Defining Homeowner’s Insurance
Your Fort Lauderdale home is an invaluable piece of your life, and you want to protect it. Homeowner’s insurance protects your home’s structure and all of the belongings within it from damage. In the case that your home of its contents are damaged or destroyed, homeowner’s insurance will spare you and your family from financially covering the losses.
A homeowner’s insurance policy in South Florida and beyond may provide you with compensation for your losses including medical expenses, liability claims, and other expenses that result from property damage and/or personal injury obtained by other individuals. Typically, prior to getting a mortgage, the lender will require you to invest in homeowner’s insurance.
Circumstances Covered by Homeowner’s Insurance
Depending on the policy that you select, homeowner’s insurance in Florida can have you covered in the case of:
- Weather-related damage such as shattered windows or damaged roofing after a tornado or storm
- Burglaries that result in the loss of belongings in your home
- Damage resulting from a vehicle colliding with your home
- Injuries requiring physical therapy from a guest that falls or gets hurt in your home
- A personal injury lawsuit being filed against you as a homeowner
Homeowner’s insurance isn’t just for traditional homes, either. Owners of condos, cooperative homes, mobile homes, as well as renters, can benefit from a homeowner’s insurance. In these cases, a homeowner’s insurance policy can provide protection for possessions against damage or theft. Liability coverage can protect against property damage and injuries to others.
Coverage Under Homeowners Insurance
There are multiple individuals covered under homeowner’s insurance other than the homeowner. These include:
Homeowner’s spouses who live in the same home will be covered by personal property insurance and liability insurance. This is the case whether or not the spouse is named on the Declarations Page of the policy as a Named Insured.
Certain residents of a home are protected under personal property insurance and liability insurance. To be covered under the policy, residents must either be relatives of the policy holder or under 21 and under the care of a member of the policy holder’s family.
- “Named Insured” individual
Insurance policies name an individual who is the primary person insured under the policy. Referred to as the “Named Insured”, this individual is generally the person identified on the lease as the tenant or on the deed as the owner. The Named Insured is covered under property insurance on the home, personal property insurance, and liability insurance. Therefore, this individual is the most extensively protected individual under the insurance policy. Since insured owners of condos and renters don’t personally own their home or other dwelling, they’re not as thoroughly covered under homeowner’s insurance.
Property insurance within your homeowner’s insurance policy offers protections beyond the physical structure of your home.
Generally, your insurance policy will provide protection and compensation for damage and theft impacting:
- Your home or dwelling, along with any edifice connected to the dwelling.
- Construction materials and tools held near the dwelling that are intended for the construction, alteration, or repair of your home and attached structures.
- Unattached structural additions on the premises of your home (i.e. detached garage, garden shed,etc.)
- Personal property within your home, along with belongings stored outdoors. This includes furniture, clothing, appliances, garden tools, and more.
For property and structures beyond those listed above, coverage is typically limited as a percentage of the total dwelling coverage. You’ll have the option to increase the policy’s set coverage amount with an endorsement.
Coverage for Condominiums or Cooperative Units
Given that condominium and cooperative unit owners don’t own their home’s structure in its entirety, homeowner’s insurance doesn’t cover their whole dwelling space. In these circumstances, homeowner’s insurance covers the part of the unit owned according to the terms of the condominium or cooperative agreement, along with personal property within the dwelling.
For renters, homeowner’s insurance only covers personal property. This is because renters don’t own any of the property of their living space.
Both renters and homeowners are generally covered by their homeowner’s insurance policy in the following cases:
- Loss of use
In the case that your home has damage that requires you to permanently relocate or seek other housing until repairs are completed, your homeowner’s insurance policy should provide reimbursement for your family’s living expenses in the time before you settle. The damage must be covered by your insurance policy to receive reimbursement. You can increase the set coverage limit of your policy’s standard loss-of-use coverage by endorsement.
