Homeowners Insurance in Florida
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UPDATED: Mar 13, 2020
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If you're in the process of purchasing your first time, then you've come to the right place. We understand how difficult it can be to find the best deal on a homeowner's insurance policy. If you live in the state of Florida and you're having trouble finding an affordable premium for your homeowners insurance, let this handy guide help you comparison shop for the best rates in your area.
In many states, Florida included, the most common type of homeowners insurance policy that you will see is an HO-3. This policy includes many types of standard coverages and is divided into an open perils and a named perils list. Far as the structure of your home is concerned, the open perils list enumerates all of the disasters that you are insurance does not cover; for anything that is not named on the open perils list, your insurance will pay to repair or replace damage to your structure if such an event occurs. The named perils list is the exact opposite; it names all of the perils that your insurance company will pay out on a claim if the contents of your home (your personal belongings) need to be repaired or replaced due to damage from one of the named perils.
|Type of Coverage||Coverage Amount|
|Replacement Cost (Dwelling)||$300,000|
|Replacement Cost (Contents)||$150,000|
Average coverage limits for an HO-3 policy are listed in the Above table. However, your domicile may not fit into the average needs of most homeowners. Be sure to ask your insurance agent about whether you can increase your coverage limits on a more expensive home, or lower them for a more affordable domicile. You will also want to ask about endorsements, such as coverage for mold damage, which can be added to your policy.
For Better or Worse, Florida has some of the highest homeowners insurance premiums out of any other state in the entire country. Not only does Florida have thousands of miles of Coastline, which leave homes vulnerable to water, flood, and severe weather damage, but it is also the state which receives the most hurricane landings on an annual basis. However, shopping around for a good deal can make a significant difference in your annual premium. You can see examples of this for major Florida cities in the table below.
Laws and Requirements
The legal requirements for homeowners insurance can be a little confusing. For starters, you don't necessarily have any legal requirement - either from your state or federal government - to purchase homeowners insurance. But your bank, the institution who is lending you your mortgage, can make it a legal requirement in your contract. And if you don't purchase it, your bank may pursue litigation or possibly take back the home.
Taking a Home Inventory
Since homeowners insurance is basically de-facto mandated for everyone taking out a mortgage on their house, you owe it to yourself to make sure that you get the best deal on your annual premium. The first step in this process is to take a home Inventory. But it's not quite as easy as it sounds. Your home Inventory must be very thorough, and as honest as you can make it. Overestimating the value of your personal belongings can lead you to purchase an excess amount of coverage, which will cost you thousands over the years. But underestimating the value of or failing to add expensive personal items to your inventory can lead you to purchase too little coverage. And if the worst happens, not having enough coverage will leave you with a bigger Financial liability when you need to repair and replace things.
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Choosing What (and How Much) Coverage
The basic HO-3 policy that many Florida home insurance companies offer does not necessarily cover every potential disaster that your home or your property may face. Before you sign the paperwork on your policy, make sure to talk to your insurance agent about:
- Fires - While damaged by fire and smoke is protected on your structure, it may be excluded on the named perils section of your personal property coverage. But if you talk to your insurance agent, you may discover that there are optional endorsements you can add if you would like to protect your property as well as your domicile.
- Floods - Flood damage is not only common, but extremely expensive to fix or replace damaged property. Most insurance companies don't want to take the financial risk, and therefore don't even offer endorsements to their homeowners insurance policies, much less make it a part of their standard coverage. However, there are other options. You can contact the National Flood Insurance Program (NFIP) for assistance and coverage. And since Florida is so vulnerable to flood damage, you may also want to shop around and see if private insurance companies are willing to sell you additional coverage.
- Damage from Winter Storms - They don't call Florida the Sunshine State ironically. This state is notorious for its frequent sunny days and consistently warm weather. Occasionally, parts of Northern Florida and the Panhandle may see some winter weather. But it is unlikely that Northern Florida homeowners will ever need to go out of their way to purchase additional coverage to protect against damage from winter weather.
- Covering Your Property - This part of your insurance coverage will protect you financially in the event that your expensive personal belongings which are located in your home become damaged or need to be replaced. However, unlike the coverage for the structure of your house, you will only be paid out when you file a claim if the damage was done by one of the named perils on your insurance policy. make sure you go over this list of named perils with your insurance agent, and discuss any concerns or any additional property coverage endorsements you think you may need.
- Liability Coverage - What do you think would happen if, say, someone walking on your lawn was bitten by your dog and needed to be taken to the ER? If you are found culpable for the incident, you may have to pay for their medical expenses or be taken to court. This is one such scenario where liability coverage can help pay the expenses and protect you from a severe financial burden.
- Umbrella Coverage - Depending on where you live in your home may be significantly more expensive than the $300,000 example we gave above.If your home is twice that price, triple that price, or even more, you may not be able to by sufficiently high coverage limits. Umbrella insurance, on the other hand, can let you purchase coverage limits up into the Millions. This is ideal for people who have very expensive, very large homes in parts of the state with very high property values.
Replacement Cost vs. Actual Cash Value
During the homeowners insurance buying process, you might hear the terms "replacement cost" and "actual cash value" thrown around a lot. These may be confusing at first, but it's actually pretty simple to understand. An actual cash value payout on a claim is a smaller amount of money based on the replacement cost of damaged property minus depreciation. And the replacement cost to repair or replace damaged property, as you can probably guess from the context of the previous sentence, is the full dollar amount. No depreciation is taken into account.
How Your Credit Score May Influence Your Rate
Just like many other insurance products, their homeowners insurance company will use some of your credit information to determine how much they should charge you for your annual premium. But they do it the slightly different way then, say, a car insurance company might. Most insurance companies will perform a hard check on your credit in order to determine your reliability. Unfortunately, too many hard checks on your credit report can lower your credit score and cause you financial problems later on down the road.
Because homeowners insurance is such a complicated process, and because you will likely be getting multiple quotes from several different companies, they do their customers a favor and only perform a soft check. This involves collecting your most recent credit history (as far back as 7 years) based on your experience with other insurance companies. They take into account how often you pay your premiums on time, how often you file claims, and other factors. This is called a CLUE report, and you have a legal right to request a copy of your own CLUE report from your local insurance office before you go shopping around.
For more information, feel free to click any of the links you see in this article. They all lead to more detailed information about homeowner's insurance, specifics on purchasing a policy, and how to find the best deal. You should also contact local resources in your state, such as:
Or contact them directly through the following resources:
Office of Insurance Regulation
1560 Broadway, Suite 925
Tallahassee, FL 32399