Why Do I Need Home Insurance in Florida?

Home insurance provides financial protection against loss occurring to one’s home or personal possessions in the home. While home insurance is not mandated by law, it is a necessary expenditure that you take on as a form of assurance. A house is one of the most valuable assets that people can own, and it can take years to save up for it or pay up the mortgage on it. As a homeowner, landlord, or even a renter, you must protect your investments from possible risks. The type of home insurance policy required depends on its purpose and the type of home. For instance, the home insurance policy for a rented condo varies from the insurance policy on a private duplex.

How Does Home Insurance Help?

Home insurance provides coverage to repair or rebuild your home after a peril (e.g. fire, hail, vandalism) covered in the policy. Standard homeowners insurance policies provide coverage for the contents in the home, like furniture, appliances, and other personal belongings. In addition, they cover legal expenses and medical expenses if people other than you and your family get injured on the property. The same specifications apply to renters insurance and landlord insurance, with slight differences. Most standard insurance policies provide coverage for structures attached to the home (e.g. tool shed, garage) and structures on the same property (e.g. swimming pool, gazebo).

Let’s cover how home insurance helps homeowners, condo owners, and even renters:

HOMEOWNERS Insurance:

Homeowners insurance safeguards you financially. If your home or property is destroyed or damaged by something covered under your policy like a natural disaster or theft, the homeowners insurance will help pay to fix or replace it. Most standard homeowners insurance policies in the State of Florida offer these basic coverages:

1. Coverage to the structure of the home (e.g. the walls and roof). It also covers some structures attached to the house, like a garage.

2. Coverage to other structures that are on your property/land but not directly attached to your home, e.g. a fence or a shed.

3. Coverage for personal items in the house like furniture, electronics, or jewellery. In the event of a fire, theft, or any form of peril covered in the insurance policy, homeowners insurance will pay for its repair or replacement.

4. If a guest gets injured in your home, homeowners insurance will help pay the legal fees (if applicable) and medical bills. Homeowners insurance will also pay if you’ve been found responsible for destroying/damaging someone else’s property.

5. Coverage for your additional living expenses (e.g., rent, groceries) if you have to move out of your home due to your home being repaired due to damages covered by your policy.

CONDO Insurance:

Condo insurance in Florida provides coverage for your sole unit and all the fixtures inside. Condo insurance also covers personal liability protection (i.e., payment of medical bills of any guest that gets injured in your unit). Condo insurance also provides coverage if the unit/condo becomes temporarily unsuitable to live in due to damages or ongoing repairs.

LANDLORD Insurance:

This insurance policy protects property owners from monetary losses attached to rental properties like theft, damages caused by tenants, and weather damages. Landlord insurance policy offers basic coverage like:

1. Compensation for loss or injury to a third party on the property. For example, if a third party (e.g., a delivery man) falls on the steps, the insurance policy will pay for the third party’s medical bills. Maintenance of the property is the landlord’s responsibility; therefore, the landlord is liable for any accident that involves a third party on the property.

2. In the event of the property being uninhabitable due to a covered/ insured occurrence that forces the tenants to move out, the expenses incurred would be covered by the landlord insurance.

3. Coverage for fixing or replacing items belonging to the landlord in a property occupied by tenants. It covers contents like furniture and appliances.

NOTE: Regular landlord insurance policies do not cover short-term rentals. Thus, a landlord may need to get a hotel/ bed and breakfast insurance policy for such a setup.

RENTERS Insurance:

This insurance policy is quite similar to the homeowners insurance policy; the difference is it does not cover the dwelling or structure that inhabits the tenant. Renters insurance covers theft or damage to personal property and personal liability damages. Renters insurance provides these basic coverages:

1. Coverage of damaged property that is covered in the policy.

2. Coverage of liability costs if a third party (e.g., mailman) gets injured in your rented apartment.

3. If your rented apartment becomes unsuitable to live in due to an occurrence covered by the insurance policy, renters insurance will pay for your expenses.

4. Renters insurance will cover the medical costs of any guest that gets injured in your rented apartment.

When Do you Need Home Insurance?

