Insuring Your Home
Florida law does not require homeowners’ insurance, but most people want to insure the largest investment they may ever make – their home. Also, if you own certain pets or a swimming pool, some cities and counties require liability coverage, which would pay for covered injuries to others, or damage to their property, for which you are legally responsible.
For mortgaged homes, the lending institution may require insurance coverage on the home, including flood (if located in a special zone).
Depending on your home and which insurer you choose, you may obtain one of several homeowners’ insurance packages to cover your home and personal property. Each package provides coverage against specified perils or events that cause damage to property, such as fire, windstorm or theft.
Normally, a homeowner’s insurance policy provides coverage for the following:
- Structure (the dwelling itself)
- Other structures (like sheds and fences)
- Personal property (the contents of the structures)
- Loss of use (also called Additional Living Expense or ALE)
The first three are defined as “property.”
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Property coverage helps pay for damage caused by covered perils to your home, the contents of your home and other personal belongings owned by you or family members who live with you. In some cases, it helps pay for damage to other structures, such as tool sheds, detached garages, small boats, guest houses and their contents. Your insurance agent or company can point out the items covered in a given policy.
Most policies provide special limits to some personal property, such as cash, antiques, firearms, jewelry, furs and electronics. You may be able to add additional coverage for these items as an endorsement to your insurance policy for an additional premium.
Your homeowners’ insurance policy may also cover your dependent children’s belongings while they attend college, whether they live on or off campus. Check with your agent or company representative concerning coverage for children living away from home. You may need a separate policy.
Additional Living Expense (ALE)
Homeowners’ policies provide Additional Living Expense coverage that will pay some extra expenses if damage to your home prevents you from living there while it is being repaired. Most policies also provide this coverage when a civil authority (law enforcement agency, emergency management service, etc.) prohibits the use of a residence or access to a residence due to direct damage to neighboring homes by a covered peril.
The items typically covered – above and beyond normal expenses – include extra costs for food, housing, telephone, relocation and storage, utility installation and furniture rental for a temporary residence. Be sure to check your policy to find out what is specifically covered or excluded. This coverage applies only to the additional amounts, over and above differences in expenses. For example, it would apply to the cost of restaurant meals minus “normal” food expenses. It does not cover your mortgage, groceries and utilities or the monthly cost of a telephone in a rented space. These are not expenses over and above your normal expenses.
Your policy may designate a specified limit of coverage for additional living expenses, but your policy does not obligate your company to pay this amount up front or in full if you suffer a total or partial loss. For this reason, you must keep receipts for additional living expenses and submit these to your company for reimbursement. Policies generally offer ALE coverage without any deductible. It applies only to the residence in the event of a loss. ALE coverage does not apply to your dependent children while they are away at college, and flood insurance policies issued through the National Flood Insurance Program do not provide this coverage. If flood is covered under your homeowner’s insurance policy or if you have a separate policy issued by the voluntary market, check your policy or talk to your agent to determine coverage.
This coverage protects you against a claim or lawsuit resulting from (non-auto) bodily injury or property damage to others. For example, if a neighbor slips and falls in your house and sues you, and a jury finds you legally liable, this coverage would pay that claim plus legal fees up to the policy limits. This coverage applies to you and all family members who live with you. It does not cover intentional damage or harm caused by you or family members who live with you. Check your policy for exclusions and discuss them with your agent.
This coverage pays for medical expenses, up to the medical payment limits, of persons accidentally injured at your home, regardless of fault. It does not apply to your injuries or those of anyone living with you, or to activities involving an at-home business.
Inflation can increase the replacement cost of your home and its contents, while the actual cash value of your home may decrease over time. An inflation guard endorsement gradually increases your dwelling’s coverage limit annually to assist you in keeping your home insured at its true replacement cost. However, it is your responsibility to make sure you have the amount of coverage you need.
How Much Insurance Should You Buy?
Do not rely on the purchase price of the home, the amount of the mortgage loan, or the amount set by the property tax appraiser or insurance agent. In order to be adequately covered, your home must be insured for the amount it will take to rebuild the home at current prices for building materials and labor costs. You may also need coverage to comply with current building codes when making repairs.
If your home is underinsured at the time of a loss, there may be a penalty or reduction in the amount the insurance company will pay for the loss.
Ask your agent about limits and exclusions.
This section explains some of the insurance packages available to Florida homeowners, condominium-unit owners and mobile home owners. The homeowners’ policy is a package policy that may be modified, but dwellings, unattached structures, personal property, liability, and medical payments are normally covered.
Information courtesy of myfloridacfo.com.