For a lot of people Florida homeowners insurance is their greatest asset, so it is very important to refrain from being under-insured. To safeguard your investment from a disaster, homeowners in Florida should update their insurance frequently to include improvements, major purchases and increased rebuilding costs.
Since the end of the Great Recession in June 2009, despite the major drop off in construction activity, construction prices have actually risen significantly. Moreover, after a disaster, materials and labor may become short, driving repair and rebuilding costs up even further.
To correctly insure your home, it is vital to consult your Florida insurance agent or company representative about these four key questions.
1. Do I have an adequate amount of insurance to rebuild my home?
Your policy needs to cover the cost of rebuilding your home at current construction costs. Unlikely, some homeowners simply acquire enough insurance protection to meet the requirements of their mortgage lender. Others confuse the real estate value of their home with what it would cost to rebuild it. Generally, you should have enough insurance to rebuild your home in the event that it is completely destroyed. Be certain to consider the following:
• Replacement Cost – nearly all policies cover replacement cost for destruction caused to the structure. A replacement cost policy pays for the repair or replacement of damaged property with materials of similar kind and quality.
• Extended Replacement Cost – this coverage automatically adjusts the rebuilding costs of your home to indicate any changes in construction costs. Find out if your policy includes this coverage or if you have to purchase it separately. Normally provides an additional 25% coverage to rebuild the home.
• Ordinance or Law Coverage – if your home is critically damages, you may be required to rebuild it to meet new (and often stricter) building codes. Ordinance or law coverage pays a specific amount towards these costs. This coverage comes in variation of 10%, 25% and 50%. Discuss with your agent on how much you require.
• Water Back-Up – this coverage insures your property for damage from sewer or drain back-up. Most insurers offer it as an add-on to a standard policy. Normally provides $5,000 in coverage. Check to see if your policy has a water back-up deductible.
• Flood Insurance – standard home insurance policies provide coverage for disasters such as lightning, fire and hurricane. They do not include coverage for flood (including flooding from a hurricane). Flood insurance is available through the federal government’s National Flood Insurance Program, but can be purchased from the same agent or company representative who provides you with your home or renters insurance.
2. Do I have enough insurance to replace all of my belongings?
Almost all homeowners insurance policies provide coverage for your personal belongings for about 50 percent to 70 percent of the amount of insurance you have on the structure of the home. So if you have $100,000 worth of coverage on the dwelling, you would be covered for $50,000 to $70,000 worth of the contents of your home, depending on the policy. Some policies can go as low as 25% coverage for personal property so make sure you discuss this coverage with your Florida agent.
You can insure your belongings in two ways: by their actual cash value or their replacement cost. Be certain to consult with your agent or company representative about which type of coverage is best for your particular situation.
3. Do I have enough coverage for additional living expenses?
Coverage for additional living expenses pays the extra costs of temporarily living away from your home if you can’t live in it due to an insured disaster such as a hurricane or fire. It covers hotel bills, restaurant meals, transportation and other living expenses while your home is inaccessible or being rebuilt. Coverage for additional living expenses varies from company to company. Make sure you know exactly how much coverage you have for additional living expenses and whether there is a limit.
4. Do I have enough insurance to protect my assets?
It is also vital to have sufficient liability protection. This covers you against lawsuits for bodily injury or property damage that you or your family members are liable for.