homeowners insurance with happy family

Scott Love Insurance provides homeowners insurance in Lutz, Florida, and the surrounding areas of Land O Lakes and Tampa, that can protect you and your entire family in the event of an unexpected event and financial loss.

What is Homeowners Insurance?

Your house is where you live with your family and your most prized possessions.  For most people, the house they live in is the biggest financial investment they have.  Homeowners insurance protects this important investment against the unexpected, such as perils of hurricane, wind, lightning, theft, and fire.

Homeowners Insurance is a package policy that covers damage to your building, your personal possessions, as well as providing legal protection for injuries or property damage you or members of your household may have caused someone else.

Homeowners insurance is typically for a house that you own and occupy yourself, whether on a primary, secondary, or seasonal basis.  Primary means you live there more than 9 months a year, secondary means you occupy it between 3-9 months, and seasonal refers to houses you occupy less than 3 months a year.

Homeowners insurance policies can also cover houses you own but are rented or occupied by others.  These policies are called Dwelling Fire policies as they had their origin when houses used to burn down frequently.  There are also specific types of homeowners policies called Condo policies or Mobile Home policies that are customized to fit their unique nature.

Why Do I Need Homeowners Insurance?

  • To avoid financial disaster-most people could not afford to rebuild their house if it was completely destroyed by fire, hurricane, windstorm, or sinkholes
  • While Florida law doesn’t require homeowners insurance, some governments require you carry it for the liability protection it offers, especially if you have certain pets, a swimming pool, an at home business.
  • Your lender will require you to carry it for the life of the mortgage to protect their investment
  • If a guest in your home is injured, it provides liability protection and medical coverage to cover their expenses so it doesn’t come out of your pocket!
  • If a thief stole your valuables, could you afford to replace them, or if a pipe burst and caused $30,000 damage to your house, would you want to pay this?

What is Covered on My Homeowners Policy?

A majority of homeowners insurance policies include the four following types of coverage:

  1. Structure (the house and things either attached or detached like garages, porches, sheds)
  2. Personal property (items like your TVs, furniture, clothing, food, phones, computers)
  3. Liability protection (for damage to someone else caused by your family)
  4. Loss of use(when property is damaged and you have to stay somewhere else)

Structure (Coverage A on policy) covers the building itself including roof, walls, flooring and anything permanently attached to building.  It includes attached items like garages, porches and often includes coverage for detached items such as garages, pools, fences, sheds up to 10% of the building coverage.  For example, if the Replacement Cost or insurance coverage on a home was $200,000 and the Other Structures (Coverage B) on the policy was 5%, 5% of $200,000 would provide $10,000 of coverage for detached items like a garage, barn, shed.

Typical perils covered are fire, wind, hurricane, theft, leaking pipes, lightning but keep in mind that there are exceptions to what is covered on a homeowners insurance policy.  Some examples of perils not automatically covered on a typical homeowners insurance policy are:

  • Flood-which is damage from rising water outside the house. In ordered to be covered for flood damage, you must purchase a separate policy, which we highly recommend you look into because approx.25% of all flood claims result from what are considered low-flood risk prone areas.
  • Water backup/sump pump-while most policies cover burst or leaking pipes they do not cover problems from the pipes OUTSIDE the house. The good news is this important coverage can usually be added for a reasonable amount(i.e$50)
  • Damage caused by termites and pests
  • Routine wear and tear of items such as ac units, appliances or any items neglected due to poor maintenance. You can avoid problems with these items by checking periodically or purchasing a separate home warranty plan.

Personal Property items (Coverage C) are anything that would fall out of your house if it was picked up and turned upside down.  Typically the same perils for the structure are also covered for your personal items. Your policy will cover personal items up to a certain amount (usually 10%) offsite anywhere in the world.  This includes items in your cars as well as your kid’s stuff while away at college.

For example, if the personal property coverage was 50% of the Coverage A Dwelling coverage of $200,000, then you would have $100,000 of personal property coverage maximum. If your kid was away at college with their stuff, it would be covered up to a maximum of 10% of $100,000 or $10,000.

We recommend you do a home inventory of all your personal property items to help estimate the Replacement Cost New, not the actual cash value, or depreciated value of your items. This can help you work with your agent to determine how much coverage you need plus would help the insurance company when you went to file a claim for these items.

Also, keep in mind that higher value items like jewelry, fine arts, guns, stamps, and musical instruments are limited in the coverages on a standard homeowners insurance policy.  Jewelry for example, typically is only covered up to $500 or $1000 on a policy but the wedding ring alone may cost $10,000 to replace.  If these items mean a lot to you, have an appraisal done and be willing to pay additional premium.  Your agent can quote these additional premiums for you on a case by case basis.

