Shopping and Saving for Florida Home Insurance

Home Insurance

Homeowner’s insurance or property insurance is another cost you will have to consider. The lending institution holding the mortgage will require insurance in an amount sufficient to cover the loan. To protect the full value of your investment, however, we recommend that you consider purchasing enough to cover the full replacement cost if the home is destroyed. Some insurance companies provide only a fixed dollar amount, which may be insufficient to rebuild a badly damaged home.

Homeowners insurance companies have various factors they consider when binding and writing an insurance policy. Some of the factors include your credit, previous claims against you and the property to be purchased, the percentage or likely hood of a particular disaster.  Obviously, a home that is located along the coast of Florida is more at risk of a direct impact of Hurricane or Flood damage.

Some tips for Homebuyers Include

1. Call Early for Quotes.  Get quotes for homeowner insurance as soon as you have a contract on the home. When you have made a decision on which policy to go with, let the insurance agent know immediately so that underwriting can be completed and coverage bound. Delaying this process could delay your closing.  Insurance companies will not write a policy for insurance if their is a Hurricane or Tropical Storm within a certain distance from the state of Florida. If the insurance companies put a freeze on writing binders during this time, your purchase will not close until the threat has passed even if the storm stalls of shore for days.  If you call early and discover that the property has a hidden previous issue from a claim or that the policy cost will be higher due to a previous claim, then you may be able to cancel the contract during the inspection period saving you a surprise at a later date that you may be forced to live with.

2. Find out if you will need Flood Insurance. When you call for quotes on the homeowner insurance. Waiting on elevation certificates and other documentation can hold up your closing if you don’t start early. Flood Insurance costs can be expensive depending on the flood zone. You may consider flood insurance if the property is not in a dangerous flood zone, yet you have a pool or are close to some type of water.  Also many times the insurance company will not cover damage due to water during a hurricane should the water damage come from the hurricane driving water in the home through door and window sills, through the foundation, or even through roof vents.  These are often considering water damage due and linked to the need of flood insurance.  You will want to ask the insurance company for clarification.

3. Find out if you will need Mold Insurance. When you call for quotes ask if Mold is covered due to damages. If water damage is caused by a hurricane, is the repair covered.  Often times, the answer is no.

4. Ask about the Hurricane deductible. Most companies have gone to the 2% deductible for hurricanes but some still have other options. What is covered under these options, water, floor, mold, temporary housing, property damage including fencing, landscaping. Do they oversee the repairs or can you oversee it.  After the hurricanes in 2004, the insurance companies lacked adjustors leading to huge delays in repairs and checks.

5. Don’t over insure or underinsure. Make sure your agent does a replacement cost calculation. Insure the cost to rebuild it rather than the purchase price, which includes your land value and increases for Market Value. You will also want to call annually after your purchase to make sure that you are still properly covered.  As your homes value increases, you will want to be properly covered.

6. Make sure you are getting Replacement Cost Coverage for both your dwelling and contents. If your home is destroyed you’ll receive the money to replace only to the maximum of your coverage. So be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $200,000 to replace it, you will only receive $150,000. If you choose not to replace your home when it’s destroyed, you’ll receive replacement cost, less depreciation. This is called actual cash value.

7. Remember to ask about other optional coverage’s that may be available to you.  Sometimes bulk policies, which include your car and personal coverage, make your home insurance policy cheaper.

8.Don’t forget to get quotes for scheduled Personal Property items. Most policies have limitations on high value items such as jewelry, watches, furs, guns, computer equipment etc. These items can either be added by rider to the Homeowners policy or a separate Inland Marine policy can be written.

9. Ask for discounts.  Often insurance companies will provide discounts to policies, which are written on properties with home alarms that are monitored through alarm companies. Does your home have a safe?  Homes with pools are more costly. If the pool has a diving board, you may need to remove it in order to receive insurance.

10. Wind Mitigation Report. Many insurance companies will provide a discount if you have a wind mitigation report. But, the cost of the report is only valuable if you get the discount. The discount will only be applied if your home has the proper added hurricane supports added.  Peaks and Valleys as well as ties and strapping all play a factor if you receive a potential discount.  The average for a wind mitigation report is around $100.  The discount can vary, so ask the agent.

11. Sink Hole or Catastrophic Ground Coverage.  You will want to verify what your lender will require in the form of Sink Hole coverage. There are various terms and types of insurance coverage’s.  Your lender will have very specific demands.  You will then want to speak to your insurance agent.  You may choose to have more coverage than your lender will require.  Take in mind the bank wants to recoup their cost if the property is lost due to damage.  Imagine that a sink hole pops up in your yard, but does not damage the home.  This is now something that you will have to disclose to a future buyer.  Most future buyers do not want to purchase a home with a sink hole.  So, how do you recoup the loss of this equity?  You may want to speak to the insurance company to learn your rights.

12. Understand your liability. Generally your homeowners insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it is sufficient to cover your assets.

13. How’s your credit? Maintain a good credit record.  Establishing a solid history can cut your insurance costs. Insurers are increasingly using credit information to price homeowner’s insurance policy.

14. Check the CLUE (Comprehensive Loss Underwriting Exchange) report of the home you are thinking of buying. These reports contain the insurance claim history of the property and can help you judge some of the problems as home may have.

Top Ways to Lower your Homeowners Insurance Costs

  • Raise your deductible. If you can afford to pay more toward a loss that occurs, your premiums will be lower.
  • Buy your homeowners and auto policies from the same company. You’ll usually qualify for a discount. But make sure that the savings really yields the lowest price.
  • Make your home less susceptible to damage. Keep roofs and drains in good repair. Retrofit your house to protect against natural disasters common to your area.
  • Keep your home safer. Install smoke detectors, burglar alarms, and dead-bolt locks. All of these will usually qualify for a discount.
  • Be sure you insure your house for the correct amount. Remember, you’re covering replacement cost, not market value.
  • Ask about other discounts. For example, retirees who are home more than working people may qualify for a discount on theft insurance.
  • Stay with the same insurer. Especially in today’s tight insurance market, your current vendor is more likely to give you a good price.
  • See if you belong to any groups – associations, alumni groups – that offer lower insurance rates. Example: AAA Auto sells home insurance.
  • Review your policy limits and the value of your home and possessions annually. Some items depreciate and may not need as much coverage.
  • See if there’s a government-backed insurance plan. In some high-risk areas, such as the coasts, federal or state governments may back plans to lower rates. Ask your agent.
  • Shop around.  Different Insurance companies have different policy types.

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