Homeowners insurance is not required by law in the State of Florida, but if your home is not paid off, the financial institution (mortgage lender) will require insurance coverage as a mortgage condition. Even if you are making a full payment, it’s a good investment to purchase home insurance alongside, as this will safeguard your home and your belongings in the home. Home insurance (homeowners, condo, or commercial property insurance policies) protects property owners from financial loss. If a property owner decides to rent their property out to tenants, the property owner becomes a landlord and must purchase landlord insurance because regular homeowners insurance would not provide sufficient coverage anymore. The renters of the property should also protect their personal belongings from risks such as fire, wind, or theft by purchasing a renters insurance policy. Standard home insurance in the State of Florida provides the following coverage:

• Dwelling coverage covers damages made to the structure of the house (e.g., walls, roof).

• Other structure coverage covers damages to structures that are not directly attached to the home (e.g., pool, fence, toolshed).

• Personal property coverage covers damages to personal belongings in the home.

• Loss of use coverage covers extra financial costs (e.g., groceries, hotel bills) caused by temporary relocation due to the home being uninhabitable.

• Medical payments coverage covers the medical expenses of guests injured on your property.

• Personal liability coverage covers medical expenses and other costs caused by injuries on your property.

Contact a knowledgeable Florida-licensed insurance agent to discuss your options and decide which of the above coverages you should get.

Do you Need Home Insurance in Florida to:

GET A MORTGAGE?

Yes. In Florida, home insurance is a mandatory prerequisite to obtaining a mortgage. Your mortgage lender can also require you to obtain additional coverage if your home is susceptible to some risks. The mortgage lender, which is usually a bank, requires the homeowner to buy enough insurance to cover the loan balance. When you have closed on the house, the bank will request documents to prove sufficient coverage. The mortgage lender may also require you to name them the lien holder. This means that the mortgage lender has the legal right to claim property ownership if you fail to make timely payments. If a homeowner cannot provide proof of insurance or the mortgage lender does not think the insurance coverage is sufficient, the mortgage lender can implement forced-placed insurance. The homeowner also pays the forced-placed insurance alongside the monthly mortgage payments. Even though the forced-placed insurance increases the total payment astronomically and has lesser coverage than the regular home insurance, the mortgage lender has every right to protect their investment.

BUY A HOME?

Legally, you can buy a home without purchasing home insurance in Florida. If a home is being purchased with the help of a mortgage lender, it is mandatory to purchase home insurance, but if an outright payment is being made, home insurance is not required. Home insurance is required to purchase a home through a mortgage lender because the investment needs to be protected. If your house were damaged due to a flood or fire, home insurance would save you and the lender from the financial loss. If the property is located in a flood-prone area, the mortgage lender may require you to purchase a flood insurance policy from the Federal Emergency Management Agency.

SELL A HOME?

Home insurance is not required to sell a house in Florida, but it is a good idea to purchase a home insurance policy in case anything happens to the house before it is sold. A buyer who intends to utilise the services of a mortgage lender would have to pay a premium of homeowners insurance. The homeowners insurance premium is the amount you pay to keep the insurance policy active. The insurance coverage remains in full effect when you sell a house until you have received the funds required to finish paying off the loan. Although a home insurance policy is not a requirement to sell a house, it is recommended to keep the insurance until the property has been totally handed over to the buyer.

REFINANCE A HOME?

Yes. Refinancing a home simply means exchanging an old mortgage for a new mortgage; this new mortgage may have lower interest and a shorter payment term. In Florida, a home insurance policy is required to refinance a home, as the new mortgage lender would want to secure their investment. To refinance your home, your home insurance agent would be contacted to get a copy of the declarations page of your homeowners insurance policy. The declarations page contains information about the coverage, limits, address, premium, policy term dates, and it is used as proof of insurance in the refinance process.

RENT A HOME?

No. The State of Florida does not make it mandatory for renters to purchase a home insurance policy; however, the landlord may insist. Renters insurance will protect against the consequences of unexpected events; tenants are therefore advised to get it.

What Home Insurance Do I Need in Florida?

