No One is Paying the Insurance of Foreclosed Houses

Posted on June 22, 2009
Filed Under Foreclosure Homes | 1 Comment

It is a matter of grave concern that no one is paying the insurance fees of foreclosed houses in Florida. This is a source of worry for all adjacent houses now that that the hurricane season has set in. It poses risks for the neighbour as well as the property insurer especially during this season of rough weather and hurricanes.

The foreclosed houses are generally the prime targets of vandals. It is also prone to accidental outbreaks of fire. If the house is not shuttered then there is a good chance that hurricanes will rip it apart while blowing through. The debris would launch on nearby property.

The insurer will pay for the losses incurred to policy holders. But if the claims multiply then naturally the premiums will also increase. This will affect all policy holders. The condo owners are especially vulnerable as they have common walls and roofs with the empty foreclosed units.

Robert Friedman of Gunster law firm, West Palm Beach explained, “These vacant, uninsured units are like the rats that hide out of sight in dark alleyways. If a major hurricane hits … people will be shocked at how many there are. You will see an increase in litigation among [condo] associations, unit owners and insurers.”

Foreclosures in Florida are increasing at a staggering rate. In Broward County it has doubled in the last one year. Across Florida State 250,000 residential houses are in foreclosure. In Broward County and Palm Beach County there are 11,325 and 3,782 foreclosures respectively according to the findings of RealtyTrac. Most of the insurance companies are wary about giving coverage to houses that do not have occupants.

Recently a representative from an insurance firm representing bankers of Florida circulated the idea of having state supported insurance coverage for the vacant units because not much coverage is available in the private market. The suggestion was not warmly received but there were indications that discussions would continue. The banks contend that until they get the title deed after completion of the foreclosure process they are not owners and hence not responsible for anything.

Todd Campbell of Federated Mortgage Services said, “To obtain new insurance without ownership is very difficult, and you are shaking in your boots during the waiting period. There is no doubt that many vacant units are uncovered, either because the owners were unable to get coverage or because the coverage is in a ‘gap’ period due to the foreclosure process.”

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