In the wake of the real estate boom-and-bust market, a seldom-discussed ripple is costing consumers money and pitting them and their agents against mortgage brokers, lenders, and carriers.
Reports from agents across the state reveal that some carriers are requiring a current property appraisal before they will write homeowners' coverage, which is actually not a bad idea. Citizens Property Insurance Corporation requires a new appraisal every 18 months. However, with appraisal in hand, the lenders and/or carriers are then insisting that the potential policyholder obtain insurance coverage for the property's total value, including land.
A member alert on the Florida PIA's web site addressed the issue: “Banks are confusing the home mortgage amount with the replacement value of insurable buildings. In other words, some banks are requiring insurance on the total mortgage amount instead of just the structures. This is against the law.”
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