In the case that you or another insured person in your policy are liable for another person’s personal injury or property damage, your homeowner’s insurance company will provide a settlement amount to the affected person. This protection isn’t applicable for intentional misconduct and only applies to damage or injury caused by carelessness or negligence. An example of negligence would be if someone sustained an injury from falling down your outdoor steps because you failed to repair a broken railing. An example of intentional misconduct would be trying to improve your home’s view by cutting down a tree located on your neighbor’s property.If an injured or damaged individual files a lawsuit against you, it’s your insurance company’s responsibility should provide funds to pay for the defense of you and other insured individuals named in the lawsuit.
- Medical payments to nonresidents
In the case that medical treatment is needed by a nonresident due to an injury sustained on or near your property, it’s the responsibility of your insurance company to cover his or her medical expenses. Also, if you, another insured, a household employee, or a pet causes an injury while away from your home, the medical expenses are generally covered under your homeowner’s insurance policy.
Open and Named Perils
Open perils and named perils may be covered under your homeowners insurance policy. Certain perils are and aren’t covered under a named perils policy. On the other hand, an open perils policy provides comprehensive coverage for the risk of direct loss relating to your home and its structures. A complete list of perils not covered under the policy is also included in an open perils policy.
What Isn’t Covered?
Your homeowner’s insurance policy won’t cover a large range of costs, damages, and conditions. Exclusions are specific circumstances detailed in your policy that aren’t covered by insurance. The number of exclusions in your coverage depends on the policy that you select. There are also conditions detailed in your insurance policy that must be adhered to and responsibilities that you must carry out for your coverage to be applicable.
An endorsement is a document that can alter the terms and limitations that were initially detailed in your homeowner’s insurance policy. Due to the potential for an endorsement, always make sure to closely read and review your homeowner’s insurance policy. Be sure that you clearly understand its limitations and exclusions that may impact you.
In a typical homeowner’s insurance policy, you may not be covered in the following circumstances:
- Coverage Limitations
There are maximum coverage amounts stated in the Declarations Page of your homeowner’s insurance policy. Coverage limitations put a cap on the amount of money that your insurance company is required to pay. Different aspects of your coverage (including your dwelling, attached structures, personal property, personal liability, loss of use, and medical payments) with each have individual coverage limits. This means that you may have to pay a portion of the damages out of pocket if the coverage limitation is lower than a loss you suffer as a homeowner.
Homeowner’s insurance generally insures the dwelling, structures, and personal property positioned on a piece of land. However, the land itself is often not covered in the policy. This may impact you if your lawn or garden is damaged, for example.
Flooding, sewer overflows, water damage to a basement, and waves aren’t included in homeowner’s insurance policies.
Business activity, even when it occurs in your home, isn’t covered under homeowner’s insurance. This includes liability and medical payments to other individuals for damage or injury. If there are additional structures for business use on your property, the structures aren’t covered by homeowner’s insurance.
If you have tenants renting a portion of your home, your homeowner’s insurance won’t provide coverage for any damages or injuries that they suffer while living in your home.
- Other insurance
If damage or injury is covered under a different insurance as well as your homeowner’s policy, the homeowner’s insurance company is only obligated to pay a proportional amount to cover the loss.
- Theft committed by another insured individual
If theft is committed by a person who’s also injured under your homeowner’s policy (i.e. someone who lives in the home with you), the loss won’t be covered by your homeowner’s insurance company.
- More than two family dwellings
If your home’s structure has over three family dwelling units, that structure won’t be covered under a homeowner’s insurance policy
Personal property coverage clearly excludes registered motor vehicles, as does the “Personal Liability and Medical Payments to Others” sections of your homeowner’s insurance policy.
Motorized wheelchairs, lawn mowers, and similar vehicles that aren’t registered with your state are the only vehicles covered under personal property insurance. This is mainly due to insurance companies’ preference that clients insure vehicles with an automobile insurance company.
How Much Coverage Do I Need in Florida?
You can insure your home for replacement costs or actual cash value. Replacement cost insurance will provide compensation to replace property that’s incurred damage. While there’s isn’t a depreciation deduction, replacement cost insurance has a maximum dollar amount. Actual cash value insurance will provide coverage in the exact amount of the replacement value for property that’s been damaged, excluding an allowance for depreciation.
