This is an excellent question that I am not sure has a clear cut answer. We do know that virtually in every case your lender for a mortgage can require insurance on the property. If a homeowner fails to secure insurance, the bank can apply what we call a force place policy. This is when the bank essentially secures insurance itself and then will bill the homeowner back. Those rates are usually much higher with worse coverage so we always encourage homeowners to keep up with their own policies without heading down that road. Whether a lender can require certain types of coverage is a little foggier I believe. I would point to flood insurance though. If a particular home sits in a flood zone, your lender can and will require flood insurance on the property at an extra premium. The flood zones are typically based upon FEMA mapping and my understanding is that different lenders may have different internal requirements but also may be confined within national law. I am not aware of sinkhole mapping that lenders do that would require sinkhole coverage. Perhaps that is something on the horizon where FEMA would map high risk sinkhole areas and those maps would be provided to lenders prior to purchase in helping them determine whether they would require sinkhole coverage. I have certainly heard that many lenders, especially in Pasco and Hernando Counties, do require sinkhole coverage due to the high risk. I would like to hear from any realtors or insurance agents who could shed more light on this topic because it is an interesting question.
August 29, 2015 by Morgan Barfield