Purchasing a residential property is a significant investment. Thus, it is novel for householders to obtain home insurance. This is a form issued by an insurance provider that protects or covers your home, the related fixtures, and valuables from damages caused by natural calamities such as flooding, hurricanes, and landslide/sinkhole damages.
That said, living in high-risk areas such as Florida makes it inevitable for property owners to buy home insurance. That way, people save money in case their homes and belongings get destroyed because of hurricanes. Notably, most insurance companies avoid serving high-risk areas due to frequent occurrences of floods among other calamities. Luckily, a few firms are dedicated to providing home insurance in such places
Even so, it is understandable how daunting and puzzling finding the right policy can get. Below is a breakdown of some practical tips to help you interpret and navigate a wide array of coverage options.
1. Shop Around
The essence of shopping around is to find the best coverage that suits your specific home-coverage needs. Start by searching for reputable insurance companies in Florida, and take note of the policies provided by each firm. Make comparisons of each coverage to find the one that works best for you. Only choose a licensed insurance carrier in Florida with an exceptional rating to have the financial power to offer coverage, regardless of the damage extent.
Other factors to consider are the limitations of each policy, deductibles, and price. We conducted a study on the costs of insurance in Florida. Our findings concluded that the medium value of purchasing home insurance in the state is about $1,172 per year. However, the cost may vary depending on your area of residence, characteristics of the property, among others. Below is a breakdown of the average annual costs of insurance in different cities in Florida.
- Miami – $3,033.00
- Tampa – $2,107.00
- Jacksonville – $1,191.00
- Orlando – $1,265.00
2. Understand the Different Types of Insurance
Only by understanding the different home insurance policies can make the right purchase decisions. Each insurance differs from the others when it comes to coverage. The different types of insurance are:
HO-1 Basic Coverage
This is the simplest form of home insurance. Due to its single-calamity coverage, most insurance providers barely include them in their portfolio. A HO-1 basic form may cover only one of the following events: explosion, lightning, hail and windstorms, fire damages, theft, and aircraft damages, etc.
HO-2 Broad Form
The HO-2 is an extended form of the HO-1 basic form. It covers all the specifics in a HO-1 policy, including the following: frozen home fixtures like the HVAC unit, falling items, sudden bursts and leaks on the plumbing system, water/moisture damages, personal valuables, and damage due to ice, sleet, or snow.
HO-3 Special Home Insurance
The most common type of home coverage, the HO-3 special form does not focus on specific occurrences but covers the property structure and belongings. Nonetheless, particular incidents are excluded under the policy. Some examples include damages by hurricanes and collapse of ground cover, also known as a sinkhole.
In some other insurance companies, HO-3 policy also covers:
- Personal liability coverage – This form helps individuals cover any legal fees when someone else suffers physical injuries in their property. It also covers damages to other persons' homes.
- Loss of use coverage – Caters for living costs when your home gets damaged/ uninhabitable after repairs by a covered policy.
- Medical coverage – Help one pay for the medical expenses when someone gets injured in their home.
3. Check the Excluded Coverage
Another critical thing to understand is the policies that are not covered. For a HO-3 Special form, some incidents that may be excluded include hurricanes, earthquakes, and landslides. We encourage homeowners to read the policies to know what's not covered.
You may reside in a region that requires additional coverage. That's when you need to purchase a rider policy, an add-on to your special form coverage at an additional cost. In Florida, most homes lie in Special Flood Hazard Areas (SFHA), and you may need flood insurance, especially when applying for a mortgage.
- Hurricane Insurance – This policy covers wind damage and bears a hurricane deductible that you need to pay once per year when you make a claim. Typically, the deductible is often a percentage of the home insurance cost. For instance, if you have a $300,000 home coverage, and pay a 5% deductible, then you spend $15,000 for a wind-damage claim.
- Sinkhole Coverage – To a certain degree, your homeowner's insurance can cater to sinkhole/landslide damages. In fact, over 6,500 Floridians file for such claims every year. Florida state officials require that insurance companies provide sinkhole coverage.
Nonetheless, for one to claim for that, the following conditions must be met:
- A sudden collapse of the ground cover
- A conspicuous depression in the ground cover
- Structural damage to the home and other structures
A government agency deems the structure unfit for occupancy, making relocation inevitable