As a rule of thumb, homeowner’s insurance coverage follows the actual cash value model unless coverage for replacement value is explicitly stated in the policy.
Your homeowner’s insurance policy should provide coverage for 100% of the cost to replace your home. This is crucial so that you’ll receive compensation in the amount of the entire replacement cost (until the coverage limit is reached) for any incurred damage.
Concern over the impact of inflation on the value of a homeowner’s insurance policy can be curbed by an inflation guard endorsement, which protects your coverage amount from inflation by increasing it slightly on an annual basis. This type of endorsement is often included in homeowner’s policies today. An inflation guard endorsement will increase your coverage amount in accordance with a set index of home values in your area; when the value of your home goes up, so will the value of your insurance policy.
Your homeowner’s insurance value should increase when you make additions and improvements to your home. You’ll want to get in touch with your insurance company to up your coverage amount either just before or just after the construction on your home starts. If you wait too long before increasing your coverage, you’ll risk having to cover the entire cost of repairs in the case that the addition gets damaged.
On the topic of home additions, it’s also important to note that you should ask contractors and subcontractors for copies of their workers’ compensation insurance certificates. This is critical because if a worker sustains an injury while working on your property, they may take legal action against you if the contractor isn’t appropriately covered by insurance. It may be necessary to increase the liability limits of your homeowner’s insurance policy if the workers don’t have enough coverage. In this case, you may also choose to seek out a new insurance company with sufficient coverage for your needs.
What’s Condominium or Co-op Insurance?
When you’re looking to insure a condo or co-op in Ft. Lauderdale and other areas of Florida, the policies will differ from those offered to homeowners. Since you don’t own the building in which you reside in its entirety, coverage and guidelines are altered. In most cases, there are two policies in this circumstance: a master policy and an individual policy. The master policy is from the co-op board or condo association, while the individual policy is generally based on a standard Form HO-6. The best strategy is to review your master policy to determine what’s left to be covered, then buy an individual policy for the remaining coverage.
The Master Policy
A master policy bought by the owner of the condo or co-op property should cover common spaced used by all tenants. For instance, this insurance may cover stairways, elevators, the basement, the lobby, and/or the roof. This policy protects the owner from physical damage to the property and liability in the case of injury. In addition, the master policy may cover the separate units in their original state, and fixtures are sometimes covered.
It’s crucial to know the specifics of what the master policy covers. That way, you can buy an individual policy with the appropriate coverage. You can typically get this information from the condo association or the co-op board; they’ll often have documents that explain what’s covered under the master policy.
Your Personal Policy
A Form HO-6 is generally used for your personal condo or co-op insurance. The property coverage on this form has distinct differences from that of other homeowner’s insurance policies, but the liability coverage is comparable. Personal property and property including additions, improvements, private balconies, private entryways, private garages, and any property considered your responsibility by the condo or co-op documents are covered under the Form HO-6. But, the coverage only includes property that’s physically damaged by a “named peril” in the policy, including fire, explosion, storm, riot, aircraft, smoke, theft, vandalism, broken glass, and volcanic eruption, among others. After reading the perils in your policy, know that you may buy insurance for unnamed perils to supplement your coverage.
What’s Not Covered?
Possessions aren’t covered for property damage from perils named under “exclusions” in your policy on a Form HO-6. Examples of these exclusions include earthquakes, flooding, power failures, neglect, war, nuclear hazards, intentional acts, or enforcement of building codes.
The “Loss Assessment” section of your personal policy (if a Form HO-6 is used) is important to note. You’re entitled to charge the co-op or condo association up to a $1,000 payment for loss assessments under this section. Generally, losses suffered by the entire condo or co-op (i.e. roof damage) result in loss assessments and the damages circulate to all unit owners.
If you suffer a loss, the amount you’re entitled to are detailed in your policy. You can recover the actual repair or replacement cost of property like fixtures, balconies, improvements, and similar items (given that the repair or replacement is completed within a reasonable time frame). In the case that damage isn’t repaired or replaced, the compensation you’re entitled to may only be the actual cash value of damaged property (up to the repair or replacement cost). Coverage limits detailed in your policy apply to loss settlement.
