Homeowners Insurance Basics Every Fort Myers Homebuyer Should Understand

You've worked so hard to find your dream home in beautiful Fort Myers, Florida. Now imagine losing everything you own – every single possession in your home and maybe even the house too. Ask anyone who has lived through a devastating fire or an infamous Florida hurricane, what it feels like to suddenly have nothing but the clothes you’re wearing and you’ll understand the importance of buying homeowners insurance.

If you’re using a mortgage to purchase the home you’ll have no choice in the matter; the lender will insist that you insure the home. But even if you aren't required to have insurance, is it worth the risk to skip it?

In my daily dealings with Fort Myers homebuyers, I’ve noticed that a lot of them don't understand insurance and how to properly shop for coverage. Hey, that’s understandable. It’s not every day you purchase a home. So, let’s bring you up to speed on purchasing enough insurance while trying to save money in the process.

Where to start

Your homeowners insurance covers the cost to rebuild the house, not the loss of market value. If your house burns down, you still have the lot so that doesn't need to be replaced, only the actual structure does. How much will it cost to rebuild the house? Your insurance agent will supply you with an estimate.

What insurance agent, you ask? If you already have an established relationship with an auto insurer, he or she is a good person to contact first. Most insurers will offer a discount for those with more than one policy with their company. However, insurance in Florida can be s sticky subject due to the H-word (hurricanes) so some insurance companies won't write policies here. However, I've got a list of trusted local Fort Myers insurance brokers that I would be glad to share with you - just ask!

But it’s always a good idea to shop around so ask friends, colleagues and neighbors who they recommend. An independent agent should be among those you interview. He or she is able to shop for coverage from among different companies to find you the best deal. If you go to, say, Jake's Insurance, Jake is only going to offer you a policy from his company (hint, it rhymes with Fate Starm).

A good insurance agent will ask the important questions and gather lots of information from you. If you happen to interview an agent that magically pulls a figure out of thin air, without understanding your circumstances, move on to another.

To get a general idea of the replacement cost of your home before speaking with an insurance agent, follow the instructions at Forbes.com, Bankrate.com or Valuepenguin.com.

What does homeowners insurance cover?

The typical homeowner insurance policy covers damage to the home caused by fire, some natural disasters – wind and hail for instance – vandalism and theft. In Fort Myers and most of Florida, a normal hazard policy doesn't include flood coverage so be sure to ask about that as well.

Your belongings, up to a set limit, are covered under your policy as well. “Homeowners insurance automatically provides coverage for your possessions based on a certain percentage of your home’s insurance value – 75 percent is typical,” Kiplinger’s Kimberly Lankford says.

“So, if your home is insured for $200,000, you’ll also have up to $150,000 of coverage for your possessions,” she continues. Lankford also cautions that the insurance company may set a coverage limit on some items, such as jewelry, so ask for additional coverage for any expensive pieces you own.

Your homeowners insurance policy covers more than just the home and its contents, though. It also may protect you:

• For damage to other structures on your property such as a detached garage, a shed, guest house, pool and pool cage, or fence.
• From liability if someone is injured on your property. Even if they acidentally fall down the stairs, don't be surprised if they ask you to pay their medical bills.
• From out-of-pocket expenses, such as housing and living expenses while your house is being repaired.
• From liability for damage that you or a family member cause to other people or their property.

What’s not covered?

While it’s important to understand what your insurance policy covers, you also need to know what isn’t covered. These items are known as “exclusions” in your policy.

The following is a list of typical exclusions:

• Water damage caused by flood or by sewer or drain backups. A general rule of thumb is that water which enters from the outside (like a flood) won't be covered by a normal policy while water that enters from the inside (like a broken pipe) is covered.
• Loss of pets.
• Automobile damage or loss. Pay special attention to golf carts; a golf cart that is registered (ie, has a license plate) is considered an automobile but one that isn't registered is considered personal property.
• Damage as a result of war.
• Power failure.
• Earth settlement or other movement. Parts of Florida are prone to sinkholes but thankfully Fort Myers is not one of those areas. However, anything is possible.

Choose a deductible

An insurance deductible is how much money you will pay out-of-pocket before the insurance company begins paying a claim.

The standard homeowners insurance policy deductibles are $500, $1000, $2500, and sometimes $5000, according to Coastal Insurance in Rocky Point, N.Y. The lower the deductible, the higher your insurance premium will be.

Choose the deductible carefully by considering what kind of a financial position you’ll be in should disaster strike. Do you have enough savings to pay the deductible? If you are retired, this is a crucial consideration. Generally speaking, most financial experts suggest having a higher deductible and a lower premium, but ONLY if you can actually afford to pay the deductible, if needed!

Additional considerations

Ask your insurance agent about ways to get discounts on homeowner insurance. Adding a burglar alarm, sprinkler system and even smoke detectors may bring down the premium.

While the concept of homeowners insurance is simple, the policies may be confusing and complex. Choose an experienced insurance agent to help you navigate the process of buying home insurance.

Ensure that you get answers to every question that comes up.

You’ll need your homeowners insurance to begin coverage on the date you take possession of the house, so getting an early start on shopping for it is important. You can cancel your policy at anytime as long as you have a replacement policy, so if you are rushed to get a policy before closing, you can shop around for a new policy after you close. Just make sure you don't have a lapse in coverage!

Remember, if you need a list of excellent Fort Myers insurance brokers, please reach out to me today and I'll be glad to send it!