Florida Residential Homeowners’ Insurance


insurance (Photo credit: Alan Cleaver)

If you are financing the purchase of your home, the lender will require that homeowners’ insurance be in place by closing or the bank will refuse to “fund the loan” without proof of insurance.  Homeowners’ Insurance is a specific type of insurance that covers damage and theft for items the main dwelling and associated structures, personal property, loss of use/additional living expenses, personal liability, medical payment to others as well as additional coverages and exclusions.  Homeowners’ Insurance does not cover flood insurance.  The Atlantic Hurricane Season is officially from June 1 to November 30 of each year.  If a named storm exists in proximity to Florida, then insurance providers cease issuing policies and homes cannot close. Hence, during hurricane season, it is a good idea to pay for and bind the insurance policy prior to closing. We would advise buyers to bind and pay for home insurance prior to the day of closing during hurricane season. Some helpful hints to reduce homeowner’s insurance rates include the following:

  1. Install Smoke Detectors
  2. Buy and maintain Fire Extinguishers
  3. Install a Home Security System
  4. Replacing the roof with impact-resistant material
  5. Replacing the Plumbing
  6. Bring the electrical system up to code.  Replacing old fashioned fuses with circuit breakers
  7. If there is a swimming pool on the property make sure filled or covered.  Otherwise, it is going to be hard or even impossible to insure due to potential liability.
  8. Insure only the improvements replacement costs and not the land (i.e. If you purchase a new home for $300,000, you should insure something less than the purchase price to reflect the improvements only.)

Since standard homeowners insurance doesn’t cover flooding, it is important to purchase protection to cover flooding.  Congress created the National Flood Insurance Program (NFIP) in 1968 to help provide a means for property owners to financially protect themselves.  Congress mandated federally regulated or insured lenders to require flood insurance on properties that are located in areas at high risk of flooding (a 25% chance of flooding during a 30-year mortgage). In Florida, tropical storms and hurricanes are more than just strong winds.  They bring heavy rains and storm surges, which can cause very destructive flooding.  Unlike homeowners’ insurance, there is a 30 day waiting period to get flood insurance.

Most flood Insurance rates are going up as part of the Federal Emergency Management Agency (FEMA) issued the 2013 Specific Rate Guidelines.  As part of these annual rate changes, FEMA will be implementing provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12).  The law requires that policy ratings more accurately reflect the risk of each property’s true risk rate by eliminating the subsidies.  It removes subsidies that keep federal flood insurance premiums artificially low for more than a million policy holders around the country.  So you can imagine, this will have an impact on most residential real estate located in a flood zone.  It is important to remember that not all policyholders will have their subsidy eliminated, and some policies could go down.

If you are interested in buying a new home or any other home in the Tampa Bay area, please contact me (Alan Lane with Keller Williams Realty at 2119 W Brandon Blvd, Brandon, Florida  33511) and I can help you find a new home in the Tampa Bay Area.  My email address is alanlane66@gmail.com or call me at 813.205.9280.  If you are just starting your search, you can search the MLS for homes on my website at this link.

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