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April 29, 2013

Review Your Florida Homeowner Insurance for Best Coverage and Best Rates

Picture of a Florida Home

Homeowner insurance premiums are once again on the rise in South Florida. It is imperative then for homeowners to review their coverage to make the most of their money and to protect everything they need to protect.

In the past, insurance companies offered a standard homeowner “package” policy with a one size fits all mentality. Today, some companies are offering more options to give their policyholders an opportunity to tailor a policy to specifically meet their needs. You will also want to ensure that you are receiving all the discounts you are entitled to.

Grab your homeowner insurance policy and/or declarations page to review step-by-step.

Coverage “A” Dwelling

Review the estimated cost to rebuild your home to make sure you are not over- or under-insured. Insurance companies require you to insure the home for at least the amount it would cost to rebuild it (which is not the same as market value). Don’t waste money over-insuring your home but be very careful though not to underinsure as there is a penalty (co-insurance) for this built into the standard homeowner policy.

Coverage “B” Other Structures or Separate Structures

The standard homeowner policy provides coverage for “other structures or separate structures” set at a limit of 10% of the amount the dwelling is insured at (Coverage A). In the past, companies would only allow this coverage to be increased, however more and more companies are now allowing this coverage to be reduced or removed. Other or separate structures would include sheds, detached garages, outbuildings, pool houses, etc.

Coverage “C” Personal Property or Contents

The standard homeowner policy provides personal property coverage set at a limit of 50% of the amount the dwelling is insured at (Coverage A). In the past, companies would only allow this coverage to be increased, however more and more companies are now allowing this coverage to be reduced or removed. Talk with your insurance agent about your personal property coverage needs. You may have certain types of property that would be better insured separately or that need to be specifically listed in your policy.

Coverage “C” Personal Property Settlement Option – “Replacement Cost” or “Actual Cash Value”

The large majority of Florida homeowner insurance policies are written with a “Replacement Cost Endorsement.” However, with rising costs, the selection of “Actual Cash Value” is becoming a bit more common. Actual cash value of personal property is calculated by estimating the replacement value of an item, then subtracting the depreciation. Depreciation is the amount an item has lessened in value since it was purchased.

Insurance agents use the formula “replacement cost – depreciation = actual cash value or ACV”. Example, suppose you bought a sofa 3 years ago for $1,000. If a similar new sofa is still selling for $1,000 today, but after 3 years, your sofa is arguably worth less than $1,000. Let’s say the sofa is now worth $500. With actual cash value, you’d only receive $500 for your sofa, rather than the $1,000 it would cost to replace it today

Ordinance & Law Coverage

There are a couple of companies that will now allow you to reduce Ordinance & Law Coverage from the standard 25% of Dwelling Coverage to 10% or remove the coverage completely. This coverage can also be increased to 50%. This coverage covers loss caused by enforcement of ordinances or laws regulating construction and repair of damaged buildings. Older structures that are damaged may need upgraded based on city codes. Many communities have a building ordinance(s) requiring that a building that has been damaged to a specified extent (typically 50 percent) must be demolished and rebuilt in accordance with current building codes rather than simply repaired.

We often see claims against this type of coverage when South Florida older homes are damaged by hurricanes or tropical storms and then must be brought up to current code upon repair.

Non Hurricane Deductible

Increasing the AOP or Non Hurricane Deductible can create a significant savings with a small and limited assumption of risk. Some companies are now allowing up to a $5000 deductible.

Hurricane Deductible

Increasing the Hurricane Deductible can create a significant savings. The most common deductible carried in Florida is the 2% (% of Dwelling Coverage carried), options to increase the deductible range from 3% to 10% of the Dwelling coverage. A few companies will actually allow a set deductible of $500 or $1000.

Screen Enclosure Coverage

A few companies still include coverage for a Screen Enclosure under Coverage “A” Dwelling, but most companies have excluded the coverage and offer a buy back under a separate endorsement. The coverage offered under the endorsement varies greatly from company to company. Be sure to look closely at the coverage and the premium charged.

Wind Mitigation Inspection and Other Credits

In recent years many companies have audited and adjusted wind mitigation inspection credits. It may be worthwhile to see if your credits have changed and what can be done to earn them back. Some homeowners have found significant savings with a small investment upgrading their roof to wall attachment or upgrading their garage door to get the full hurricane shutter credit.

Another frequently earned credit is an alarm credit. If you have a monitored burglar and fire alarm system in your home, you may be eligible for a credit against your homeowner insurance premium.

If all of this is overwhelming, give one of our agents a call here at the Wiglesworth-Rindom Insurance offices in Delray Beach. We are happy to walk you through your existing policy and help you determine what changes you might be able to make to your coverage to get the best possible coverage for your situation. Call us at 561-637-2424.

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