Homeowner insurance covers damages from most natural disasters.
Homeowner insurance protects property owners from risks associated with unpredictable damages like natural disasters, property crimes and fire. Unlike car insurance, Florida law does not mandate that all homeowners carry insurance. However, many mortgage institutions will only extend loans on the condition that the borrower obtain and carry homeowner insurance at all time. Purchasing homeowner insurance is a smart way to protect an important asset. The Florida Office of Insurance Regulation regulates the insurance industry in the state and imposes certain rules on the industry.
Flooding Rules
Florida laws and regulations permit the insurance companies to exclude flood damage from coverage. Most policies cover fire, lightning, explosions and criminal activity. The Federal Insurance Administration, however, provides flood insurance. Many mortgage lenders require borrowers have flood insurance where property is located near the Gulf of Mexico or Atlantic Ocean.
Hurricane Rules
FOIR regulations impose limits for policies that include hurricane coverage on the range of deductible homeowner insurance can include. A deductible is a contractually set amount of money an insurance policy will impose on the policy holder to pay before the insurance company will pay the damages incurred above that amount. For example, an insurance policy may impose a $1,000 deductible per year. If the homeowner sustained $5,000 in damage, the homeowner must pay the first $1,000, and the insurance company would pay the remaining $4,000. FOIR imposes a $500 minimum deductible for hurricane insurance with the insurance company having the option to charge 2 or 3 percent to the damage sustained. In other words, a home with $100,000 in hurricane damage and a 3 percent option would impose a $3,000 deductible on the homeowner.
Termination Rules
Florida laws and regulations prohibit insurance companies from canceling policies after 90 days of it remaining in force. The exception to this rule is where a homeowner fails to make a payment, otherwise breaches the agreement or substantially changes the property and increases its risk. Insurance companies can decline to renew certain policies so long as they provide a 90-day notice to the policy holder.
Property Values
Its important to remember that property value changes over time. A house worth $100,000 with a $100,000 insurance policy could increase in value over some years. Suppose the property value increased to $300,000 over a period of 10 years. A homeowner still carrying a $100,000 of insurance on a home worth $300,000 would have an inadequate insurance policy.
