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.
Be sure to keep in constant contact with the lender, the buyer, and the buyer’s insurance company so that you’re aware of specific deadlines for your closing.