By Rod Davis, CEO BBB serving Southeast Florida and the Caribbean
Floridians are blessed with mild winters, beautiful beaches, and, according to the Insurance Information Institute, the highest annual premiums for home insurance of any state. When I received my notice this year that my insurance was about to increase by $600, I decided it was time to get some quotes and compare my options.
Insurance can be confusing to most homeowners. This data from the Insurance Information Institute shows how much we collectively need to learn to be better consumers.
- 43% of homeowners believe their homeowners insurance covers flood insurance
- 60% of homes in the U.S. are underinsured
- 44% of consumers comparison shop for home insurance
Getting Started – Background Information
Homeowners insurance is generally broken down into 6 areas:
- Dwelling coverage protects damages to the home and everything attached (e.g. garage, carport, in-ground pool, etc.).
- Other Structures cover fences, driveways, sheds, etc.
- Personal Property covers the items housed on your property (e.g. jewelry, laptops, furniture, etc.).
- Additional Living Expenses coverage provides assistance if your home becomes unlivable and rent or other expenses incurred due to property damage make your residence uninhabitable.
- Personal Liability provides coverage and protection to you if someone is injured on your property.
- Medial Fees to Others can be used to pay for injuries to visitors on your property and can, especially if the injury is minor, provide a way to resolve these issues.
Preparing Information to Obtain Consistent Quotes
Many people think the upper limits on the declaration page of the insurance policy as the amount they will receive if their home is destroyed. There are restrictions and terms that homeowners, and especially those of us in Florida, need to understand as we review insurance options.
Some insurance provisions provide actual cash value (ACV) to replace property while others provide replacement costs. ACV is based on the cash value of the property, but also factors in depreciation so a homeowner seeking to rebuild based on funds provided on an ACV basis, may have to make up the amount lost to depreciation to fully rebuild. Replacement costs, on the other hand, provide the full amount to replace your items.
As you put together your proposal for quotes, make sure to identify whether your plan is based on ACV or replacement costs. Additionally, know how much it will cost to rebuild your home and the full value of your personal property. The more detailed and documented your Items (e.g. cost of jewelry with receipt) the faster and more likely you will be to obtain reimbursements to make you whole. Most plans also have limits and if you have collectibles, additional coverage for a painting, and very expensive jewelry may be needed.
Once you have your information together and enough information to make sure you have the best coverage for your situation/needs, you can request proposals directly from insurance companies and insurance agents. Some agents work only with one insurance line while others gather proposals and work with several insurance providers.
I used the BBB to request a quote option to get quotes and that tool makes getting proposals easier for the consumer. Go to www.SEFlorida.App.BBB.org/Connect and enter Homeowners Insurance and your zip code.
You can upload a file with your current insurance coverage or any document summarizing what you are seeking. You can also indicate if you want to receive responses by email or phone.
Once I had my three proposals, I laid them out side by side, and found the two that provided the best coverage and value. My last step was to check out the insurance company profile. It is important to have an insurance company that has a good track record of working with their customers when claims are filed (check with BBB, Google, etc. for this), has a solid financial rating (check on A.M. Best for this), and provides clear and comprehensive coverage to protect you and your property. I was able to save $600 and obtain coverage from a quality insurance company, so it is worth taking time to obtain comparative quotes and BBB can help make that process easy and fast.
As a last reminder, homeowners insurance does not cover flood damage, so visit www.FloodSmart.gov to learn about flood insurance and if you might need that added protection.