Property Insurance and the 2012 Hurricane Season

As a Florida mortgage banker closing deals in the midst of the 2012 hurricane season, I need to call attention to what I call the “no spin zone”. This infamous storm grid should be on a home buyer’s radar because it packs the punch that will swiftly delay a scheduled closing. Particularly important for those buyers who are from out of state and may not be aware; here’s the rule that impacts the world of Florida real estate: If there’s a named storm in the imaginary box that encompasses our region, insurance companies “reserve” the right not to bind policies. In other words, they may not stop binding until the storm gets close, but they can pretty much halt activity whenever they see fit.

So for the most part, once that swirling tropical rotation enters the sector, insurance companies will hang their hurricane shutters. They’re not writing anything – it just ain’t happening – and without this bound insurance those customers who are financing their purchase are going nowhere. They won’t be able to close.

For all you Realtors out there, make sure your clients are cognizant of the sense of urgency if a named storm is approaching the edges of the box. There are some things that can be out of our control in today’s real estate market, but being proactive in this regard is well worth your clients’ attention.

While we typically have a decent heads up thanks to our experienced storm tracker professionals, being aware of the perimeters of this zone will prevent delays in closings. The bottom line is: no application for new or even an endorsement for increased coverage will be written, bound, or accepted regardless of the effective date when a named storm makes its way into the grid.

At the end of the day, best practices would dictate that home buyers do their research into area insurance companies even before looking at properties. Home buyers should establish a relationship with the insurance company that will be writing their eventual policy so that when they find their home it becomes a matter of getting the fully executed contract into the insurance company’s hands. It’ll get you in from outta the rain.

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