How Binding Restrictions Work

While writing this post, Hurricane Zeta is just off the gulf coast of New Orleans. It is the 27th named storm for this hurricane season. By the time it makes the track to Southwest Virginia the remains will affect the forecast with rain and wind.

Often when a severe weather event is imminent, insurance companies will impose binding restrictions in specific locations. For example, as of 10/28/2020 Progressive insurance has put binding restrictions in many counties in Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, and South Carolina.

While the specific restrictions for Progressive vary by state, we can look a bit closer at some of the details. For discussion we will look at the exact wording for the binding restrictions in Alabama:

Physical Damage Coverage for Boat, RV may not be written, reinstated, or otherwise bound in any area where there is a hurricane, tornado, fire, flood or tropical storm watch, warning or occurrence. Additionally, no coverage for Boats may be written, reinstated, or otherwise bound in any area where there is a hurricane, tornado, fire, flood or tropical storm watch, warning or occurrence.  

Due to Hurricane Zeta we are required to temporarily restrict Physical Damage Binding for the products listed above.  In addition, we are restricting binding for all coverages for Boat effective immediately. 

Effective on 10/28/2020 11:47:05 AM EDT the following counties are under the restricted binding procedures within the state of Alabama. Physical Damage coverage may be written, reinstated, or otherwise bound in any counties not listed.  

Progressive State Updates 10-28-2020

This statement then lists the specific counties in Alabama where the binding restrictions are in place.

Why Binding Restrictions?

It should not come as a surprise that carriers will temporarily restrict new business and changes to existing businesses if an immediate and unavoidable weather risk is about to strike.

How long these restrictions are in place depends on each individual carrier. There is currently no time frame for lifting the restrictions currently placed in Alabama by Progressive. Typically (unless further restrictions are applied) the next notice will be an updated list of counties where the restriction remain in place.

Binding restrictions can be placed on most insurance products.