While writing this post, Hurricane Ian is starting to impacting Tampa and southern Florida. According to its’ projected path, Ian will impact Southwest Virginia this weekend with days of rain and wind.
Often when a severe weather event is imminent, insurance companies will impose binding restrictions in specific locations. Binding restrictions typically apply during natural disasters such as hurricanes, tornadoes, flooding and wildfires. Depending on the restriction, new business cannot be issued and existing policies cannot be changed.
In 2020, as Hurricane Zeta was making land fall, insurance companies put binding restrictions in many counties in Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, and Virginia.
While the specific restrictions for each company vary by state, we can look a bit closer at some of the details. For discussion we will look at the exact wording for the binding restrictions in Alabama from Progressive insurance:
Physical Damage Coverage for Boat, RV may not be written, reinstated, or otherwise bound in any area where there is a hurricane, tornado, fire, flood or tropical storm watch, warning or occurrence. Additionally, no coverage for Boats may be written, reinstated, or otherwise bound in any area where there is a hurricane, tornado, fire, flood or tropical storm watch, warning or occurrence.
Due to Hurricane Zeta we are required to temporarily restrict Physical Damage Binding for the products listed above. In addition, we are restricting binding for all coverages for Boat effective immediately.
Effective on 10/28/2020 11:47:05 AM EDT the following counties are under the restricted binding procedures within the state of Alabama. Physical Damage coverage may be written, reinstated, or otherwise bound in any counties not listed.
Progressive State Updates 10-28-2020
This statement then lists the specific counties in Alabama where the binding restrictions are in place.
Why Binding Restrictions?
It should not come as a surprise that carriers will temporarily restrict new business and changes to existing business if an immediate and unavoidable weather risk is about to strike.
How long these restrictions are in place depends on each individual carrier. Once the threat passess, insurance companies wil lift the binding restrictions and allow new policies to be issued and existing policies to be endorsed.
As always with any severe weather threat, plan ahead and stay safe!