Insurance Considerations as Hurricane Nicole Approaches

As Florida braces for the possible threat of Hurricane Irma, we encourage you to take all necessary precautions to ready your loved ones and homes for potential impact. In addition, if you are purchasing or representing a buyer of a property that is set to close soon, we urge you to contact your insurance provider as quickly as possible to determine what requirements must be met to secure insurance coverage for the impending purchase. 

If you have a closing pending, your buyer must ensure 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, coverage often will only be bound once payment is tendered. Confirmation from your insurance agent needs to be obtained before binding authority is suspended; otherwise, the insurance coverage will only be available once the tropical system has passed and the suspension lifted. 

Florida insurance companies are permitted to suspend the binding (which is simply the final process of securing coverage) of home insurance policies a few days before a storm approaching. Coverage will only be secure after (even a few days after) the storm has passed. There are no set rules on when Florida home insurance companies are permitted to suspend the ability to secure coverage, and the decision is made by each company individually. 

If you have any questions about “Force Majeure” or what to do if a client cannot secure insurance, the following blogs may be helpful or contact your real estate attorney.  

Seller Hurricane Preparedness Plan
Force Majeure Clauses in Purchase and Sale Agreements
Impact of Tropical Weather Systems on Insurance 

For information on preparing your family for a significant storm, please visit the American Red Cross for information on hurricane emergency preparedness kits and evacuation plans. Click here for a link to the Red Cross article. 

Berlin Patten Ebling, PLLC

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