Conditions listed in your homeowner’s insurance policy must be met for you to be eligible for payment. You may have responsibilities prior to the event of a loss and you may have to complete specified action after the loss to qualify for compensation. To simplify the process of receiving payment after a loss, always make sure that you read and understand your policy in its entirety.
Loss Coverage Under Master Policy and Personal Policy
Under Form HO-6, losses covered by both the master policy and your personal policy will be treated differently under your homeowner’s insurance policy. In this case, your homeowner’s insurance company will only compensate for the balance of the loss left over after the master insurance policy has provided compensation at 100% of its limit.
What is Renter’s Insurance?
As a renter of a house or apartment, you aren’t the owner of the building. But, while your landlord has insurance, you need to be insured, too. Under your landlord’s insurance, the building is protected, but your belongings aren’t. In the case of a fire or burglary, you’ll need to be individually insured to receive compensation for your losses. Also, if you have a guest sustain an injury in your home, your landlord’s insurance won’t cover their medical expenses; your personal insurance would provide the needed coverage.
Defining Renter’s Insurance
Renter’s insurance, or HO-4, is a specific variety of homeowner’s insurance that doesn’t cover the building in and of itself. Personal possessions are covered under renter’s insurance and provides some liability protection for people who rent a house or apartment.
Coverage Under Renter’s Insurance
Losses from “Named Perils” detailed in your policy are covered under standard renter’s insurance. Your insurance company will provide compensation for losses resulting from a “Named Peril”, which may include:
- Fire, lightning, or explosion
- Volcanic eruption
- Snow, ice, or sleet
- Malicious mischief
- Broken glass
- Falling objects
- Accidental water discharge or overflow
- Sudden and accidental tearing apart
- Artificially generated electrical charge
Losses resulting from causes not under “Named Perils” aren’t covered. In many renter’s insurance policies, you’ll see a list of events that aren’t eligible for compensation. These exclusions may include:
- Power failure
- Nuclear hazard
- Intentional acts
- Enforcement of building codes and similar laws
For people in regions that commonly experience flooding or earthquakes, flood insurance policies may be purchased to protect possessions from flood and earthquake-related damage.
Replacement Cost and Actual Cash Value
Always ensure that you understand whether a quote is describing replacement cost or actual cash value if you’re filing a claim. Actual cash value provides compensation in the amount of the value of the property at the time of theft or damage. In short, actual cash value accounts for depreciation and you may not receive enough money to replace the items entirely.
Replacement cost coverage provides compensation for the entire replacement cost of the property. So, you can purchase a brand new replacement for the damaged or stolen item with the provided compensation. Generally speaking, actual cash value doesn’t provide as much compensation as replacement cost coverage.
Renter’s insurance limits the amount of compensation that it will provide. Limits generally start at about $15,000. When you raise your coverage amount, premiums will also raise. Per-category limits are also set by insurance companies for certain items (for example, jewelry, antiques, and computer equipment). In the case that your property’s value is higher than your insurance limit, you’ll benefit from appraising your property to prove its value. A supplementary rider may then be bought for full property coverage.
Liability coverage is also included with renter’s insurance. Accidents and injuries inside and outside of your home that resulted from you or your property are covered by most renter’s insurance policies. Legal defense costs are included under liability coverage in the case that you must go to court. Note that automobile accidents aren’t covered.
Additional Living Expenses
“Additional living expenses” are generally provided under renter’s insurance in the case that your house or apartment is unlivable from a named peril. These expenses cover the cost of other, comparable living arrangements while repairs are made. The policy will detail a dollar limit for this coverage, and a time limit is also sometimes states.
The Cost of Renter’s Insurance
The area in which you live, your building, your deductible, and your coverage needs all impact the cost of renter’s insurance. That said, renter’s insurance is more affordable than homeowner’s insurance. Actual cash value coverage generally costs less than replacement cost coverage. But, keep in mind that with the risk for a catastrophic event, the additional premium is a smart investment.