In Florida is a buyer's inability to obtain affordable homeowners' insurance a basis to rescind a contract for purchase of residential property?

Asked by vicangels, West Palm Beach, FL Tue Aug 21, 2012

The lender has conditionally approved the loan with procurement of homeowners' insurance as the only remaining condition. All homeowners' insurance premium quotes have been well-above (~2-3K/year with large deductibles) the premium price estimated at the time of loan application (and what seller represented is currently being paid)

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Annette Law…, Agent, Palm Harbor, FL
Wed Aug 22, 2012
Taxes and Insurance costs in Florida are only going to go up. If your budget is stretched at the existing insurance rates you really need to re-evaluate your situation.
A lender will not grant a mortgage without insurance. A lender will foreclose if the insurance is allowed to lapse. Insurance is IMPORTANT. I believe your lender will make insurance a condition for obtaining financing.
The good news is insurance is available. Most of us are covered by Citizens.
Please be aware, your credit score does influence the insurance rate you receive. This makes it difficult to compare your insurance coverage and cost to that of the existing owner.
To further complicate the process, historical data included in your CLUE or A-Plus report can result in non-comparable rates.
CLUE, which stands for Claim Loss Underwriting Exchange
A-PLUS, which stands for Automated Property Loss Underwriting System

If you ever made a claim, or not, someone is keeping track of it and reporting it to the insurance companies.
You will need home owners insurance to obtain financing.

Wishing you success in your home purchase,
Annette Lawrence, Broker/Associate
Remax Realtec Group, Palm Harbor, FL
727. 420. 4041
0 votes
Antonio Vega…, Agent, Saint Cloud, FL
Wed Aug 22, 2012
Are you willing to let the home of your dreams slip away over not getting insurance at the price you wanted? Makes me wonder if you are really buying the home of your dreams. You already pass inspection, have a mortgage approved and are willing to give up? So many buyers never get that far... Get on the phone and start calling every insurance company in town. Prices in our area (Central Florida) vary from 900 to 2,300 for a 3,000 sqft home....that shows you it's all in finding the right insurance for your needs. Don't let lack of insurance be the reason to lose the home you have been working for. Keep in mind after closing you can continue to search for a better insurance policy and when you find it, you can cancel the existing, get a refund for the unused part and purchase another. Again, keep shoping around.

Tony Vega
La Rosa Realty
0 votes
Tom Priester, Agent, Tequesta, FL
Wed Aug 22, 2012
Dear Vicangels,

You might get another quote. I have some amazing insurance professionals that I work with on a regular basis who may be of help. If you would like to contact me I would be happy to pass along their contact information.
0 votes
Jim Olive, Agent, Key West, FL
Tue Aug 21, 2012
That's a question for a lawyer if I ever heard one (and I'm no lawyer!). The seller would likely assert (unless they are nice and just let you off the hook) that you CAN get the financing, so it's not a release under the financing contingency. It is quite true that insurance can be outrageous, but I'm not sure failure to get it, thereby causing financing to be denied would hold up in court. Hmmm, better decide whether you want to pay an attorney or pay for the really expensive insurance or forfeit your earnest money. None of them seem like good options, but I'm thinking those are the ones you have to decide between. Best of luck with your situation.
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Thanks for the input. All of those options are being weighed and the scariest option is paying for the "really expensive insurance." According to the agents I've received quotes from, premiums will only get more expensive every year. As a first time homebuyer it is a ludicrous proposition that the lender can essentially require a buyer to purchase (and likely continue to pay for) an initial annual insurance premium nearly that is at least 66% of the annual cost of the annual mortgage payments ($6K in premiums v. $9K for mortgage). This is particularly troubling in light of the fact that insurance premiums are not going to get cheaper...
Flag Tue Aug 21, 2012
Danielle Sha…, Agent, Cape Coral, FL
Tue Aug 21, 2012
Has your lender denied you the loan if your policy is in that price range? If you don't like the numbers you are receiving from insurance companies you might want to take a close look at what exactly is covered and tweak the policy.

What the seller pays does not necessarily equal what a new owner will; have you asked the seller for their insurance agent's contact information?Rebuild costs are a large factor in policy premiums.

Have you had a wind mitigation conducted?
0 votes
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