Home insurers are pulling out of Florida and California
Recently, the home insurance in Florida and California has increased significantly or is being cancelled.
That will affect those
- who is buying or building a new house and
- who will renew the home insurance (which happens yearly).
The consequences are
1. Some people will not be able to sell houses if the insurance for new buyers is too high.
2. Some people will not be able to buy/build a house for the same reason.
3. And some people will not be able to stay in the house if the house is not entirely payed off and may have to foreclose.
For a mortgage, banks/mortgage lenders require a home insurance.
If a mortgage lender discovers that the insurance has lapsed/expired or is not renewed, the lender is allowed to buy one for you and charge you for it. This is called lender-placed or force-places insurance.
The force-placed insurance usually protects ONLY the lender. But the cost may be double or more.
The bank has to notify you 45 days before it charges you for a force-placed insurance.
Watch out for the communication from your insurer. About one month before the renewal, the insurer will notify you of an increase. And the insurer has to notify you in advance, usually 3 month, if they will not renew your coverage.
To look up the insurers in your state you can go to to the National Association of Insurer Commissioners.
Most states also provide Fair Access to Insurance Requirements (PAIR) plans, which should offer the coverage in the areas where other insurances don't cover. Those plans usually cost more.
In addition you can submit a compliant with the Consumer Financial Protection Bureau if you think that your insurance was wrongfully cancelled. I am not sure how much help will come from them, but they will forward it to the mortgage company and work to get you a response.
