Florida homeowners insurance is almost as simple as A-B-C.
If you look at your Florida homeowners policy or an agent’s quote for homeowners insurance, you’ll see coverage listed by alphabetical headings.
Start with “Coverage A” (very clever). Coverage A is the limit of coverage available to repair or replace your dwelling. You’ll want to get this number right. It’s supposed to represent your dwelling’s replacement cost. All that really means is the cost of repairing or rebuilding the structure, as it was originally constructed, at today’s prices.
Replacement cost and market value are eternally confused in the minds of many Florida homeowners who shop for insurance but the difference is actually simple. For example, market value includes the value of land. Land is never covered by Florida homeowners insurance. Market value also reflects uninsurable intangibles such as location and demand for housing.
Take a close look at the number next to Coverage A on your Florida homeowners insurance quote. Does it represent a price north of $100 per square foot? It probably should. If not, you could be risking a so-called coinsurance penalty against a claim. That or a bill for additional premium after the insurance company inspects the house and catches an obvious low ball.
Either way, ask the agent on the quote how your Coverage A was calculated. He or she have used a replacement-cost estimator approved by the insurance company. A replacement-cost estimator is what the insurance company uses to profile dwellings and empirically extrapolate the probable cost of reconstruction.
For example, is your crib one story or two? Are the exterior walls of masonry construction or frame? Is the roof covered with asphalt shingles or tile? Are the kitchen and bathroom counters laminated or solid granite? What about the floors? Hardwood? Carpet? Tile? Yes?
The only time any of this really matters, of course, is when you need it most.
Next up: Coverage C for Contents. I promised simplicity, not logical progression.
David Hackett is a Florida-licensed insurance agent who helps clients identify specific insurance requirements, clarify how insurance policies apply and find appropriate coverage at competitive prices.