HOMEOWNERS INSURANCE IN FLORIDA

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Two unprecedented back-to-back hurricane seasons in 2004 and 2005 – with eight hurricanes and four tropical storms caused tens of billions of dollars in insured damages and many issues throughout the state with regard to homeowners insurance.  You may be concerned about not only the availability, but the cost of homeowners insurance in Florida.     

 

To set your mind at ease, homeowners insurance is available and it is affordable. We recently tried the State of Florida Marketing Assistance Plan Online Referral Service to request a quote.  We received 2 calls and 1 email within 30 minutes and by the end of the day, had received three quotes from homeowners insurance companies in Florida. One quote was less than what we are currently paying, one was equal to what we are currently paying and one was more than we are currently paying. The Florida Marketing Assistance Plan Online Referral Service’s website is: http://www.fmap.org .

 

You can shop and compare the average cost of homeowners insurance in Florida by county from various companies’ at:

http://www.shopandcomparerates.com/

 

You can find information about Flood Insurance at

http://www.floodsmart.gov/floodsmart/

 

There have been many new companies entering the market, writing homeowners insurance in Florida.  Here is a PDF list along with their ratings: Click here.

 

Comprehensive information from the rating service Demotech, as noted in the list above,  can be found here: http://demotech.com/default.aspx  

 

Search for a specific insurance company to see if they are licensed in Florida:  http://www.floir.com/CompanySearch/

 

Hear directly from the Florida Insurance Commissioner:

http://www.floir.com/pdf/ProInsMkt042009.pdf

 

Peruse a variety of consumer guides published by the State here:

http://www.myfloridacfo.com/Consumers/Guides/Property/index.htm

 

From the State of Florida:

 

Homeowners’ insurance helps pay to repair or rebuild your home and replace personal possessions lost due to theft, fire or other disasters such as storms.

 

Florida law does not require homeowners’ insurance, but if you own certain pets or a swimming pool, some cities and counties require liability coverage, which would pay for non automobile-related injuries to other people, or damage to their property, for which you are legally responsible.

 

For mortgaged homes, the lending institution will require full insurance coverage on the structure, including flood (if located in a special zone), fire, liability, windstorm, etc. Some developments and subdivisions may also require insurance.

 

The following overview explains the basic types of coverage available, and provides tips for homeowners and renters.

 

Basic Coverage Available

 

Depending on which company you choose, you may obtain one of several basic packages of homeowners’ insurance in Florida to protect your home and belongings. Each package protects against a specified number of perils, or events that cause damage to property, such as fire, windstorm or theft.

 

Four categories apply to covered perils:

 

• Structure (the dwelling itself)

• Other structures (like sheds and fences)

• Personal property (the contents of the structures)

• Loss of use (also called Additional Living Expense or ALE)

 

The first three are defined as “property.”

 

Property

 

Property coverage helps pay for damage by covering perils to your home, the contents of your home and other personal belongings owned by you or family members who live with you. In some cases, it helps pay for damage to other structures, such as tool sheds, detached garages, small boats, guest houses and their contents. Your insurance agent or company can point out the items covered in a given policy.

 

Your policy provides limited coverage for some personal property, such as antiques, firearms, jewelry, furs and electronics. You may need additional coverage as an endorsement, or addition, to your insurance policy, to modify its original terms for an additional premium. Homeowners’ policies do not cover vehicles. Your agent or company can help you find coverage for items not included in your policy.

 

Additional Living Expense (ALE)

 

Homeowners’ policies provide additional living expense coverage that will pay some extra expenses if damage to your home prevents you from living there while it is being repaired.

Most policies also will provide this coverage when a civil authority (law enforcement agency, emergency management service, etc.) prohibits the use of a residence due to direct damage to neighboring homes by a covered threat.

 

The items typically covered – above and beyond normal expenses – include extra costs for food, housing, telephone, transportation (to and from work or school), relocation and storage, utility installation and furniture rental for a temporary residence. Be sure to check your policy to find out what is specifically covered. This coverage applies only to differences in expenses. For example, it would apply to the cost of restaurant meals minus normal food expenses. It does not cover your mortgage, groceries and utilities or the monthly cost of a telephone in a rented space (since you normally pay for the telephone in your house). Your policy may designate limited coverage for additional living expenses, but your policy does not obligate your company to pay this amount up front or in full if you suffer a total or partial loss. For this reason, you must keep receipts for additional living expenses and submit these to your company for reimbursement.

 

Additional living expense coverage does not apply to your dependent children while they are away at college. It applies only to the primary insured structure in the event of a loss.

 

Policies generally offer ALE coverage without any deductible. Flood insurance policies, however, don’t provide this coverage. For more information, contact your insurance agent or company.

 

Two additional types of coverage are known as personal liability and medical payments.

 

Personal Liability

 

This coverage protects you against a claim or lawsuit resulting from (non-auto) bodily injury or property damage to others. For example, if a neighbor slips and falls in your house and sues you, and a jury finds you legally liable, this coverage would pay that claim plus legal fees up to the policy limits. This coverage applies to you and all family members who live with you. It does not cover intentional damage or harm caused by you or family members who live with you. Check your policy for exclusions and discuss them with your agent.

 

Medical Payments

 

Regardless of fault, this coverage pays for medical expenses, up to the medical payment limits, of persons accidentally injured at your home. It does not apply to your injuries or those of anyone living with you or to activities involving an at-home business.

 

Notes: Your homeowners’ insurance policy may also cover your dependent children’s belongings while they attend college, whether they live on or off campus. Check with your agent or company representative concerning coverage for children living away from home. You may need a separate policy.

 

 

Replacement Cost vs. Actual Cash Value

 

When buying coverage, you may insure your property and belongings for actual cash value or replacement cost.

