Your home is likely your most valuable asset. In Florida, state law does not require you to carry homeowner’s insurance; however, your mortgage company might. Failure to maintain homeowner’s insurance under the terms of your mortgage agreement could lead the lender to obtain coverage for you and place coverage on your home via a “forced-placed” policy. In this scenario you are on the hook for the cost of the policy in addition to your loan premiums. This is expensive. In order to avoid this problem, you should carry your own homeowner’s insurance to protect your property. Below, we’ve mapped out exactly what to consider in a Florida Homeowners Insurance Policy.
Breaking Down a Florida Homeowners Insurance Policy:
In Florida, the insurance policy covering your home or commercial building is a contract, even though the terms and conditions are not negotiated. In fancy legal term’s this is essentially a contract of adhesion, because the drafter (the insurance company) drafts a contract and presents it to the homeowner in a take it or leave it fashion, where the insured has very little say in regards to what’s bargained for in the contract. What it means to you, as an insured, is that any ambiguous term or language in your insurance policy will be interpreted in the manner most favorable to you. This could be vital in litigation if the court attempts to interpret the meaning of undefined or ambiguous terms in your policy when determining coverage.
Typically, in Florida, your homeowner’s insurance policy is broken down into different type of coverages. For example, Coverage A represents the total coverage for the insured structure, and Coverage B will provide additional coverage for attached structures. It seems obvious, but the coverage amounts directly relate to sources of recovery. Also be mindful of the term length of the policy. Usually, the policy covers the home for a year, and the length of coverage is date specific. Another important thing to remember is that when you first file a claim the “date of loss” means the date when the occurrence first happened. The date of loss governs the applicable policy and coverages in force to provide coverage for your loss. Often coverages change year to year. If you are reporting a claim that occurred in the past, it is essential that you review your property insurance policy before filing to ensure that you have coverage for the peril or loss for which you will be seeking coverage.
Reading a homeowner’s insurance policy can be confusing as to what is a covered loss and what is not. Obviously, a policy will provide coverage only if the loss sustained is one set forth within the coverage terms of the policy. Typically, policies in Florida provide coverage for physical damage to the insured structure and then set forth a list of exclusions under which coverage does not exist. However, certain covered losses, via an endorsement, are added back into the policy. Be mindful of this and read your policy carefully.
Another thing to consider is the difference between replacement cost and actual cash value. Replacement cost provides coverage for the amount needed to replace or repair damaged items in the event of a covered peril. Actual cash value on the other hand only provides coverage for the amount needed to repair or replace an item less the applicable depreciation. This is especially relevant for older components of your structure like your roof. A depreciated value will significantly reduce your available policy benefits under Florida law.
Kovar Law Group is well versed in matters related to insurance contracts and litigation. We will review your policy for free and make sure you are getting the most out of your homeowner’s policy. Feel free to contact us today.