There is no one-size-fits-all type of insurance. Home insurance should be purchased based on the type of home you want and the coverage you require. For instance, regular home insurance coverage is not the same as condo insurance or renter insurance provisions. The type of home insurance required can be affected by the following factors:

• Features of the home

• Weather conditions

• Prevalence of natural disasters in the area

• Value of the personal property in the home

• Location of the home

It is important to purchase home insurance that gives you the necessary coverage. It is also essential to purchase home insurance from an insurance company with good reviews from customers, that provides coverage in your area, and has good financial strength. You can discuss your insurance needs with a state-licensed insurance agent.

What Kind of Home Insurance Coverage Do I Need in Florida?

There are various types of home insurance coverages available to homeowners, renters, and landlords, but they all vary slightly. Let's examine the different coverages and their benefits.

DWELLING Coverage:

Provides cover to the structure of the home in which you live (e.g., the house’s frame, walls, and roof). This coverage also provides cover for installed fixtures, permanently attached appliances, and other structures attached to the home, like a stairway, carport or tool shed. Dwelling coverage is available under the condo insurance policy and landlord insurance policies. However, the dwelling coverage in the condo insurance policy only covers inside the house, the part you own. While dwelling coverage under the landlord insurance policy offers protection to the home in the event of a natural peril like fire, snow, or hail, it also offers additional protection to personal property such as furniture and appliances in the home for tenant use. Renters insurance policy does not offer dwelling coverage; the landlord is responsible for any damage to the structure of the home.

OTHER STRUCTURE Coverage:

Helps to fix or repair damages that affect structures separated from the home but on the same land or premises as the home. Examples include a gazebo, detached garage, swimming pool, and fence. For instance, if a tree falls on your fence, other structure coverage may help cover the costs. Other structure coverage is covered under landlords insurance, but it’s not covered under renters insurance and condo insurance.

PERSONAL PROPERTY Coverage:

Covers your personal belongings like furniture, appliances, or even clothing in the event of a covered peril. This coverage is available under condo and renters insurance policy. Landlord insurance does not cover a tenant’s personal possessions. There are two types of personal property coverage: Replacement cost and actual cash value. An actual cash value policy puts depreciation of the item into consideration and will refund the item's current market value. Conversely, replacement cost policy will pay the amount required to replace, fix or rebuild the damaged property to the original condition.

PERSONAL LIABILITY Coverage:

Covers the cost of a lawsuit if you’re found guilty of injuring someone or damaging someone else’s property. This policy offers the same coverage under the condo insurance, but it is not quite the same under renters and landlord insurance. For instance, if a tenant falls and gets hurt on the property, the tenant can sue the landlord, but if the tenant’s guest gets injured on the same property, it will be covered by the tenant.

The State of Florida encourages its residents to purchase an umbrella insurance policy, a type of personal liability insurance. Umbrella insurance provides liability coverage beyond what your home insurance or auto insurance can provide. Umbrella insurance covers the policyholder and other members of their household. For instance, as a policyholder, if your child beats up another child in school and the parent sues you, umbrella insurance will cover the costs of the lawsuit. Another benefit of umbrella insurance policy is that it is not centred on property and vehicles alone. It also covers other hazards like an invasion of privacy and malicious prosecution. The protection extends even if you travel to another country.

LOSS OF USE Coverage:

This coverage is also called additional living expenses. It can help you pay for the extra expenses incurred (e.g., groceries, rent) if a covered peril made your home temporarily unsuitable to live in while it is being rebuilt or repaired. This coverage is the same for condo insurance and renters insurance policy, while landlord insurance policy allows the landlord to claim back lost income caused by tenants moving out due to an insured event (e.g. flood).

MEDICAL PAYMENT Coverage:

Medical payment coverage covers the medical bills of people who get hurt on your property, but this does not include members of your household. This policy also covers injuries that happen away from your home, such as your pet biting someone on the street. As a landlord, this policy will not cover your tenants, only guests of your tenants or an individual who is temporarily living with the tenant.

