Home > Uncategorized > What Happens When the Insurer of Last Resort Won’t Insure Your Property?

What Happens When the Insurer of Last Resort Won’t Insure Your Property?

For those of you who do not live in Florida, the State has a government run homeowner’s insurance program for properties which do not meet the insurability requirements from mainstream property insurance companies. Citizens Property Insurance Corporation is often referred to as "the insurer of last resort".  It’s who a homeowner goes to when they can’t get coverage elsewhere.  At the Citizens website it explains that "Citizens is a not-for-profit, tax-exempt government corporation whose public purpose is to provide insurance protection to Florida property owners throughout the state. The corporation insures hundreds of thousands of homes, businesses and condominiums whose owners otherwise might not be able to find coverage."

What happens, however, if Citizens won’t insure a property?

My brother-in-law is in the process of buying his first home.  Everything is in place except for the homeowner’s insurance. The home he is purchasing was constructed in 1981. The home inspector verbally indicated that the remaining life of the roof is 5-8 years. In the inspection report, however, the inspector indicates that the roof must be replaced within 1 year. Citizens policy is that if a home is older than 25 years, and if the roof is constructed with shingles, then a qualified inspector must indicate that the remaining useful life of the the roof is no less than 3 years. While this situation will not be an issue with my brother-in-law, it got me thinking that this could be a huge issue for other’s.

Take, for instance, a homeowner who is Selling and does not have the funds to bring a property up to an insurance company’s standards. The Buyer certainly is not going to put any money into a property prior to purchasing. The one who stands to potentially lose is the bank because the home may need to foreclose or short sell. While this is an extreme example as there are renovation loans and/or FHA 203K rehab loans, the potential remains that a policy won’t be written and, accordingly, the house won’t sell.

Here’s another potential hurdle — the insurance company (not just Citizens) may write the policy only to cancel it within 90 days because it did not meet their initial underwriting guidelines. At that point the homeowner will need to make the necessary improvements or face the sometimes exorbitant costs of forced placed insurance! WHAT? They can cancel immediately after they write the policy? This seems a little unfair to the consumer. A mortgage company must underwrite a mortgage prior to issuing a loan, why shouldn’t an insurance company be required to underwrite a policy prior to a home purchase.

It seems like the State of Florida has some work to do when it comes to insuring certain homes in the state.


Rick Schuster

Licensed Real Estate Broker – Jaycee Realty, Inc.
Licensed Title Insurance Agent – Home Guardian Title, Inc.
Licensed Mortgage Broker – Leading Edge Mortgage Corp
20283 State Road 7 – Ste 400
Boca Raton, FL 33498

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