance Agency in Carbondale, the moratorium affected Basalt proper, the El Jebel area (including Willits and Blue Lake) and a good part of Missouri Heights along and above Upper Cattle Creek Road. Fortunately, the ban was lifted a couple of weeks back, but for at least six weeks one of many factors affecting the nerves of existing residents as well as potential home-buyers was the uncertainly regarding what was covered, not covered and temporarily unavailable. The result was insult to injury and fury after the fire.
In terms of what the future holds for policies and premiums after the last flames are snuffed out, Fugate said he's not anticipating any immediate rate increases. Unlike a hurricane or an earthquake that affects an entire region, thousands of homes and businesses and millions if not billions of dollars in losses, this event was relatively isolated in terms of its scope and damage.
Even so, Fugate said he's heard from many of his clients since the fire not only asking about a possible rate increase but asking questions about their policies and coverage, something he welcomes but encourages well before potential disaster strikes rather than after the fact.
"Folks shouldn't wait for a catastrophic event to understand their coverages and policy details," he said.
When I asked about the possibility of mudslides and water damage from potential future flooding now that stabilizing vegetation has been damaged or destroyed, the answer was, to say the least, disconcerting. Mudslides in the aftermath of fires are typically not covered by regular insurance and are not considered "Act of God" events.
The remedy for that is something called a difference in conditions rider. Additionally, many major carriers do not offer this type of coverage, but Fugate said there are companies that do that is he actively referring his clients to. He did not discuss the cost as difference in conditions is not his expertise.
That brings us to the ever-present but oft-overlooked issue of FEMA flood insurance. As we saw in places like Houston this time last year — even those within the designated 100-year flood plain — many chose not to secure this coverage, which must be obtained through and paid to the federal agency. For those who went without, it was a fateful choice with devastating financial repercussions. With climate change, we are now seeing 500-year events and flood plain maps are being rewritten. Around here, it's not surprising very few have flood insurance. However, all in the fire zone should strongly reconsider. You should know any water than might penetrate or even destroy your home as a result of water heading downhill is not covered by traditional policies.
It's a new world out there and with home values in our area so high, and with so much at stake, it's critical homeowners protect their largest investment.
Scott Bayens (GRI, ABR, CNE) is a Realtor with Aspen Snowmass Sotheby's International Realty with more than a decade of experience with buyers, sellers and investors. He can be reached at email@example.com.
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