Florida has it all, constant sunshine, beaches,plenty of restaurants and entertainment. It also has some of the highest homeowner insurance premiums in the country. According to Value Penguin, the Sunshine State has the 14th most expensive homeowner insurance rates in the country with the average premium coming in at $1,727.
While insurance premiums are high all across the state, the cost of protecting your home jumps up dramatically if you live in a coastal area such as Naples, Bonita Springs, South beach, Vero Beach or any of the other beach communities in Florida.
Here is a quick overview of coastal homeowners insurance in Florida.
What is a high-risk location?
A high-risk location is an area in Florida that is more susceptible to certain perils that are covered by homeowners insurance. This can encompass a wide variety of different areas, but in Florida, the main concern is coastal property. Oceanfront and coastal properties are much more susceptible to wind, hailstorm and flooding damage.
Whenever a major storm such as a hurricane hits the coasts of Florida, insurance companies often end up paying out for thousands of claims. As an example, Hurricane Andrew, in 1992 ended up causing $26 billion in damages and reigned as the most expensive storm in U.S. history until Katrina took the title.
While Florida managed to avoid hurricanes for almost 10 years, Hurricane Irma and Michael broke that lucky streak. Hurricanes and other severe weather are common in Florida and are largely responsible for the high premiums that Florida homeowners pay for insurance.
While the majority of homeowner insurance policies in Florida cover damage from hurricanes, windstorms and hail, there may be certain policies that exclude wind and hail damage or have a separate deductible for this type of damage.
If your home is located in a high-risk area you should check with your agent or insurance company to make sure you are protected against all perils. If it turns out that there are gaps or you cannot get coverage in your area, you may need to look at a policy from Citizens Property which is the insurer of last resort in Florida.
In Florida, Citizens Property Insurance Corporation is the insurer of last resort. This means that if you cannot find coverage in the private market, Citizens Property will insure your home and property, the coverage comes with restrictions though.
A little history of Citizens Property Insurance Corporation from their website:
Citizens Property Insurance Corporation was created by the Florida Legislature in August 2002 as a not-for-profit, tax-exempt, government entity. Its mission is to provide insurance protection to Florida policyholders who are entitled to but are unable to find property insurance coverage in the private market.
Citizens is funded by policyholder premiums and, additionally, if its surplus is depleted in the wake of a particularly devastating storm or series of storms, Florida law requires Citizens to levy assessments on most Florida property-casualty insurance policyholders until any deficit is eliminated.
Citizens Property is considered the insurer of last resort and you must meet certain requirements before you can purchase a policy. According to Citizens, the following criteria must be met before you are eligible for a policy:
Under Florida law, Citizens may write a new insurance policy only for property that meets one of the following eligibility criteria:
- Coverage is not available from a Florida-authorized insurance company
- Premiums for coverage from Florida-authorized insurance companies are more than 15 percent higher than the premiums for comparable coverage from Citizens
Citizens policies can only be sold by agents who have been authorized to sell them so while you will be dealing with a private market agent, not all agents in Florida can write Citizens policies.
If you are interested in a policy, the Citizens Agent Look-Up tool can help you find an authorized Citizens agent.
While Citizens Property may be the only option for many homeowners, there can be options for others. The Florida insurance market has seen a bit of a revival over the last several years as more insurers move back into the market. Private market insurers usually offer more coverage options as well as higher coverage limits, often at a lower rate so it is always a good idea to check other insurers before looking into a Citizens policy.
We can help you search for a policy, please give us a call at 888-685-4704, we can quickly help answer any questions you have about Florida coastal home insurance policy, coverage, rates and more.
Limitations of Citizens Property
However, if you are unable to find a policy in the private market, Citizens Property can be a good option. There are restrictions to these policies and coverage caps that may not work for every situation, you may need to supplement your Citizens coverage with a private market policy if your home exceeds their coverage limits.
One of the biggest issues with Citizens is their coverage limits. Here is a breakdown of the limits on a standard homeowners policy:
- Dwelling Coverage: This covers the structure of your home and coverage is limited to $700,000. Maximum limit is extended to $1 million in Miami-Dade or Monroe counties due to the cost of housing in those counties. This coverage is available in both replacement cost and actual cash value. These policies cover all perils except those specifically excluded by the policy. Flood and earthquake damage are always excluded.
- Personal Property: This covers your personal property in your home and is limited to 25% to 50% of your dwelling coverage depending on the policy type. It should be noted that all of your contents are only covered under actual cash value with their standard policy. This means that Citizens will take depreciation into account when valuing your contents. With actual cash value, the check you receive for your 10-year-old TV will most likely not be enough to replace it.
