Time Florida Home Buyers: What You May Not Know About Homeowners Insurance
If you are new to Southwest Florida, or a first time home buyer here, you need to read this article. Shopping for your new Cape Coral home, dreaming of the furniture you will purchase, and picturing yourself relaxing in the backyard pool may be fun and inspirational but you'll also need to familiarize yourself with the 'not so fun' part of owning Cape Coral property; purchasing Florida homeowner's insurance.
Making Sense Out of Florida Homeowner's Insurance
The first thing you need to know about Florida Homeowner's Insurance is the difference between what is required and what is optional. This information will help you to correctly budget for the purchase of your new Cape Coral property and your insurance.
Required Insurance Coverage
- Technically, if you purchase your Cape Coral property outright, without a mortgage, you aren't required by law to have a homeowner's policy that protects against peril, theft or damage. We all know that's a bad idea, so let's move on...
- Mortgaged homes are required by the lending institution to have full coverage before closing day. Depending on the lending institution and the risk factors involved with your location, the required coverage can vary. All homeowners are required to have policies that cover liability, fire, windstorm, and sometimes flood insurance (if your home is located in a flood zone).
- Condo associations may have additional insurance requirements. If you are purchasing a Cape Coral condominium, be sure to ask.
Insurance Coverage that is NOT Required
Certain policies and insurance coverage may not be required, but you should be aware of the specifics. Just because certain insurance isn't required, doesn't mean it's not smart to have.
- Replacement Cost vs. Actual Cash Value: Some lenders will only require you to hold actual cash value insurance. Your insurance agent must offer you replacement cost coverage, but if it's not required you can opt out. Which is smarter? Replacement cost, by a landslide. Actual cash value will only cover the amount you actually paid, minus depreciation. For example, if you have a 17 year old roof with a 20 year life expectancy and it gets ripped off during a tropical storm, you won't receive enough from your insurance policy to actually replace your roof according to today's prices. After the insurance company allows for depreciation, you won't even receive enough compensation to replace the roof at the prices that were in effect 17 years ago!
- Ordinance or Law Coverage: Your agent must offer you this option. This covers you in the event that a local ordinance or law causes you to make changes or repairs to your Cape Coral home due to changes in the law.
- Mold Damage: Mold insurance isn't required, but if you are purchasing Cape Coral waterfront property or an older home with copper pipes (which tend to burst or leak over time), this coverage is worth looking into.
- Flood Insurance: If you aren't required to hold a flood insurance policy, you may want to look into one anyway. Find out the elevation of the property you are considering and conduct some research of your own to find out if your area or neighborhood is prone to flooding. Things can appear high and dry but quickly change once rainy season arrives.
- Covering the Contents of Your Home: Florida Statute requires insurance companies to provide the option to exclude coverage for the personal property or contents of your dwelling. Smart option? We don't think so.
Another key to getting the best price for your homeowner's insurance involves knowledge of available discounts. According to Florida Statutes, insurers must provide discounts for homeowners who fortify their home against theft, hurricanes, and wind damage. Ask your insurance agent how simple mitigation inspections (generally not costing more than $75) can greatly reduce your insurance premiums.
We hope this article has brought clarity to some of the facts surrounding homeowner's insurance for your new Cape Coral property. For more information, including ways to save on your homeowners insurance, the Florida State Website has several informative brochures covering all aspects of homeowner's insurance.
For more information on purchasing your first or next Cape Coral property, please give us a call. You'll be glad you did!
By David Sporleder | Sporleder-Ray Realty Group | firstname.lastname@example.org| Google+