Impact of Tropical Weather Systems on Insurance

Storm ahead road sign

The 5th Tropical System for the 2015 Season (which generally runs from June 1 to November 30) has been identified by the National Weather Service. Tropical Storm “Erika” is now in the Caribbean and bearing down on Florida.

Since Binding Authority for windstorm, homeowners or flood insurance coverage may be temporarily suspended when a “Tropical Depression,” “Tropical Storm,” or “Hurricane” is located anywhere in the State of Florida, buyers, agents and settlement agents need to be mindful that insurance coverage needs to be bound and in place before closing. Lenders will not close on a mortgage loan without appropriate insurance coverage.

If you have a closing pending your buyer needs to be absolutely certain that their insurance is binding (sometimes referred to as “bound”).”Binding” means that coverage is in place, although a policy has yet to be issued.  Often binding takes place through verbal agreement, in person, via email, or over the telephone; however, many times coverage will not be bound until payment is tendered. Confirmation from your insurance agent needs to be obtained before binding authority is suspended; otherwise, insurance coverage will not be available until the tropical system has passed and the suspension lifted.

The Florida Realtors/Florida BAR-3 Contract, Paragraph 5(b), EXTENSION OF CLOSING DATE, provides:

If extreme weather or other condition or event constituting “Force Majeure” (see          STANDARD G) causes: (i) disruption of utilities or together services essential for Closing, or (ii) Hazard, Wind, Flood or Homeowners’ insurance, to become unavailable prior to Closing, Closing shall be extended a reasonable time up to 3 days after restoration of utilities and other services essential to Closing and availability of applicable Hazard, Wind, Flood or Homeowners’ insurance. If restoration of such utilities or services and availability of insurance has not occurred within ___ (if left blank, then 14) days after Closing Date, then either party may terminate this Contract by delivering written notice to the other party, and Buyer shall be refunded the Deposit, thereby releasing Buyer and Seller from all further obligations under this Contract.

The Florida Association of REALTORS – CRSP-13 Contract, Paragraph 4, Closing Date, in pertinent part provides:

If on Closing Date insurance underwriting is suspended, Buyer may postpone Closing for up to 5 days after the insurance suspension is lifted.

If your transaction originates out of contract other than the Florida Realtors/Florida BAR-3 Contract, or the Florida Association of REALTORS – CRSP-13 Contract, be sure to closely review the specific provisions of that contract regarding an extension of the Closing Date as a consequence of the suspension of insurance underwriting arising out of a tropical system.

As always, should you have any questions regarding the foregoing we urge you to consult with your local real estate attorney.


Berlin Patten Ebling, PLLC

Article Authored by Mark C. Hanewich

Please note that we have relocated from our former downtown Sarasota office to our new Sarasota headquarters as of Monday, August 17th which is located at 3700 South Tamiami Trail just across from South Gate Mall. This will only impact business handled from our Sarasota location, as our Venice and Lakewood Ranch offices will remain the same. Thank you.

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

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