Liability covers harm to Others that happens in your house or on your property. For example, say a friend was at your house for a party and they either stepped in a hole in yard or tripped over something inside your house and fell down and were injured. If they threaten to sue you, your liability protection could kick in and protect you. This coverage typically starts at $100,000 but can be increased to $300,000 for a minor amount.

If you own a lot of assets or a business and feel you need even more protection, you can purchase an Umbrella policy, which provides an “umbrella” layer of coverages on top of the home and auto policies.  Amounts range from $1million to $5million and can be obtained for only a few hundred dollars a year.

Things that can increase your risk of liability are pools, trampolines and aggressive pets.

Also included in the homeowners insurance policy is Medical Expense coverage which covers the party scenario above.  If your friend was injured on your property, you could offer to reimburse them for some of their medical expenses and hopefully avoid being sued for much bigger expense.

Keep in mind that medical expense coverage does not apply to injuries sustained by anyone in your house or for activities related to an at-home business. They are for injuries to others. If you had a home-based business and brought a client into your house and they slipped and fell, there is no coverage because a homeowners insurance policy is for personal use, not business use!

Loss of Use (also known as Additional Living Expenses) is covered on the homeowners insurance policy when someone is no longer able to live at their home and they incur additional living expenses living elsewhere.  This coverage is separate from the coverage to repair or rebuild your house.  If you had to stay in a motel or purchase food at a restaurant because you can no longer live in your house, this coverage would then apply.  Keep receipts of all expenses as this is done on a reimbursement basis.

Also, if you own a property that you rent out to someone else, and the tenant has to move out due to a covered peril such as fire or windstorm damage or tree falling on house, you can be compensated for the Loss of Rent since the tenant should not pay since they don’t live there while house is being repaired.

How Much Homeowners Insurance Coverage Do I Need?

Very simply, insure to rebuild the house with similar labor and materials to current building code. Do not go by the purchase price of the house, amount of mortgage loan (mortgage covers land too), or what the tax assessor says its worth.  Most insurance companies do a replacement cost estimate to cover this very thing.  This is one reason we ask so many questions about the features of the house, to do an accurate replacement cost estimate to make sure we can rebuild your house if it is totally destroyed!

It is important to provide accurate information to your agent and to discuss this to avoid being either over-insured (which results in you being overcharged) or underinsured (and not being able to rebuild your house).  Remember that housing prices go up and down depending on many factors but the Cost to Rebuild your house tends to almost always go up over time.

What Perils Are Covered On My Homeowners Insurance Policy?

The most common type of homeowners insurance policy is the HO-3 Special Form as it covers almost anything bad that can occur to your property with specified exclusions.  Perils may include:

  • Fire or lightning
  • Falling objects
  • Windstorm or hail
  • Weight of ice, snow, or sleet
  • Explosion
  • Accidental discharge or overflow of water or steam
  • Riot or civil commotion
  • Sudden and accidental tearing apart, cracking, burning, or bulging
  • Aircraft
  • Vehicles
  • Smoke
  • Vandalism or Malicious Mischief
  • Freezing
  • Theft
  • Sudden and accidental damage from artificially generated electrical current

The above list covers a lot but it does exclude things like sinkhole damage. Sinkhole damage is defined as the cracking or settling throughout your house whereas your policy usually includes “catastrophic ground cover collapse” (think of what the media called the Land O Lakes sinkholes which swallowed the houses in summer of 2017).

Insurance policies are not all the same and should be reviewed carefully with your agent and read later by you to make sure you have the coverages you need.  While price is a big and legitimate concern, in my years of writing homeowners policies, I have had several clients tell me that they wish they had purchased some of the additional coverages available after they had filed a claim that cost them thousands!

What Are Deductibles?

Deductibles are a certain amount of money that the homeowner has to pay when they file a claim before the insurance coverage kicks in.  For example, most homeowners insurance policies have standard deductibles of $500, $1000, $2500, or $5000.  The higher deductible you pick, meaning you’re willing to spend more out of your pocket in a claims situation, generally means your overall premium should come down.  Lower deductibles result in higher premiums.

There are typically two categories of deductibles on a homeowners insurance policy; the All other perils deductible and the Hurricane deductible.

The hurricane deductible is expressed as a percentage of the dwelling or building coverage. For example, if you have a 2% hurricane deductible, then on a $200,000 replacement cost on your house, 2% of $200,000 is $4000 you have to pay out of your pocket for a hurricane claim(unless a total loss).

The all other perils deductible is the one that applies for all other perils other than a hurricane. For example, if you had a leaking pipe, your deductible or out of pocket expense might be $1000 or $2500 depending on what you chose.

Are All Insurance Companies the Same?

No, they’re not. There are a lot of insurance companies available but they have different amounts of experience, offer differences to the standard Ho-3 policy, have differences in financial strength and ability to pay claims.  Insurance policies are not all the same either so we recommend you contact an experienced agent like Scott Love Insurance to take care of your insurance needs.