The Florida homeowner has probably the most unique set of circumstances when it comes to transferring the risk of being a property owner. This coastal state offers a unique and difficult set of circumstances when it comes to protecting this valuable asset.
Unlike most states, Florida homeowners face additional challenges such as:
Windstorm coverage is not unique to Florida but homeowners will find unusual challenges when obtaining coverage when their property is located in a “Wind Zone”.
A “wind zone” map is designed to designate areas of the state where this risk is especially difficult to insure in the private market. In fact, windstorm coverage is usually only available from Citizens Insurance which is the state owned insurer of last resort.
Since a large portion of the state has a relatively thin layer of lime rock underneath it, many areas are subject to sinkholes which can gobble up a structure in an overnight event. Many areas of the state are so susceptible to sinkhole events that most insurance companies will not offer coverage in certain zip codes. Most private insurance carriers require an applicant to pay out of pocket for sinkhole testing in advance of obtaining this coverage. Some companies will offer the coverage on a modified basis such as “catastrophic ground collapse” which is not the same thing and then require a 10% deductible on top of that.
Although there are many Florida carriers that will now offer hurricane coverage, many have elected to mitigate their risk by requiring a separate deductible for named storms.In most cases when a $1,000 deductible is selected for “all other perils” which is pretty much anything other than windstorm or named storm, a larger deductible such as 1% or 2% of the dwelling limit is required. This may seem like a minimal deductible at first glance, but when you take into consideration a $400,000 home, a 2% deductible will leave the homeowner paying $8,000 out of pocket for hurricane damage.
Florida is a great place to live and own property but insuring your home can present a unique set of challenges and can be expensive. Any consumer considering purchasing a home in Florida should first do the research needed to anticipate the cost of insuring their property in advance of committing to the purchase.
There are so many things to keep in mind when it comes to your insurance coverage, in fact we haven’t even scratched the surface. We will continue to pass on topics that will educate our fellow Floridians; we look forward to hearing from you with any questions, comments and concerns.
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