Insurance policy cancelled before closing

[Jason Krick]

I have a property under contract. It is an REO. Initially, we were to close in the beginning of February. Then it was pushed back to last Wednesday. In the meantime, I had my insurance agent secure a vacant dwelling/builder's risk policy for renovations after close. Last week, I got a notice that the policy would be cancelled if payment was not received by March 4. No problem, we were to close on Feb 25. We didn't close as scheduled as they discovered a defect in regards to title that needs to be cleared. Now, I have not paid the premium yet, because I've heard stories of title issues arising and it ends up that the bank did not foreclose properly, and the the entire process has to be re-done. I've called and left messages for the broker, but they have not been returned. So, I do not know if an extension is possible, another application needs to be filled out, etc. The earliest I am looking at closing is the 10th. So, barring any changes, the policy will be cancelled. I've begun shipping around for other insurance in the meantime, but my question is in regards to my financial liability on the first policy. I assume it is rather normal not to pay the premium until closing, or until it is clear that closing will occur. Am I liable for the premium in this case? Do situations like I described happen regularly? It's a curious turn of events, as the broker had been fantastic to work with up to this point. I don't know what happened, but I can't continue to wait either. If it matters, this is a commercial policy, and the property is being purchased by an LLC.

[Tom Keith]

@Jason Krickhi Jason,  if you think the closing is going to take a little while you have a couple of choices.  1) If you expect, really expect to close, have agent/broker change effective date before termination.  2) pay premium and when closing is determined, have broker change effective date.  Oh I forgot 3) terminate policy flat the policy that was bound.  You have no interest in property so you cannot have insurance on it.  Then, if you do close, rewrite policy, maybe with a different broker.  Best of luck.