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Kim N. Bregman's Blog

By Kim N. Bregman | Broker in Boca Raton, FL

Homeowner’s Insurance – Advice for Buyers

Home values have dropped substantially across the nation, making it hard for consumers to understand why home insurance costs have increased 40%-50% during the same period.  Florida one of the top three most expensive states to insure a home ( along with Texas and Louisiana); the average policy costs about four time that of the cheapest states, Idaho, Utah and Oregon.  Some of the best ways to reduce your costs are to shop around for coverage and increase the deductibles on your policy.  The most common deductible is $500, but raising it to $1000 or $2,500 could cut 25-30% off your bill.  High deductibles often make sense, since filing smaller claims my result in cancellation, especially in hard-to-insure states like Florida.

The coverage you need:
Your homeowners' insurance policy should probably cover the following items:

1.    The structure of your house. Don't base the cost of replacement of your home on what you paid for it, or on the value of the land. You're not replacing the ground around you, and construction costs might be much different from what you paid.

2.    Your personal possessions. Take an inventory of your home's personal property, especially high-priced items such as jewelry, furniture, and electronic equipment. Determine how much it would cost to replace everything if you lost your goods to theft or destruction. If you think you need more than what the basic policies provide, talk to your agent.

3.    Additional living expenses if you can't live in your home. Additional living expenses are usually part of your standard policy and total about 20% of the cost of insuring your home. Policies that provide for unlimited expenses for a short period of time may also be available, as are policies for special situations, such as renting out your home.

4.    Liability for injury to others. While most policies provide a base of $100,000 in insurance to cover your liability should you be sued, consider getting more: In today's litigious society, potential damage awards could exceed those lower limits in a hurry.

5.    Get special coverage if you need it. If you live in an area that floods frequently, you'll want to make sure your coverage won't leave you underwater in a flood. Similarly, residents in earthquake-prone areas have to weigh the added costs of earthquake insurance against the risks of being uninsured if the Big One hits.

6.    Consider umbrella insurance. Umbrella insurance isn't directly connected to your home. But if other types of insurance you have don't provide enough coverage for damages, then your home could be at risk. Umbrella insurance provides additional coverage that makes sure injured parties won't threaten to collect by taking away your home.

You should consider homeowners' insurance to be an integral part of your overall financial plan. It can help minimize the disruption and economic loss you would realize should a calamity strike.

 

Here are some tips to get the most out of your homeowner’s coverage:

1.   Upgrades like a new roof, impact glass, Dade County rated shutters and garage doors and other improvements can help you avoid serious damage to your home and may keep premiums lower.

2.   Like it or not, your credit rating does affect your insurance premiums.  Keeping your credit score top notch will help keep insurance premiums at rock bottom.

3.   In states like Florida, there is often a second and higher deductible for hurricanes, starting at 2% of home value and climbing to 5% or more.  While increasing that deductible can cut your premium, make sure it doesn’t exceed what you can handle in the event of a disaster.

4.   Building codes and costs change, so review your policy to make sure your insurance coverage is sufficient to cover rebuilding at today’s costs and building codes ( replacement costs)

5.   Many people are not aware that homeowner’s insurance does NOT cover flood damage ( rising water) from a  storm.  Discuss purchasing a separate flood policy with your insurance agent.  Over 30% of all floods occur outside standard flood zones.  If you do not own flood Insurance, you could be exposed to significant, out-of-pocket losses.

6.   While it is tempting to save money, going bare, or without any hurricane coverage, can be a potential disaster.  If you have a mortgage your lender will require proof of insurance.

 

 

 

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