You can change this coverage to replacement value for an additional fee.
- Additional Living Expenses: This part of the policy pays for expenses if you have to stay somewhere else because your home is damaged by a covered peril. This coverage is capped at 10 percent of your dwelling coverage.
- Personal Liability Coverage: Liability insurance covers medical and legal bills if someone is injured in your home. This coverage is capped at $100,000 which is low, most experts recommend carrying at least $300,000 and if you have significant assets it should be upped to $500,000.
The Disadvantages of Citizens
In general, Property Citizens plans tend to be a bit more expensive than private market policies and offer less robust coverage.
Here are a few examples of the less robust coverage these policies offer:
- Low Limits for High Value Items: Most homeowner policies put a limit on high value items such as jewelry, furs, collectibles and even wine collections. In most cases that limit is around $1,500 to $2500 but it can be upped by purchasing a rider. Citizens Property puts a limit of $1,000 on these items and does not offer any way to increase that coverage.
- Low Liability: As noted above, the liability coverage of $100,00 is low and with Citizens there is no option to increase it. Private insurers allow you to increase your liability coverage, but it does push up your premium slightly.
- No coverage for water backup or sump pump failure: Citizens insurance does not provide coverage for damage caused by water backup or sump overflow. While many private market policies exclude this coverage, it is available as an add-on, that is not the case with a Citizen policy, this type of coverage is completely unavailable.
Deductibles Are Different
When it comes to deductibles, coastal communities tend to have a couple of different deductibles, one for regular perils and another for hurricane related issues.
The deductible is the amount of money you need to pay before the insurance company will cover your losses. With a standard homeowners insurance policy the deductible is usually a set amount ranging from $500 up to $10,000. You can choose your deductible, the higher the deductible the lower your premium tends to be:
Here is a breakdown of the different deductibles from Citizens Property:
- All other perils: You can choose from a $500, $1,000 or $2,500 deductible
- Hurricane deductible: You can choose from a $500 or 2%, 5% or 10% of Coverage A deductible. Choosing a $500 deductible will push up your premium dramatically. The other deductible options are called percentage deductibles and they will be much more expensive for you if you have to make a claim.
As an example, if you are carrying $200,000 worth of home insurance and you choose the 5 percent deductible option you would be on the hook for $10,000 if you have to make a hurricane related claim.
Be sure you completely understand your policy as well as the deductibles when shopping for coverage.
Discounts with Citizens Property
Citizens Property only offers a few discounts because they only offer homeowners insurance. Here is a breakdown of the discounts they offer:
- Wind mitigation: You can receive a discount for adding features such as window shutters and hip roofs which help lower the risks of wind damage.
- Building code: If your home was built after Jan. 1, 2002 or if it has an updated roof that meet appropriate building standards you should receive a discount.
- Alarm systems and sprinklers: If you have put in a monitored fire or burglar alarm or a sprinkler system, you should get a discount.
Inspections May Be Required
Depending on the type of policy you are looking for as well as the age and location of your property, you may need an inspection before they will cover your home.
- Four-point inspection: This inspection is required for all homeowner insurance applications for properties that are more than 30 years old. This inspection looks at your home’s electrical system, plumbing, heating and cooling system and roof.
- Roof inspection: If your roof is older than 25 years for a shingle or other type of roof or over 50 years old for a tile, slate, clay, concrete or metal roof you will need documentation that shows your roof has at least three years remaining useful life. Citizens will require an inspector to complete a roof inspection form that verifies your roof meets its requirements.
- Wind-damage mitigation inspection: If you are hoping for a discount due to wind mitigation features at your home you will have to get an inspection done to document these features.
Tips for Finding Standard Coverage
Here are a few tips for finding a policy in the private market:
- Work with an agent that represents multiple insurance companies and specializes in coastal properties. We can help you shop and easily compare up to 12 different Florida home insurance premiums.
- Talk to your neighbors to see which insurance company they use .
- Consider adding storm shutters and replacing your roof with wind resistant materials to make it more attractive to insurance companies.
- If insurers are more concerned about the condition of your house rather than the location, ask what you can do to upgrade your home to make it insurable.
- Remember, flood damage is not covered by a standard homeowners policy, you will need a separate flood policy to make sure your coastal home is fully protected.
- If you are shopping for a home on the coast, be sure to get a homeowners insurance quote as well as a flood policy quote to make sure you can afford the cost to protect your potential home.