Florida is a gorgeous place to live, and with low-interest rates, this is a perfect time to become a homeowner. Although that comes with responsibility, it’s also a journey filled with adventure.
One of the first things you’ll need to do is start looking for homeowners insurance in Florida. Obviously, you want excellent coverage but also affordable premiums. Until you pay off the loan, the house you buy legally belongs to the lending institution, whether a bank or mortgage company. As an asset they need to protect, they’ll require you to have insurance in place before you can close the deal.
However, you want to start looking at different companies and policies as far out as you can. That way, you have ample time to compare what they offer. As part of the search, you can always talk to family members and friends to see if they’re satisfied with the company they have. If so, that’d make a good starting point.
Helpful Tips for Buying Homeowners Insurance
The following will make the decision-making process much easier.
- Shop Around
Regardless if you receive referrals from trusted individuals or not, compare what at least three different companies offer. Remember, you’re not just looking at the price but also specific coverage. Now, if you buy a house in a risk area, meaning it’s prone to flooding, tornadoes, hurricanes, and so on, you’ll need a policy that includes those things.
Otherwise, you’ll have to purchase a second policy. Usually, that doesn’t increase the premiums by much, but you don’t want to go without protection. Depending on the lender, they might also require you to have coverage for “Acts of God.” Once you find several companies that fit your criteria, ask for a quote. That way, you can lock in a price until you make up your mind.
- Escrow Your Insurance Payments
To avoid missing a payment on your homeowner’s insurance and perhaps save money, consider having the insurance payments escrowed with your mortgage payments. What happens is the lender rolls the cost of coverage into your monthly house payment. So, each month when your insurance premium comes due, the lender pays it.
Keep in mind that if you choose this option, you’ll likely have to pay a full year’s insurance coverage at the time of closing. However, during those first 12 months, when you have a lot going on, it’s very convenient.
- Don’t Skimp on Coverage
Perhaps one of the biggest mistakes that homebuyers make is going with the lowest price homeowner’s insurance policy they find. Unfortunately, that usually means compromising on quality. In the long-run, it’s far better to pay a little more to ensure you have adequate protection.
At the same time, there’s no reason to pay more for coverage that you don’t need. This is when having a one-on-one conversation with an independent agent is so important. Here is some useful information:
- HO-2 – This broad homeowner’s insurance policy protects against 16 perils, each outlined in the policy itself.
- HO-3 – Somewhat broader, this policy includes the 16 perils, excluding anything specifically removed.
- HO-5 – Considered a premium policy, this is usually for newer and well-maintained residences. Again, it covers the 16 perils minus anything specifically removed.
- HO-6 – In this case, the homeowner’s insurance is for condos and co-ops. It includes the protection of personal belongings, improvements to the unit you own, and liability. For structure coverage, this is typically through the association.
- HO-7 – The only difference between this policy and the HO-3 is that it is for mobile homes.
- HO-8 – If you plan to buy an older house, both this and the HO-2 policy are ideal. However, the HO-8 only covers the cash value of the home as opposed to the replacement cost.
- Educate Yourself about the Policy
Before you sign on the dotted line, make sure you fully understand every aspect of the policy. Again, an independent agent can go over each line item to provide information and answer questions. In particular, you want to focus on the deductible, depreciation, personal property, liability coverage, and premium.
However, other aspects of the policy you need to understand include the actual cash value, replacement cost, riders, and sub-limits. Take your time to know what exactly you’re paying for. Long-term, this could save you money and prevent you from facing a major dilemma.
Article Contributed by Brie Taylor