Have you ever tried to add coverage to your insurance policy only to be told about binding restrictions? This could be a common experience, particularly in Florida during hurricane season. When the state is in the path of an impending hurricane or tropical storm, insurance companies often establish binding restrictions, typically before the predicted storm date and even extending after the storm has passed.
But what exactly does this mean? Binding restrictions imply a temporary freeze by the insurance companies on issuing new policies, adding coverage, or making changes to existing ones. You can expect these restrictions to be lifted between 24 to 78 hours after the storm has passed, although this can vary from one insurer to another.
Insurance is designed to serve as a tool for mitigating risk. However, when a storm is imminent, the likelihood of claims could significantly increase, thereby raising the degree of risk for insurance companies. To keep their risk level manageable and ensure they can meet their obligations, insurers respond by implementing binding restrictions.
Therefore, it’s essential to be proactive during the hurricane season. Plan any necessary measures, such as acquiring new insurance or making changes to an existing policy, well ahead of time to avoid running into binding restriction roadblocks and ensure you have the coverage you need when faced with adverse weather conditions.
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