The homeowners insurance industry in Florida faces certain risks that are common to that area, such as hurricanes and flooding. While homeowners insurance is not required by the state, Florida residents are encouraged to purchase this insurance anyway. Understanding what a standard homeowners insurance policy covers and what it doesn't can help you be prepared for future losses before they occur.
The Florida Office of Insurance Regulation states that all homeowners insurance policies must address a minimum $500 hurricane deductible with an optional 2 or 3 percent deductible. According to the Florida Insurance Council, 70 percent of homes in the state carry the 2 percent option, meaning that a $100,000 loss to your home would carry a $2,000 deductible. Be sure to have enough money on hand to pay the maximum deductible for your policy limits or choose a different option from your insurance agent.
Homeowners insurance in Florida does not cover flood damage, including flooding from a hurricane. To be protected against this peril you must buy a policy from the National Flood Insurance Program (NFIP), offered by the federal government through the Federal Emergency Management Agency (FEMA).
Extended Replacement Cost
After large-scale losses such as those suffered in hurricanes, the cost of building materials and labor may increase above normal market rates. Extended replacement cost coverage pays for these unexpected increases in rebuilding cost by paying up to 20 percent above the stated policy limit for your home. This coverage can avoid costly out-of-pocket expenses.
An actual cash value (ACV) policy will pay to replace damaged items with those of like kind and quality. Settlements will be depreciated based on age and condition of the items at the time of loss. A replacement cost (RC) policy will replace damaged items with new ones regardless of current market value. RC policies typically cost more than ACV ones.
Termination and Nonrenewal
Insurance companies in Florida may not cancel your homeowners policy after it has been in force for 90 days unless you fail to pay your premium, you fail to comply with a company regulation such as a property inspection, you lied on your policy application or the risk has substantially changed as in the case of upgrades. If a company chooses not to renew your policy, it must give you a 90-day notice period in order to be legal.