When purchasing homeowners insurance in Florida, there are a few coverages related to hurricane exposures buyers should become familiar with.
If you’re looking to purchase homeowners insurance you’ll soon realize that each state has its own requirements and locality quirks. For instance, because of the exposure, earthquake coverage is handled differently in California than it is in New York. Since Florida is a hurricane-prone area, each Florida homeowner should be aware of coverage options that may pay for itself. Here are a few coverages to talk to your agent about:
Extended Replacement Cost Coverage: After a catastrophe, like a major hurricane, building materials tend to become scarce. The larger the area affected, the more serious the problem. In addition to scarce building materials, the construction workers who rebuild and repair the structures become more difficult to secure and their rates rise accordingly.
Florida residents should look into buying Extended Replacement Cost Coverage. It will pay for the increased cost in materials and labor above and beyond the policy limit. Insurance companies may pay as much as 20% above the policy limit, depending on the insurance company. It is in your best interest, as a Florida homeowner, to talk to your agent about having this coverage endorsed onto your policy.
Hurricane Deductibles: According to the Florida Insurance Council, 70% of Florida homeowners have a 2% deductible applicable to their hurricane coverage. This could prove to be a hefty dollar amount. For example, if your hurricane policy limit is $300,000 with a 2% deductible, you will be responsible for the first $6,000 of a hurricane loss. As an informed policyholder, you can plan beforehand and set aside money in an interest-bearing account to offset the cost of the deductible.
Flood Coverage: The standard homeownershomeowner’s policy does not include coverage for flood damage. Storm surge from a hurricane is also considered flood damage and not covered by your homeowner’s policy. This coverage must be purchased separately through he Federal Government’s National Flood Insurance Program. If you’re not sure how to go about getting the coverage, speak with your agent or visit Federal Emergency Management Agency (FEMA) website (www.fema.gov) for more information
If you are having a difficult time in securing homeowners insurance because your home is located in what is considered to be a ‘high-risk’ area, you will be able to obtain insurance through the Citizens Property Insurance Corporation (www.citizensfla.com). In addition to providing insurance for homes located in high-risk areas, they provide insurance for those Florida homeowners who cannot find coverage elsewhere in the private insurance market.
For more information on purchasing Florida homeowners insurance visit the Florida Insurance Council and the Florida Office of Insurance (www.floir.com).