ADDITIONAL Coverage:

This coverage pays for expenses that are above what the policyholder was paying before a claim was made. Before an additional expense can be considered for repayment by the insurance company, the expense must be considered necessary. It must be for the purpose of continuing a normal standard of living. For instance, if the policyholder’s apartment becomes unsuitable to live in due to fire, flood, or any other covered peril, this policy will pay the extra expenses incurred in living outside the apartment. There are some personal belongings that are thought to be covered by the personal property coverage but are not. For instance, a computer used for a home-based business may not be covered under the personal property policy. You would have to purchase additional coverage for it. You may need additional coverage for the following items in Florida:

1. Expensive artworks

2. Damages caused by earthquakes

3. Electronics and gadgets

4. Sewers

5. Damages caused by natural disasters

Natural Disasters:

A natural disaster is an adverse event originating from the natural processes of the earth. Most natural disasters are not covered under most home insurance policies in Florida; it has to be purchased separately for the specific natural disaster. Consult with a state-licensed insurance agent to know which insurance coverages to get for natural disasters your area is susceptible to.

Flood Insurance

Flood insurance covers losses that are caused by flooding; it is a necessity if you live within a Flood-prone area in Florida. Flood insurance can cover your home and the things in your home. The State of Florida does not require homeowners to purchase flood insurance; however, if your property is in a high-risk flood zone, it is recommended to purchase a flood insurance policy. Flood insurance will ensure your valuables are protected from flash floods and other threats. Flood insurance covers physical damage to your structure and belongings.

Here are examples of what is covered by flood insurance in Florida:

• Refrigerator

• Cooking stove

• Built-in appliance (e.g., washing machine, dryer)

• Plumbing and electrical systems

• Anchorage systems

• Staircase

• Furnace and water heaters

Note: Flood insurance is administered by the National Flood Insurance Program (NFIP).

Hurricane Insurance

Florida laws require home insurance policies to include coverage for damage caused by wind during a storm that the National Hurricane Centre declares to be a hurricane. The coverage extends to homeowners, condo owners, and even tenants. Policyholders may be given premium discounts for installing wind-resistant features on their homes. The hurricane coverage provides cover for damages directly caused by the hurricane to the interior of the building or to the properties inside the building. A program was passed in 2006 by the State of Florida. The program is called Florida Hurricane Damage Mitigation Program. This program offers free home inspections by qualified mitigation inspectors to eligible homeowners to pinpoint ways to strengthen their homes against hurricane damages.

Note: Rental properties, apartments, and businesses are not eligible for free home inspections.

Grants are also available for retrofitting homes, but this depends on the structure of the home and the homeowner's income. The grant may be used for the following fittings:

• Roof coverings

• Openings protections

• Roof deck attachments

• Reinforcement of roof-wall connections

• Secondary water barrier

Tornado Insurance

Unlike floods and earthquakes, tornadoes do not require special coverage in Florida, and because a tornado is classified as a windstorm, windstorms are covered by most home insurance policies. A standard homeowner insurance policy includes dwelling coverage, which will help fix or rebuild a home damaged by a tornado. Also, personal property coverage may provide protection for the contents of the house damaged in a tornado. This coverage can also protect personal belongings from weather-related events, theft, and vandalism. Pet coverage can be added to your personal property insurance; you will get reimbursed for funeral expenses or a veterinarian’s expenses.

Note: If your insurance policy excludes windstorm damage, it might not cover the repair cost if a tornado damages your home.

Earthquake Insurance

Earthquake insurance provides coverage if your home has been destroyed by an earthquake. Earthquake insurance covers damages to your home and personal belongings within your home. This policy also covers additional living expenses if you have to live elsewhere temporarily due to an earthquake. Your earthquake insurance policy only covers direct damage to the property resulting from the earthquake (e.g., cracked wall, broken television). Indirect damage such as water damage from burst water pipes or fire due to burst gas pipes will not be covered under this policy. Earthquake insurance will also not cover damage to your vehicle or land. You may need to buy additional coverage to restore your land. You can contact the Florida Department of Financial Services helpline at 1 (877) 693-5236 for inquiries about companies that offer coverage for earthquakes.