Hurricane Elsa is projected to enter the “box” on Saturday, preventing insurance companies in Florida from binding policies. In is important to review all transactions closing Tuesday and Wednesday of next week to ensure buyers have bound their polices. In the event that the storm’s path results in hurricane watch or warning in an area that a closing is to take place, it is unlikely that closing will be able to happen without re-inspection, and in cases where the transaction has a mortgage, the lender may also require independent re-inspection before they will approve closing. The FTGA team is currently reviewing all of our upcoming closings for status of bound insurance policies and will proactively contact parties to coordinate where needed.
Please feel free to reach out to Jeff Hall at jeffhall@FTGAgency.com or your local FTGA Title Rep with any questions. All of us at FTGA wish you a safe and happy 4th of July weekend!
What is the “Box”?
Florida’s no bind insurance box covers over 16,000 square miles and can cause significant delays to real estate closings. What is it and why does it exist?
THE BIG PICTURE
If you live anywhere near the Gulf Coast or the eastern seaboard of the United States you’re familiar with “Hurricane Season.” Every year from June 1st through November 30th our attention turns towards the warm waters off our coasts for the development of tropical depressions, tropical storms and hurricanes and for good reason. According to the National Oceanic and Atmospheric Administration (NOAA), tropical cyclones have coast the United States $1.75-trillion since 1989. Impacts from a landfalling storm can disrupt lives for weeks, months, and years.
One of the hardest hit industries as it relates to tropical cyclones is the insurance industry. Take for example Hurricane Michael which made landfall as a category five storm in 2018. When Hurricane Michael made landfall in the Florida panhandle it had sustained winds of 160-mph, caused over 25-billion in property damage and claimed the lives of over 70-people.
The insurance industry had to come up with a way to help mitigate their loss from property owners who were waiting until a storm had formed and was on the way to get insurance. Their solution was the “no bind” box.
THE ‘NO BIND’ BOX
Covering an estimated 16,000 square miles around Florida, the no-bind box is something that every real estate agent and broker should be familiar with because it has the potential to delay and derail closings.
Whenever a tropical storm or hurricane watch or warning is issued within the no-bind box (indicated by the red line in the map below), the state’s Citizens Property Insurance Corporation will not accept any applications for new coverage or any endorsements for increased coverage, regardless of the effective date. Most private insurance companies also follow the same policy, however, there are some that make exceptions.
NO BIND CLOSING IMPACTS
With homeowners insurance being required for the vast majority of financed real estate closings, it is important that real estate agents keep a watchful eye on the weather during hurricane season. If it looks as if there may be tropical development within 36-72-hours anywhere within the no-bind box agents should strongly encourage buyers to bind their policies before the issuance of any watches or warnings.