Cannot get insurance lined up before your closing date? It’s a serious problem, but you can usually fix it. Nearly every mortgage lender requires proof of homeowners insurance before funding a loan. Typically, lenders want an insurance binder or declarations page 3 to 5 business days before closing. However, buyers in California, Florida, and Louisiana now face shrinking options. Many carriers have paused or limited new policies in high-risk areas. As a result, more buyers find they cannot get insurance from a standard company. This guide explains why it happens and what to do before your closing date slips.
The good news is that most buyers who cannot get insurance on the first try still find coverage. It usually takes more calls and more paperwork. Sometimes it also means a higher premium.
Why Some Buyers Cannot Get Insurance Before Closing
Insurers review both the home and its history before they issue a policy. For example, they check the property’s claims record through a CLUE report. This database holds up to seven years of claims. A home with repeated water or roof claims may be declined, even if you have never filed a claim yourself.
The condition of the home matters too. In most cases, carriers flag roofs older than 15 to 20 years. Outdated electrical systems can also cause a denial. Common examples include knob-and-tube wiring and Federal Pacific panels. Polybutylene plumbing and wood stoves are other red flags.
Location is the biggest factor today. Wildfire zones, coastal counties, and hail-prone regions are the hardest to insure. For example, State Farm and Allstate paused new homeowners applications in California in 2023. As a result, many buyers in these areas cannot get insurance from their first-choice carrier.
Your Options When You Cannot Get Insurance From a Standard Carrier
If you cannot get insurance through a standard company, you still have several paths. Each one comes with trade-offs in cost and coverage. The table below compares the most common options.
| Option | What It Is | Typical Trade-Off |
|---|---|---|
| Independent agent | Shops many carriers at once | Wider choice, but quotes take time |
| State FAIR plan | Insurer of last resort in 30+ states and D.C. | Limited coverage; often needs a second policy |
| Surplus lines insurer | Non-admitted carrier for high-risk homes | Higher premiums; no state guaranty fund backing |
| State-run insurer | Citizens in Florida and Louisiana | Eligibility rules; possible assessments |
| Higher deductible | Standard policy with more risk on you | Lower premium, but larger out-of-pocket costs |
FAIR plans are the most common backup. The Property Insurance Plans Service Office tracks FAIR plans in more than 30 states and Washington, D.C. However, these plans often cover only named perils like fire and smoke. For example, the California FAIR Plan does not include theft or liability coverage. You typically pair it with a “difference in conditions” policy to fill the gaps.
Check your lender’s rules before you buy. Fannie Mae generally requires coverage equal to 100% of replacement cost or the unpaid loan balance, whichever is less. Its maximum deductible is typically 5% of the dwelling coverage. A cheap policy that misses these limits may not be accepted.
Flood coverage works a little differently. The National Flood Insurance Program normally has a 30-day waiting period. However, FEMA waives that wait when you buy coverage in connection with a loan closing. As a result, required flood insurance rarely delays a closing. You can learn more at FloodSmart.gov.
Steps to Take If You Cannot Get Insurance Before Your Closing Date
Act fast and communicate early. Your lender and your real estate agent need to know right away if you cannot get insurance. Follow these steps in order:
- Call your loan officer and confirm the exact deadline for proof of coverage.
- Contact an independent agent. They can often quote several carriers in one day.
- Ask the seller for their carrier’s name and claims history. That company may write a new policy for you.
- Fix red flags quickly. For example, a roof certification or wind mitigation inspection can improve your odds.
- Apply to your state FAIR plan as a backup, even while you shop.
- Request a written closing extension if coverage is still pending.
Next, review your purchase contract. Some contracts include an insurance contingency. In most cases, this clause lets you cancel and keep your earnest money if you cannot get insurance by a set date. Earnest money is typically 1% to 3% of the price. That comes to $4,000 to $12,000 on a $400,000 home.
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If you have no contingency, talk to your agent right away. Sellers often agree to short extensions rather than lose a buyer. However, an extension can affect your mortgage rate lock. Many locks last 30 to 60 days, and extension fees may apply.
Finally, contact your state insurance department if a denial seems unfair. Regulators can explain your rights and list insurers still writing policies. You can find your state’s office through the NAIC state insurance department directory.
Frequently Asked Questions
Can I close on a house without homeowners insurance?
If you have a mortgage, typically no. Lenders require proof of coverage before they fund the loan. If you cannot get insurance in time, your closing will usually be delayed. However, cash buyers can legally close without a policy, though it is risky.
What happens to my earnest money if I cannot get insurance?
It depends on your contract. In most cases, an insurance or financing contingency protects your deposit. Without one, you could lose it if you walk away from the deal.
Will my lender accept a FAIR plan policy?
Often, yes. Many lenders accept FAIR plan coverage, especially when it is paired with a wraparound policy. However, the combined coverage must still meet replacement cost rules. Ask your lender first, particularly if you cannot get insurance anywhere else.
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Official Sources & Resources
For verified information on home insurance regulations and consumer protection:
- NAIC (National Association of Insurance Commissioners): naic.org
- Insurance Information Institute: iii.org
- FEMA (Federal Emergency Management Agency): fema.gov
- FloodSmart (National Flood Insurance Program): floodsmart.gov
- USA.gov — Housing: usa.gov/housing
Content last reviewed September 2026. If you notice any outdated information, please contact us.