In Florida, hurricane season lasts from June 1 to November 30. During this time, the state sees an increased risk of impact from both hurricanes and tropical storms. Most Florida home buyers are aware of this, but what some don’t realize is that closing on a home during hurricane season can impact their ability to buy homeowners insurance.
Risks of Closing During Hurricane Season
In Florida, home insurance providers are permitted to suspend the binding of insurance coverage at certain points during hurricane season. Specifically, if a hurricane or tropical storm enters the 16,000 square-mile “box” around Florida, certain types of home insurance coverage (such as that for windstorm and hurricane damage) can be suspended. In insurance terms, this is often referred to as being “trapped in the box.”
If a client is closing on a home during this high-risk season and the closing date ends up falling during a time when a tropical storm or hurricane is a major threat, the insurance coverage your client needs for the new home may not go into effect right away. Note that each insurance company may differ when it comes to its specific rules and regulations regarding “the box” so it is important for your client to check with their insurance agent as soon as you enter into a contract on a new home.
Why Can Insurance Companies Suspend Binding Coverage?
Many prospective home buyers, upon learning this information, don’t understand why these regulations are in place. In reality, they’re designed to protect policyholders. Specifically, insurance companies can suspend the binding of insurance coverage in “the box” to avoid irresponsible homeowners from only purchasing coverage when the threat of a hurricane is imminent. The ability to suspend coverage during hurricane season actually helps to keep rates down for honest homeowners who pay for their coverage year-round.
What Buyers Can Do to Avoid Problems
If one of your clients is looking to close on a home during hurricane season, the best thing you can do is to encourage them to speak with their home insurance company as soon as possible about getting coverage planned before the threat of a hurricane or tropical storm becomes imminent. Specifically, homeowners should be encouraged to get their policy paperwork filled out and submitted to their agents prior to the company’s suspension date. From there, coverage should start seamlessly the day they close on the house, even if it is in the middle of a severe tropical storm or hurricane threat.
For more information on homeowners insurance regulations and how we can help your clients from being “trapped in the box”, please contact Spickelmier Insurance.