If you own a home in Florida then you are already well aware of how stringent the state requirements for homeowner’s insurance are in this state. Of course, even if it weren’t the law, any smart homeowner would make sure to carry adequate homeowner’s insurance. It is simply the only way to make sure that your property and you are protected in the event of accident or disaster.
The Two Types of Florida Homeowner’s Insurance
The standard Florida homeowner’s insurance policy is comprised of two sections. The first section pertains to the coverage you carry on your property, both your home and your other possessions. The second section relates to your personal liability coverage, which protects you in the event that a person or their property should be harmed through fault of yourself, your family, your pets or your property. Both types of insurance, personal property and liability, are of the utmost importance to Florida homeowners.
Replacement Cost vs. Actual Cash Value
Your Florida homeowner’s insurance may be payable based on either the replacement cost or the actual cash value of the property. If your policy stipulates payment of the replacement cost, then if your property becomes damaged or destroyed then your insurance will pay to have that property replaced with new property of comparable quality and type at its current market price. However, if your personal property coverage only provides for payment of the actual cash value, then you will only receive payment for the depreciated cash value of the property, which may not be enough to actually replace it.
Since all property depreciates over time, it is important to consider this distinction when selecting your coverage. Actual cash value coverage is generally less expensive and is a good option for those with easily replaced property, or those who feel confident in their ability to make up the difference in cost when replacing their property. For those who want to make sure they will be able to replace all of their property quickly, without a lot of out-of-pocket expense, then opting for the higher premium replacement cost coverage is the wiser investment.
All Risks vs. Named Perils
Another consideration is the distinction between all risks coverage and named perils coverage. Covering yourself with an all risks policy ensures that your home and other property are covered in any event. On the other hand, named perils policies provide the Florida homeowner with coverage from damage by only those events specifically named in the policy.
Named peril homeowner’s insurance policies commonly cover windstorms, hail, fire and theft and are usually less expensive than all risk policies. Named risks homeowner’s insurance policies leave you less protected than all risks policies. If you want to make sure that you and your home are protected whatever may come, then getting an all risk policy is the smart move.
Personal Liability Coverage
There is less variety in personal liability coverage for Florida homeowners than there is with personal property insurance. Most Florida personal liability insurance policies differ only in the amount of coverage and in the deductible. Choosing a lower limit leaves you more at risk should you be sued for damage to a person or property. It is wise to choose a higher limit (at least equal to the amount of liability coverage you carry on your auto insurance policy). Choosing a lower deductible will raise your rates, but leave you with less out-of-pocket expense in the event of an accident where you are required to pay damages or cover medical expenses.
