Mortgage holder orders homeowners to change insurers

[Nords]

Maybe I don't get around much, but I've never read about a bank telling itsmortgage customers that they have to change their insurance company.

Vesta Insurance Group has apparently taken a hard hit on hurricane claims in the southeast. One of VIG's subsidiaries is local firm Hawaiian Insurance & Guaranty. Due to Vesta's deteriorating financial position, HIG's bonds have been dropped to a C+ rating. Bank of Hawaii requires its borrowers' homeowner insurance policies to be from companies with at least a B rating, so BOH has been ordering the switch. People are shopping for hurricane insurance at a time when requirements are tightening and insurers are dropping out... did I mention that the season starts in five days?

http://starbulletin.com/2006/05/26/business/story01.html

Brewer, have you been following the news on this trend?

 

[Texas Proud]

I do not see this as a big issue.. as an interested party to your property.. and with the majority of homeowners, the mortgage company having more equity in the property, they want to protect their investment... the homeowner signed a contract and they are just telling them to live up to their commitment.

 

[lazygood4nothinbum]

did I mention that the season starts in five days?

companies generally issue insurance as long as there is no named storm currently active.

 

[Martha]

This is a common mortgage clause and the commercial mortgages I write are even more strict.

 

[brewer12345]

Thanks for the heads up. Not a good think for the homeowners, since I am pretty sure it will be hard for them to find any coverage, let alone at what price.

 

[Nords]

Looks like the other shoe dropped on HIG and its parent company.

"Vesta Insurance Group is in default on loan agreements and officials say Texas regulators have taken over six of the Birmingham company's subsidiaries."

I see they have branches in Texas & Florida too...

 

[Alex]

It sounds like the Mortgage holders are protecting themselves and their clients to me ( a real win/win). I'd sure want to know if my insurance company rating fell lower than "B".