 

Replacement Cost

 

Replacement cost is the amount needed to replace or repair your damaged property with materials of similar kind and quality, without deducting for depreciation (the decrease in the value of your home or personal property due to normal wear and tear).

 

Actual Cash Value

 

Actual cash value is the amount needed to repair or replace damage to your home after depreciation. For example, your insurance company would deduct for the age and condition of a 17-year-old roof with a 20-year life expectancy.

 

Here is how the two types of coverage work in practice. Let’s say you bought a new $700 television in 2000. In 2005, a lightning strike destroys the TV. A policy for actual cash value will only pay an amount that reflects the TV’s current value – say, $300. A replacement cost policy, however, would cover the entire cost of a new TV of the same type – say, $900. Legislation passed in 2005 requires full payment without a depreciation hold-back for personal residential policies in some cases. Call the Consumer Helpline toll free at 1-877-MY-FL-CFO (1-877-693 5236) for further information.

 

Your agent must offer you replacement cost coverage for your dwelling. If you reject this coverage, you must sign a statement on the application form indicating that you don’t want it.

 

Standard replacement cost depends upon the dwelling limit stated on your policy. Insurance companies design most homeowners’ policies to require the policyholder to insure the dwelling for at least 80 percent of its replacement cost. And, while it is rare, you can insure your home for less than 80 percent. If you do so, you will be charged a co-payment penalty, in addition to your deductible, when you file a claim.

 

Some companies offer guaranteed replacement cost dwelling insurance – an option that costs only a few dollars more, and insures your home for an increased amount, even if it exceeds policy limits. Many companies will not offer guaranteed replacement benefits for older homes.

 

 

Inflation Guard

 

Inflation or room additions can increase the replacement cost of your home and its contents, while the actual cash value of your home may decrease over time. An inflation guard endorsement gradually increases your dwelling’s coverage limit annually to keep your insurance coverage up-to-date with current prices and inflation. It also may keep the policy value in line with increases in local building costs per square foot. If your policy lacks this endorsement, you are responsible for periodically updating your coverage with your insurance agent or company. No matter how you insure your home, you should keep track of its replacement cost evaluation. Check with your agent or company once a year to make sure your policy provides adequate coverage.

 

For more information, please call the

DFS Consumer Helpline toll-free at

1-877-MY-FL-CFO (1-877-693-5236),

or visit the DFS Web site at

www.MyFloridaCFO.com.

 

 

Additional Coverages

 

Ordinance or Law Exclusion

 

Your agent must offer you ordinance or law coverage. If you do not wish to buy this coverage, you must sign a form stating that you reject it. Some companies automatically include this coverage for a limited amount. If a local building ordinance or law increases the cost of repairing or replacing your dwelling, the insurance company will not pay that extra amount, unless you had added ordinance or law coverage to your policy.

 

For more information, please call the

DFS Consumer Helpline toll-free at

1-877-MY-FL-CFO (1-877-693-5236), or visit

the DFS Web site at www.MyFloridaCFO.com.

 

Windstorm Coverage

 

Most homeowners’ policies cover damage caused by windstorms, hurricanes and hail, but insurance companies may exclude this coverage in some high-risk areas. The Citizens Property Insurance Corporation provides homeowners with insurance in high risk situations (like a home on the beach), and to consumers who can’t find coverage in the private market. The Citizens policy may have special coverage restrictions during hurricanes for lawn furniture, grills, fences and other such items.

 

Hurricane Deductibles

 

The Hurricane Insurance Affordability and Availability Act offers homeowners a broader selection of deductible amounts. These deductibles depend on the value of the insured property and apply only to hurricane claims (i.e., resulting from a hurricane declared by the National Weather Service). Consequently, you may owe extra out-of pocket costs for damage that occurs:

 

• Any time a hurricane watch or warning is issued for any part of Florida

• Up to 72 hours after such a watch or warning ends

• Any time when hurricane conditions exist throughout the state

 

New legislation passed following the 2004 hurricane season – when many homeowners had damage from multiple storms and faced multiple deductible payments – limits the number of times a hurricane deductible must be paid to once per calendar year, per insurance company.

(If you change companies, you could pay two deductibles.) Once the hurricane deductible has been met, subsequent hurricane losses are subject to the “other perils” deductible.

 

Recent legislation eliminates maximum allowable deductibles, but requires a written statement, approved by the mortgage holder, if the deductible requested is in excess of 10 percent for a home valued at less than $500,000. This legislation also requires insurers to allow the insured to exclude windstorm coverage. Again, a written statement is required from the insured that is approved by the mortgage holder.

 

 

Factors considered in establishing your premium

 

Your location: The closer you are to the coast, the more vulnerable you are to damage caused by hurricane winds and this makes your hurricane-wind premium higher than similar homes in other areas of the state.

 

Your policy: Your insurance policy is divided into two premiums: one for damage caused by hurricane force winds (hurricane-wind) and one for all other damage (all perils), such as fire.

 

Your deductible: Under the law, you are allowed to choose a $500, 2%, 5% or 10% deductible depending on the actual value of your home. The larger your deductible, the lower your hurricane-wind premium, however, if you select a higher deductible your out-of-pocket expenses in the event of a hurricane claim will be higher.

 

Improvements to your home: The state requires insurance companies to offer discounts for protecting your home against damage caused by hurricane winds. Securing your roof so it doesn’t blow off and protecting your windows from flying debris are the two most cost effective measures you can take to safeguard your home and reduce your hurricane –wind premium. Discounts apply only to the hurricane-wind portion of your policy.

 

Your maximum discount: Discounts are not calculated cumulatively. The total discount is not the sum of the individual discounts. Instead, when one discount is applied, other discounts are reduced until you reach your maximum discount.