Buying a home in Florida is very exciting. Buying Florida homeowners insurance? Not so much. For as uninspiring as shopping for homeowner’s insurance can be, it is a must. Florida Homeowners Insurance is the single best way to protect your biggest financial investment: your new home. However, protecting your asset isn’t the only reason you need to purchase this insurance — your mortgage lender requires it.

Repairing or replacing a home that has been damaged is expensive, often prohibitively so. Homeowners insurance helps pay for those costs. You pay an annual premium that is based on the replacement cost of the home and the value of your personal property within the home. 

Lenders will insist on having proof of homeowner’s insurance even before providing a final loan approval.  Therefore, being ready to provide the required insurance documents is very important.

As in all things in life being ready ahead of time is not only recommended but required if you want to get the best and most affordable options.  A home can be full of surprises and you want to know about them ahead of time.  There are two very important inspections that must be provided to your insurance agent in Florida.  If the home is older than 30 years a 4 Point inspection is required to ensure updates have been done to the roof, electrical, mechanical and plumbing.  Without this inspection most companies will not consider the property for insurance.  In addition, if you want to receive all the credits available to lower the cost of your insurance, you will need a “Wind Mitigation Inspection”.  A significant discount can be obtained if the home you are purchasing has been updated to withstand hurricanes.  By the time you are ready to start quoting the cost of your homeowner’s insurance you should have your inspections ready to provide your insurance agent.  Having the correct insurance premium to provide to your lender will avoid unpleasant surprises that will impact your monthly mortgage payments when you have an escrow account.

The cost of these inspections varies depending on the vendor you are using but a good strategy is to request it from the same vendor you are using for the general home inspection.  One should not be paying more than $100 per inspection.

How much coverage do I need?

Given that the annual premium you pay for your Florida Homeowners Insurance is based on the replacement cost of the home and the value of your personal property within the home, how do I arrive at those figures?

To determine how much dwelling coverage is required, the following question must be asked – If the house is totally destroyed, how much will it cost to rebuilt it.  Hence, Insurance companies require that a Replacement Cost Estimator be used to determine the REPLACEMENT COST of the property.  In addition, lenders insist that the policy must cover the dwelling for an amount equal to 100% of its replacement cost.  Don’t worry, your insurance agent will guide you in this process.  However, now you will understand when they tell you that they can’t simply insure the property for an amount equal to the loan value or some other figure.  With regards to your personal property, you have a lot more flexibility.  Because the personal property is not used as collateral when issuing a mortgage lenders do not require you to have insurance for your personal property.  However, be thoughtful before deciding to forego coverage for all your belongings.  The cost of replacing items you have accumulated over the years can be substantial.

When you are preparing to buy a home, you have a lot of things to take care of.  Let the experts at E&L Insurance of Miami, Florida assist you with the details of securing insurance.  We’ll make it easier for you to have a great experience – and to ensure you’re protected for whatever the future my bring!