During hurricane season, it is important for purchasers of property to attain insurance as soon as possible after executing a contract. Why? As a tropical depression, storm or hurricane approaches Florida, insurance companies stop binding policies. If this occurs near or on a closing date and the purchaser is unable to get an insurance policy, the closing will be delayed until the storm passes and the all-clear is given to bind policies again. A delay in the closing may trigger additional fees or penalties from mortgage lenders. You could even lose your interest rate-lock.
Why do insurance companies stop binding? Many people go for years without wind or flood insurance. When a storm is approaching they decide that insurance might be a good idea. It isn't fair that these people don't pay into the premium pool until they're very sure they need coverage. Binding is stopped to prevent this unfair behavior.
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