Homeowners insurance covers the costs to repair or rebuild your house in case of fire, hurricanes, theft, and other disasters. You may opt for a replacement cost or cash value policy, depending on your needs.
Based on the homeowner’s past claims history and credit score, the insurance company’s perceived risk of a claim is the main driving force behind rates. Other factors include the neighborhood, crime rate, and building materials available to build with.
Coverage
The average cost of homeowners insurance in Florida is determined by various factors, including the structure of your home, its age and construction materials, and your personal claims history. It’s important to understand how these different factors affect your rates so you can choose the right policy for your needs.
The coverages provided by homeowners insurance policies are called “perils.” Each type of coverage protects against specific types of damage. Some policies, like HO-1, protect against fire, wind, hail, lightning, and vandalism, while others offer broad coverage for floods, earthquakes, and other disasters.
Personal property is any item you own not built into the house, such as clothes, furniture, and electronics. A homeowners policy usually pays a percentage of your dwelling coverage limit to replace or repair your possessions, but limits vary by policy.
Typical personal property coverage is 20% of your home’s dwelling coverage. For example, if you own expensive jewelry or art, talk to your agent about adding more coverage to cover your valuables.
Exclusions
One of the most important things to understand about homeowners insurance rates is that every policy has exclusions. This is to prevent customers from being unfairly billed for coverage that would be inappropriate for their property and to ensure that premiums remain affordable.
Most policies include exclusions for specific causes of loss that would cause customers to pay excessive premiums to protect their homes, such as floods, earthquakes, and sewer backups. These exclusions are necessary to protect the profitability of insurance companies and keep their premiums affordable for customers.
A standard homeowners insurance policy covers damage to the dwelling and attached structures, such as the garage and screened porch. It also includes personal content, including items like clothing and jewelry. The amount a policy pays for personal items is based on the item’s value.
Other structures on your property, such as utility sheds, guest houses, gazebos, and pool houses, are covered under other structures coverage. This coverage does not cover the cost of replacing your items, though you may be able to purchase additional coverage for them separately.
The cost of homeowners insurance is influenced by factors such as the age and type of structure on your property, as well as security and safety features. Modern alarm systems, fire alarms, and water sensors can all help reduce your premium.
Another factor that impacts your rate is where you live. Areas more susceptible to disasters such as hurricanes, tornadoes, and wildfires can have higher home insurance rates because they are more likely to experience costly damages.
Deductibles
A homeowners insurance deductible is the amount you agree to pay toward a claim on your policy. It is a significant part of the total cost of your insurance premium, so you want to choose a deductible that you can comfortably afford, and one that won’t leave you in a financial pinch should something happen to your home.
Choosing the right deductible is personal, but it should consider your budget and savings. You’ll also want to evaluate how often you need to file a claim for damages.
You’ll typically see two types of deductibles provided by your insurance provider: a flat or dollar amount, a deductible, and a percentage or split deductible. A fixed dollar amount deductible is a single, one-time payment that you make to your insurer when you file a claim.
If you opt for a percentage deductible, you’ll be responsible for the first portion of the claim. This deductible is usually calculated as a percentage of your dwelling coverage amount or coverage A value. For example, if your home is insured for $200,000 and your deductible is 2%, you’ll be responsible for the first $4,000 of any covered loss.
Percentage deductibles, like hurricanes and windstorms, are typically reserved for certain insurance claims. They differ from fixed dollar deductibles because they’re based on the coverage value of your policy, not the actual worth of your home.
In most cases, a percentage deductible will save you on your premium. But you should be aware that the deductible isn’t always the same as the actual costs of repairs or replacements.
Co-Insurance
When it comes to homeowner’s insurance rates, understanding the deductible, coverage, and co-insurance details is important for understanding how to get the best policy. Deductibles help you keep your premium low but also make you responsible for paying out-of-pocket costs when a claim is made.
Deductibles vary, depending on the type of damage you’re insuring. If you have earthquake or flood coverage, your deductible will be higher than if you’re insuring your home for wind or hail.
Typically, most homeowners insurance policies cover the structure and contents of your home in the event of a covered loss. This means your house is protected from fire and other perils, including storms, theft, or vandalism.
Your insurance company will usually list your deductibles in the policy documents. You should also ask your agent if there are any other types of coverage you might want to add to your homeowner’s policy, such as sewer backup or umbrella liability.
Another important aspect of home insurance is personal liability protection, which pays medical bills and other expenses for people you’re legally liable for. This coverage can be especially helpful if someone gets hurt on your property or you’re sued for damage caused by you or your family members.
