As of last weekend, insurers and mortgage lenders have new rules to which they must comply
Starting on July 1, Florida's forced-trace insurance regulations have been updated, requiring
insurers and mortgage lenders to say certain tighter restrictions on the implementation
of those policies. The change is the result of a new bill approved by Florida lawmakers earlier in 2023
House Bill 793 took effect at the start of this month, with the intention of banning
what some have referred to as lender double-dipping. That occurred when lenders put forced-trace insurance policies into effect before the
homeowners' existing coverage had run out. The new law was based on the National Association of Insurance Commissioners' model legislation
It states that policies put in place by lenders cannot become effective earlier than the last
date of the homeowners' policies. Moreover, lender-established coverage must also end the moment the homeowners' new market
coverage is put into place. Forced-trace insurance has become highly problematic for Florida homeowners dropped
by insurers. Florida has become a state-approaching homeowners' coverage crisis. It is commonplace for insurers to drop homeowners
When those homeowners are covered by a mortgage that requires them to have coverage, this
triggers lenders to purchase coverage on behalf of the borrower. The issue is that some homeowners in this situation have pointed out that the new coverage
is being put into place, and they are being charged for it, even before their existing
policy has run out. As a result, they face double coverage and a notably higher premium to come with forced-trace
insurance policies. A number of states have already adopted similar laws on the same model in recent years
Florida's new law states that the amount of coverage purchased on behalf of a homeowner
must be passed at the replacement cost of the property as best determined by the last
known coverage amount. Moreover, the new insurer or its agent will be required to request the previous coverage
level from the homeowner. If that cannot be obtained, the coverage will be based either on the home's replacement
cost as calculated by the insurer or on the loan's unpaid balance
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