There’s a lot of nonsense circulating about what homeowners insurance is and what it isn’t. Let’s clear up some of the more prevalent of these homeowners insurance myths, shall we?
Myth #1: I’m required to buy home insurance
FACT: Homeowners insurance is a definite advantage – but it’s not mandated by law in Florida
While Florida drivers are required by law to carry a certain minimum amount of car insurance, the same is not true of home insurance. In many instances, your lender will likely require coverage it to protect their investment. There is no law on the books mandating you insure your home. However, while it’s not a legal requirement, there are significant advantages to having the right amount of insurance in place for your Florida home. The primary reasons having homeowners insurance is smart include (1) protection against financial loss or ruin following fire, hurricane, theft or vandalism, or other covered hazard; and (2) protection against costly lawsuits and medical bills if you’re found liable for injury/damage to a guest or their property.
Myth #2: Flooding is covered by my policy
FACT: Most standard homeowner policies exclude flood damage
The reality is most standard homeowners insurance policies do not cover flooding. To be reimbursed for damage you experience as the result of rising water entering the home, you’ll have to purchase a separate flood insurance policy. In Florida, this usually means going through FEMA’s National Flood Insurance Program (NFIP) – although you may be able to find a private insurer who will cover you for flood damage. Like homeowners insurance, flood coverage is not mandatory. However, because flooding is one of the most damaging natural disasters, especially in Florida, having flood insurance can really save the day. And, as the Florida insurance consumer advocate guide indicates: anywhere it rains, it can flood.
Myth #3: My home’s current value will be my payout amount
FACT: Understand your home’s replacement cost
When buying home insurance, you’ll be asked to choose between actual cost value or replacement cost value on your home. Replacement cost is the amount it will cost to rebuild your home, using current prices for labor and materials. Actual cost value is the replacement cost minus depreciation. Don’t use what you paid for your home or your home’s market value as a guide; it’s one of the more persistent homeowners insurance myths out there. The cost to rebuild your home is often more than the current market value of your home. Instead, make sure you get enough insurance to cover the replacement value of your home; here are some methods to calculate your replacement cost.
Myth #4: Deductibles are what I pay the insurance company
FACT: The insurance company will subtract your deductible from their payment – leaving you to pay the contractor your deductible amount
Your deductible is the portion of the contractor bill you're responsible for. In most cases, you’ll pay the contractor directly. For example, let’s say a portion of your roof was damaged during a windstorm, causing a roof leak. Your insurance company approves a claim in the amount of $10,000 to fix it. If your deductible is $1,000, your insurer will provide $9,000 toward the total bill and you will pay the contractor the remaining $1,000 (your deductible amount). When homeowners try to find a way around paying their deductible – or if a contractor offers to waive the deductible – it’s insurance fraud.
Myth #5: All my belongings are covered
FACT: There are limits on personal property reimbursement
Your personal property payout will depend on the limits you selected for your homeowners insurance policy. Personal property is typically a percentage of your dwelling coverage, with an option to increase the limit. And if you have expensive jewelry, fine art, or other difficult-to-replace items, ask your insurance agent about your additional coverage options so your prized possessions are fully covered.
Myth #6: Bodily injury coverage protects me & my family
FACT: Your homeowner’s policy may help pay medical bills for others injured at your home – but not for you or your family
This is one of the most misunderstood homeowners insurance myths. Coverage F (medical payments to others) is typically included in a homeowners or renters insurance policy – but it’s designed to cover unintentional harm caused to guests in your home. It can help pay for things like hospital and doctor bills, diagnostic testing, prescription medication, and durable medical equipment such as a wheelchair or crutches. This part of your homeowners policy won’t cover injuries to you or others in your household may suffer.
Myth #7: Renter’s don’t need insurance
FACT: Your belongings are NOT covered by your landlord’s policy
Your landlord’s homeowners insurance policy will cover the structure you live in and everything in it belonging to your landlord. This leaves all of your belongings unprotected – including any furniture, electronics, jewelry, appliances, sports equipment, clothes and shoes, and other items. In the event of a fire, theft, flooding, or other disaster, you will be stuck with the high cost of replacing everything you own. To know how much renters insurance you’ll need, you’ll want to estimate the value of your belongings. Your insurance agent may recommend an amount based on the square footage of where you’re living. You could also create a home inventory, noting details about the valuables you own. You may also find a personal property calculator online or visit a retailer’s website, put items similar to what you own in your cart, and see what it totals.
Florida Homeowners Insurance Myths: Know What You’re Getting
Don’t fall for the above all-too-common homeowners insurance myths. Whether you’re new to homeowners insurance or have had it for years, we can help you separate fact from fiction regarding what your policy can offer you.
Already a Florida Peninsula Insurance Company policyholder? Contact your agent to review your policy now and make any needed changes. Not yet insured with us? Get a quote online now to get started toward putting together a homeowners policy perfect for your unique circumstances.