Property Insur Lapsed - Posted by Sandy FL

Posted by Redline on June 08, 1999 at 11:19:45:

This makes sense since any mortgage I’ve seen says that the borrower agrees to keep the property insured. Failing to do that would seem to be a breach of the agreement and therefor could lead to default.


Property Insur Lapsed - Posted by Sandy FL

Posted by Sandy FL on June 08, 1999 at 06:36:06:

If I buy a property from a seller who let the insurance lapse, is there any risk to me that the property may be uninsurable? I have inspected the property and there seems to be no major defects. Only some rotten wood on the door frames (about one foot up off the ground) from water damage. The seller says that he will repair the door frames.

By the way,… I have heard it said that once a homeowner or landlord lets the insurance lapse, they are one step closer to defaulting on their mtg payment. Any way to find out about these folks, to get in front of them and offer to buy their problems, even before they know they are going to sell??

Sandy FL

Re: Property Insur Lapsed - Posted by JohnAz

Posted by JohnAz on June 09, 1999 at 10:20:16:

Just went thru a tough time with an insurance problem.
Have two properties, both escrowed thru the same title company. Bills for insurance set to be sent to title company. Had a claim on one policy, my own home, called the insurance company and found out my insurance on both properties had cancelled in November.
Insurance Co. says they sent bills, Title company says they never recieved them, both say it is ultimately MY responsiblity to stay on top of this. Neither lender had been notified of the lapse of insurance…one is a Judge…who is known to immediately “self insure”, the other is a Doctor who is known to start foreclosure the day after the lapse.

Of course the money was in the impound account so I just went out and found new insurance. Actually wound up getting better policies for less money thru CNA. My new insurance agent did express concern over the fact that there had been lapse…may have trouble getting a decent rate, but by combining both properties and my auto’s even their higher rate is substantially less than what I had been paying.

Unless there is something different about your area I can’t see a big problem.


Tangential Response - Posted by Joseph Turner

Posted by Joseph Turner on June 08, 1999 at 14:07:06:


It was recently brought to my attention by a family friend who works for an insurance company that a home left vacant for 30 days automatically forfeits its insurance. This 30 days clause or whatever it is only applies to homes that are vacant, abandoned or left vacant while being sold. It doesnt pertain to those who leave on extended vacations, etc.

The reasoning being that vacant homes possibly solicit or encourage vagrants, vandals and destructive kids.

this is what I have been told…has anyone heard anything about this. by the way, I am in southern california, but I was given the impression that this is a universal standard.



Re: Property Insur Lapsed - Posted by JPiper

Posted by JPiper on June 08, 1999 at 11:42:47:

I don’t know why a property would be uninsurable by YOU, if the prior owner allowed his insurance to lapse…unless of course there is something about the property itself that would preclude insurance.


Re: Property Insur Lapsed - Posted by Carmen

Posted by Carmen on June 08, 1999 at 10:20:15:

I’ve never heard that a property becomes uninsurable just because a policy lapses - however, since we are in Florida and every insurance company seems to be pulling out, it may be harder to find one that will take it. But there’s always the JUA - I think they’re a state insurance company - for exhorbitant rates they’ll insure anyone.

Remember, too, that it’s hurricane season, where you will get a freeze on insurance any time it starts raining real hard (like today) or they see a spot on the map…

As for the second question, maybe it’s time to get cozy with some insurance agents? I don’t believe this is public info - but I would like to know if I’m wrong.

Saludos! Carmen

Not in my policy - Posted by Jim IL

Posted by Jim IL on June 08, 1999 at 17:28:35:

I am no expert, but , after reading your post I got curious.
I went thru and read a few of my insurance policies and could not find ONE where this was the case.
It is not written, therefore, it is not the case.
So, this is apparently not a universal standard. (Whew!!)
And if my insurance company denied a claim based on this, when my payments were paid up, then we (me, the lawyers and the ins. comp.) could all meet at the courthouse, for settlement of a much larger claim.
Have a nice day,
Jim IL

My atty tells me… - Posted by SandyFL

Posted by SandyFL on June 08, 1999 at 10:33:42:

… that an owner who stops paying on the property insurance can be in “technical default” on their mortgage, depending upon how the mortgage is written.
The owner may receive a nastygram from the lender, which is typically not a bank, because the conventional lenders will use an escrow account for the insurance.
All you legal types out there, please correct me if I am wrong.


Re: My atty tells me… - Posted by JPiper

Posted by JPiper on June 08, 1999 at 11:40:23:

Not providing insurance is a default under any mortgage I’ve ever seen. If your attorney views that as “technical” that’s up to him…but it’s a serious breach of the loan agreements.

The question is how a lender will respond to that. They have the right to accelerate the loan. However in the cases I have seen they will place “forced insurance” on the property. This insurance is quite expensive…and only insures the lender, not the borrower.