Fyi Dont Buy Cheap Florida Condo Insurance
As an insurance broker for 15+years and a client as well
, I would like to point out why Florida condo insurance is so important to purchase properly.Many insureds are purchasing insurance based on the cost rather than on the product itself.
Seems you have to buy insurance since Florida passed the condo insurance requirement law or your mortgage lender demands you have coverage on your property. So you make some calls or jump on the internet hoping you find dirt cheap Florida condo insurance for almost nothing.
As they say you will get what you pay for. First of all you need to understand the insurance basics and the intent of the product. Condo insurance like other insurance products is not to reimburse you for minor losses of $500 or $1000, you could probably do that yourself by not paying the premium for one to two years. Insurance is a product to help you maintain a quality of lifestyle you may have worked hard and long to achieve.
For example, you worked hard & planned long to buy your condo so you could finally be the king. You spent a lot to renovate or buy nice things for your castle and even had to borrow to make it perfect. Shortly after a hurricane came along and managed to destroy the homestead. All those nice things ruined and the place looks like a scene from the war in Iraq. You bring the experts in to help you restore the castle, they estimate your going to need $38,000 to make it right again. The association will not help you as their policy only covers the common areas and not the interior of your apartment. The government wont help you either and youre going to have to try to get another loan to pay for it.
This situation would significantly change your lifestyle for whatever period of time until you can rebuild and recoup the losses. With a simple condo insurance policy this situation would cost you a small price of a deductible and you would have nothing to worry about.
Of course many of you refuse to live in realty and think it could never happen to you.
Your not susceptible to fire, theft, water damage, tornado damage, hurricane, flying objects
until it happens. I have realized there are certain amount of statistics the insurance companies dont share with the public such as claims.
For example, if your paying a Florida condo policy about $700 a year then in ten years you may have paid in about $7,000. One small claim in that period could result in an average loss of about $25,000. The insurance companies know they will need to pay at least one claim for every insured every 10 years. Taking this into account the longer you hold on to your policy consistently over a long period of time may provide security and benefits when you need it most.
And buying cheap condo insurance is ignoring reality and ending up with high out of pocket expenses and receiving an inadequate amount to make you whole again when tragedy strikes. I have seen this happen to many past clients with condo, home, auto insurance.
Now for the important part, how to buy good and adequate amount of insurance. For some its easier than others but for all they seem never to choose the right amounts.
We will discuss Coverage A Dwelling, this insurance coverage insures the interior construction of your apartment. Such as floors, walls, ceilings, bathrooms, kitchen etc.
Never choose the amount of Coverage A based on property sales value or purchase price or tax assessor values. This coverage needs to be estimated of a total value to rebuild the interior of your apartment. As a general rule we use an estimated fixed amount of $60 to $80 per square foot.
To fully insure your apartment interior you would multiply the square footage by cost. Such as a 1000 sq ft times $60 would require $60,000 of coverage A to replace the interior at 100%.
Coverage C contents or personal property refers to everything else including appliances, TVs, furniture etc. There is usually a minimum the carrier requires to be maintained and anything above that needs to be calculated by you as no other person will have the same exact items in their apartment.
Personal liability is also important and typically the choices are either $100,000 or $300,000 which may cost about $15 more for the higher. This will protect you from damage to others if they should file lawsuits against whether you were negligent or not.
These are the key important coverages to choose from and there are others with less importance which we will get in to next time.
When choosing a carrier in Florida you will not have many choices as the major players have all left the state many years back. Look for one that is admitted by the state. This means it has registered with the state and is approved to be legitimate. If they should not be able to pay claims the state will make good from the reserve it holds to pays such claims when companies default.
They should also have some type of rating of A- or better and may not be rated by AM Best or Moodys as they are not in their league. Make sure your carrier has an 800# and call them to see how fast they will pickup the phone if you need to make a future claim.
The agent is a broker and will pair you with a proper company. The company is who you want to deal direct with after if you have a claim or billing issue, the agents job is strictly policy service. Try to use email service for contacts & service, its more reliable and faster to get your needs met.
Remember, choose proper coverages with a well rated admitted company without worrying about the costs as the key decision. In the long term it will pay off.
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