Yes, even if your house gets destroyed in a hurricane in Florida, you will still have to pay your mortgage. The good news is that your homeowner’s insurance will probably pay for much, if not all, of the loss. This situation is similar to when a car gets totaled in a crash. The automobile insurance usually pays off most or all of the remaining car loan, unless the loan is “upside down,” meaning that you owe significantly more than the car is worth.
If you have a mortgage, you probably have homeowner’s insurance. Most mortgage companies require homeowner’s insurance to protect the lender in the event of a catastrophe. The bank does not want the property to be worth less than the amount the lender could get by selling the house in foreclosure.
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Your Homeowner’s Insurance Policy Should Pay the Insured Value of the House and Its Contents
The insurance company does not decide how much money to pay by determining the amount of your loss. The insurer will look at the policy and the stated value of the home and its contents.
People Without Homeowner’s Insurance
A surprising number of people do not carry homeowner’s insurance. There is no law in Florida that forces people to buy homeowner’s insurance. If you do not have a mortgage, you might not have this insurance, which means that you will not have a ready source of funds from a third party to rebuild your house. People who inherited a home or already paid off their mortgages often fall into this category.
When the Insurance Proceeds Do Not Cover the Mortgage
Even if you have homeowner’s insurance and the insurer agrees to cover the loss from the hurricane damage rather than deny coverage for some exclusion like flooding, the full proceeds from the insurance company might not be enough to pay off your mortgage or rebuild your home. Here are some reasons why your insurance proceeds may be inadequate to pay off your mortgage:
- Your structure is underinsured. If you have not looked at your homeowner’s insurance policy since you bought your house, you might not have enough insurance coverage for the current value of your home.
- You might have a hard time paying off the mortgage with the homeowner’s insurance if you have very little equity in your house. This situation can arise with a recently purchased home for which you made a small or no down payment, or if you refinanced your home.
- Sometimes people try to save money on their homeowner’s insurance premiums by selecting a very high deductible. The reasoning is that the insurance would only get used in the event of a significant loss. The problem with this approach is that when that catastrophe does happen, the payout from the insurance company might not be enough to zero balance the mortgage because of the high deductible.
Many people face the situation in which the insurer refuses to pay the claim at all or only pays for part of the damage. The insurance company might point to some language in the homeowner’s policy that excludes the claim, maintaining that the damage was from flooding, which the policy does not cover. We may have to file bad faith litigation in this case.
If your insurance proceeds are not enough to pay off your mortgage or rebuild your home, you might want to talk with a lawyer to find out whether your insurer should be paying you more money under the policy.
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How a Lawyer Can Help
It is devastating to lose your home in a hurricane. This happened to numerous families when hurricanes Michael and Irma struck. When you have difficulties with your homeowner’s insurance company, that can compound the stress you are feeling. Sometimes people do not get a fair result from their insurers until they hire a lawyer to advocate for them.
At the Law Offices of Anidjar & Levine, we will fight hard to get you all the compensation that you deserve. If you want caring lawyers and responsive legal services, we are the firm for you. Let us take care of your legal matters so that you can focus on rebuilding your life. Call us today at 1-800-747-3733 to get started.