Nobody likes paying for homeowner insurance.
That’s been especially true in Florida, where over the past few years, as more frequent storms and high litigation rates have doubled the cost of insurance for just about everyone who owns a home.
It’s tempting for homeowners, particularly seniors on fixed incomes, to put off critical upgrades or reduce their insurance coverage to save money.
But doing so can leave people vulnerable, insurance experts say. With forecasters predicting an active hurricane season this year, agents urge everyone to review the conditions of their homes and the adequacy of their insurance policies.
They advise property owners to question whether their homes are strong enough to withstand hurricane-force winds, and whether their insurance policies offer enough coverage to enable them to rebuild if catastrophe strikes.
The South Florida Sun Sentinel asked insurance agents to identify common mistakes homeowners make prior to hurricane season. Correcting some will cost more money, while savings can be realized by fixing others.
Some will require construction upgrades that might not be doable before the upcoming hurricane season begins on June 1. But you’ll be in a better position whenever you can get them done.
Here are common mistakes identified by the agents:
Failing to replace your roof at the end of its life
Replacing your aging roof is one of the wisest investments a homeowner can make, says Chris Heidrick, owner of Heidrick & Company Insurance and Risk Management Services in Sanibel.
Not only does a new roof strengthen the home against hurricanes and other severe weather, it can make your house more attractive to insurers and reduce your premium, Heidrick says.
“I’d always advise homeowners to replace an old roof rather than try and repair it,” Heidrick says. “I’ve heard homeowners say, ‘My roof is not leaking so it doesn’t need to be replaced.’ That’s like saying, ‘The bald tires on my car still hold air, so I’m going to continue driving on them until one blows out.’”
In addition, the roof installation company will be required to rebuild your roof to meet modern construction codes, improving its protection against water intrusion and uplift from hurricane force winds.
A roof’s lifespan varies according to the materials it’s made of. If in doubt, hire a roof inspector to check it out and tell you how much longer it will last.
Not covering all of your home’s openings
You can spend tens of thousands of dollars to retrofit all of your home’s windows with impact-resistant glass, but if you fail to also upgrade your entry doors and pull-down garage door, most companies won’t provide wind-mitigation discounts required by the state for opening protection, says Robert Norberg, president of Arden Insurance Associates, an insurance agency based in Lantana.
On the other hand, Steve Rogosin, owner of Plantation-based Rogosin Insurance, says some companies won’t withhold the discount if all windows are retrofitted while openings that have no glass, such as entry doors, do not meet wind mitigation standards.
Some homeowners will spend thousands to install impact glass, then learn it didn’t create a larger discount because they already were getting a discount for having accordion shutters in their garage, Rogosin says.
“Always check with your agent to see if you are or are not getting the maximum opening protection discount,” he advises.
Opting for a higher hurricane deductible
Hurricane deductibles kick in for damage that occurs after a hurricane watch or warning is declared by the National Hurricane Center. Because the hurricane deductible is higher than deductibles for all-other-perils claims, state law requires companies to offer options of a flat $500, plus 2%, 5% or 10% of the dwelling’s replacement value.
Some insurers offer additional choices beyond those required by state law.
Most homeowners choose a 2% deductible, which means a homeowner with a $400,000 replacement value would see $8,000 subtracted from their claim check.
Because homeowners can reduce their premiums by accepting higher deductibles, many will swap a 2% deductible for a 5% deductible. They should only do that if they have an emergency fund that would cover the $20,000 shortfall that a 5% deductible would create, says Dulce Suarez-Resnick, vice president of NCF Insurance Associates in Miami.
“Remember, your deductible might be so high that when they deduct it from the proceeds there won’t be much left, or the damage falls under the deductible and nothing is paid,” Suarez-Resnick says.
In many cases, switching from a 2% deductible to a 5% deductible will save only a couple hundred dollars, Norberg says.
Mel Montagne, vice president of Insurance Office of America agency in Marathon, points out that the deductible is calculated as a percentage of the building replacement cost — and not the value of the loss as some assume.
Buying inadequate loss-of-use coverage
This is the coverage that pays for you to live elsewhere while your home is uninhabitable. Jacobson says opting for the minimum loss of use coverage — typically paying 10% of what your policy will pay to rebuild your home — will buy a mobile home that will be parked in your driveway. “Better coverage can mean a hotel or rental home,” he said.
Spending too much for personal property coverage
One way to reduce insurance premiums would be to switch from full replacement cost coverage to actual cash value coverage for personal property like clothing, appliances, furniture and electronics.
Typical policies cover personal property up to 25% of the dwelling replacement cost, with exclusions or limits for jewelry, watches, furs, and silverware.
While many homeowners want the peace of mind of being able to replace their aged goods with brand new products, the choice can add hundreds of dollars to their premiums.
Eric Jacobson, a retired insurance agent who lives in Tamarac, says he reduced his premium by more than $1,200 by making the switch to actual cash value.
Then again, reducing this coverage might not be worth it for homeowners with expensive furniture or a closet full of high-priced clothing, Heidrick says. Those homeowners might consider increasing their limit above 25%, he says.
Failing to buy Law and Ordinance coverage
Approaches vary between insurers on Law and Ordinance coverage, which is intended to cover the gap between the cost to replace your home as it was originally built and rebuilding it with improvements required by modern building codes.
Some insurers include Law and Ordinance coverage in their basic policy, while others allow homeowners to forego it and pay a lower premium.
The coverage offers 10%, 25%, or 50% over the replacement cost of the home to pay for such required upgrades as impact-resistant windows and doors, modern electrical systems and any number of unforeseen code requirements. Communities near the ocean might even require homes to be rebuilt on stilts. Law and Ordinance coverage would cover that additional cost.
All of the agents who contributed to this report strongly recommended that homeowners include it if they don’t already have it, even if it can cost $1,000 or more a year for 25% coverage.
Owners of older homes should resist any suggestions that they go without Law and Ordinance coverage, Suarez-Resnick says.
Heidrick concurs: “The older the home, the more important this coverage is. But even on newer homes, it is wise to take this coverage as building codes change over time and it is not the kind of thing most homeowners would remember to add to a policy as their home ages or codes change.”
Failing to review your policy regularly for potential discounts
Brian Murphy, owner of a Brightway Insurance franchise called The Murphy Agency in Palm Beach Gardens, recommends that homeowners speak with their agents and report improvements that could make them eligible for discounts, “such as newly installed roofs, windows, shutters, security systems, or updated plumbing and electrical systems.”
Homeowners might need to submit proof of the improvements by obtaining new wind-mitigation and four-point inspection reports, Murphy said.
Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071, on Twitter @ronhurtibise or by email at [email protected].
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