I get this question often: Chris, what will I need for insurance?
First, the easy answer. If you do not have a mortgage then you don’t ‘need’ any insurance.
If you do not have a mortgage then you do not have to have the following but you really should consider if the risk if worth it. If the property is financed then your lender will require:
1) A Home Owners Policy for things like fire, water leaks, theft and liability. Liability is really what your after here for most of us. You should consider this for detached homes as well as condominiums and town homes. This policy typically covers NON-named storms.
2) A named windstorm policy for named storms a/k/a hurricanes. This is the big ticket item and can run several thousand dollars a year. If your home was built after 2002 (under the 2001 Florida Building Code) you’re in good shape. If it was built prior to 2002 you should apply for wind mitigation credits for things like hurricane shutters. The best time to do this is at the property inspection. Ask you insurance agent for the forms. These credits can save you as much as 70% of the unadjusted premium.
If your buying a property in a condominium then it almost certainly has a named wind storm policy however keep in mind that this policy ONLY COVERS THE ASSOCIATION PROPERTY. This is typically from the unfinished floors and walls outward. So this policy would cover the structural elements and the drywall but not the flooring, paint, light fixtures, carpet, tile, CABINETS & COUNTERS, etc.
3) A flood insurance policy. These are for floods or when the water comes up from below into your property. If you’re in a condo then probably only the first floor is affected. If you have a mortgage then it is required if the property is in an ‘A’ Zone AND the living space is below a certain elevation. To determine the flood zone the property is in go to the FEMA web site https://msc.fema.gov/portal/
Then you will need an elevation certificate which is done when the property is surveyed if it’s a single family home or a town home. If it’s a condo then the agent may be able to determine if a policy is required by your lender by looking at the association policy.
Don’t forget that these policies are paid for in advance. If you are financing the purchase then the premium is collected at the Closing and the policy paid. Then the lender collects 1/12 of the renewal premium every month.
While I’m certainly not a fan of insurance I can see why a lender would require it and why it’s something we all should consider the necessity of having in place.
