Shirly Smith asked:
If you are considering buying homeowners insurance in Florida, there are a few hurricane coverages all buyers must be conversant with. Each state in the US has its own requirements and locality quirks each person who wants to purchase homeowners insurance must know. For instance, earthquake coverage is handled differently in California than it is in New York. Because Florida is a hurricane prone area, each Florida homeowner should be aware of options in coverage that may pay for itself.
Here are a few coverages you must know when you want to discuss with your insurance agent:
Extended Replacement Cost Coverage:
Extended Replacement Cost Coverage is the coverage that will allow you to repair or replace your dwelling without consideration for depreciation. Should you suffer a loss to your dwelling and you do not have the replacement cost provision in your policy, the cost of repair whether small or large, will be calculated with depreciation. This could cost you far more out-of-pocket expense than the additional insurance premium you would pay to be property insured. After a catastrophe, like a major hurricane, building materials tend to become scarce. The larger the affected area, 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.
Extended Replacement Cost Coverage 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:
Some states are regularly ravaged by hurricanes including Florida and the entire eastern seaboard. Insurance companies often sell homeowners policies in hurricane-prone areas with a “hurricane deductible” that must be paid instead of the typical deductible. These deductibles limit the insurance companies’ exposure in these high-risk areas. Typical homeowners insurance deductibles are a flat amount such as $500. When a loss occurs, the homeowner pays the first $500 and the insurance company pays the rest of the claim. A hurricane deductible is based on a percentage of the home insured value. This percentage varies from state to state and some deductibles are set by state law.
If you have a house insured for $200,000 in one of these states and a 2% hurricane deductible, you will pay the first $4000 and the insurance company pays the rest of the claim. Some insurance companies allow you to pay a higher insurance premium each year in exchange for a traditional deductible for hurricane related claims. Washington DC, Alabama, Connecticut, Delaware, Florida, Georgia, Hawaii, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Rhode Island, South Carolina, Texas, and Virginia all have 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 defray the cost of the deductible.
Flood Coverage:
Generally, physical damage to your building or personal property “directly” caused by a flood is covered by your flood insurance policy. For example, damages caused by a sewer backup are covered if the backup is a direct result of flooding. However, if the backup is caused by some other problem, the damages are not covered. The standard homeowners policy does not include coverage for flood damage. Storm surge from a hurricane is also considered flood damage and not covered by your homeowners policy. This coverage must be purchased separately through the Federal Government National Flood Insurance Program. If you’re not sure how to go about getting the coverage, speak with your insurance agent.
If you are considering buying homeowners insurance in Florida, there are a few hurricane coverages all buyers must be conversant with. Each state in the US has its own requirements and locality quirks each person who wants to purchase homeowners insurance must know. For instance, earthquake coverage is handled differently in California than it is in New York. Because Florida is a hurricane prone area, each Florida homeowner should be aware of options in coverage that may pay for itself.
Here are a few coverages you must know when you want to discuss with your insurance agent:
Extended Replacement Cost Coverage:
Extended Replacement Cost Coverage is the coverage that will allow you to repair or replace your dwelling without consideration for depreciation. Should you suffer a loss to your dwelling and you do not have the replacement cost provision in your policy, the cost of repair whether small or large, will be calculated with depreciation. This could cost you far more out-of-pocket expense than the additional insurance premium you would pay to be property insured. After a catastrophe, like a major hurricane, building materials tend to become scarce. The larger the affected area, 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.
Extended Replacement Cost Coverage 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:
Some states are regularly ravaged by hurricanes including Florida and the entire eastern seaboard. Insurance companies often sell homeowners policies in hurricane-prone areas with a “hurricane deductible” that must be paid instead of the typical deductible. These deductibles limit the insurance companies’ exposure in these high-risk areas. Typical homeowners insurance deductibles are a flat amount such as $500. When a loss occurs, the homeowner pays the first $500 and the insurance company pays the rest of the claim. A hurricane deductible is based on a percentage of the home insured value. This percentage varies from state to state and some deductibles are set by state law.
If you have a house insured for $200,000 in one of these states and a 2% hurricane deductible, you will pay the first $4000 and the insurance company pays the rest of the claim. Some insurance companies allow you to pay a higher insurance premium each year in exchange for a traditional deductible for hurricane related claims. Washington DC, Alabama, Connecticut, Delaware, Florida, Georgia, Hawaii, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Rhode Island, South Carolina, Texas, and Virginia all have 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 defray the cost of the deductible.
Flood Coverage:
Generally, physical damage to your building or personal property “directly” caused by a flood is covered by your flood insurance policy. For example, damages caused by a sewer backup are covered if the backup is a direct result of flooding. However, if the backup is caused by some other problem, the damages are not covered. The standard homeowners policy does not include coverage for flood damage. Storm surge from a hurricane is also considered flood damage and not covered by your homeowners policy. This coverage must be purchased separately through the Federal Government National Flood Insurance Program. If you’re not sure how to go about getting the coverage, speak with your insurance agent.
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