Tropical Storm Fay prevents writing of property insurance policies
Aug 20, 2008
South Florida Sun-Sentinel–August 19, 2008
By Paul Owers and Julie Patel | South Florida Sun-Sentinel
With Tropical Storm Fay hitting Florida, property insurers have stopped writing policies in Broward and Palm Beach counties, a decision that will postpone home sales for at least a few days.
Citizens Property Insurance Corp., the state’s largest property insurer, quit taking new policies or allowing changes to existing ones at 5 a.m. Sunday when forecasters put Florida in Fay’s path. State Farm and Allstate, two other large insurers, also have temporarily suspended new business here.
Lenders require homeowners with mortgages to insure their properties, but some home closings continued as planned Monday for buyers who secured insurance last week.
Those who have not finalized property coverage likely will have to wait until storm watches and warnings are lifted in Florida after Fay passes today and Wednesday. Still, that may not be so bad, said Randy Bates, president of the Realtor Association of Greater Fort Lauderdale.
"If I’m on the buyer’s side, I’d be telling them to hold off until the storm is over," Bates said Monday. "Once they close, they inherit any issue, like a leaky roof."
Fay’s arrival comes in the midst of a 2 ½-year housing slump in South Florida. Sales and median prices have declined from a year ago, and analysts say it could be 2009 or later before the housing picture improves.
"We don’t need any more glitches," David Dweck, a real estate agent in Palm Beach and Broward counties, said of Fay.
In 2005, Hurricane Wilma delayed or canceled many home sales across the region. Buyers asked for reinspections, lenders required new appraisals, and title companies and other businesses struggled to catch up after days paralyzed with no power.
But a repeat scenario is unlikely here unless Fay strengthens, shifts course or dumps large amounts of rain on Palm Beach and Broward counties, agents say.
Any homes that have water damage from rain rather than wind won’t be covered, unless the owners have separate flood insurance policies.
In limited circumstances, coverage from the National Flood Insurance Program kicks in the day after homeowners buy the flood policies. In most cases, though, it doesn’t take effect for 30 days.
"It’s to avoid a situation where people say, ‘We’ve got Tropical Storm Fay coming, let’s go buy insurance. And then saying the next day, ‘We don’t need it, let’s get our money back,’ " said Butch Kinerney, the National Flood Insurance spokesman.
Paul Owers can be reached at powers@SunSentinel.com or 561-243-6529. Julie Patel can be reached at jpatel@SunSentinel.com or 954-356-4667.
Property insurance questions: Call 800-22-STORM or visit www.myfloridacfo.com
Flood insurance: Call 888-379-9531 or visit www.floodsmart.gov
To file a Citizens Property Insurance claim: Call 866-411-2742