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Home Insurance Regulations in Florida


Home insurance or hazard insurance is inextricably linked to the legalities of a real estate purchase.  The function of home insurance is to provide the lender with peace of mind in the event of property experiences damage or some other kind of loss. In addition to property damages or loss, home insurance also protects the owner against accidental injury for which the owner may be legally responsible. In effect, the mortgage lender is protecting their property from loss because the property stands as collateral for the home loan mortgage.  If anything should happen to lessen the value of their collateral, the less they can recuperate should the property be sold or go through foreclosure. 

Forced-Placed Insurance 

It is notable to mention that Florida does not require a homeowner to purchase home insurance by law.  However, the mortgage lender will most likely make this a requirement.  This requirement is usually set out in the mortgage loan terms. If the homeowner refuses to obtain home insurance even when required by the loan terms, the lender has the authority to obtain insurance on the buyer’s behalf.  In this scenario, the policy is said to be “forced-placed” on the property and buyer is responsible for the payment of the insurance premiums, which is added to the loan repayment bill. Unlike a buyer obtained home insurance, forced-placed insurance is rather pricey.  That is why as a homebuyer, you are better off shopping around for an affordable policy to protect the property. 

Coverage Types 

Although Florida does not mandate homebuyers to obtain home insurance, they do have directives on the types of coverage that should apply.  Florida breaks down the coverage types into varying categories.  These specific categories will have limits, which means that when loss or damage falls within a specific category, there is a dollar limit as to how much the insurance will payout.  For example, if your expensive ring falls down the drain, you may only claim $2,000 for that piece of personal property even though the ring is worth $5,000. The categories include Coverage A, which is for the dwelling place itself and Coverage B, which is for other structures on the property.  Coverage C covers personal property whereas Coverage E and F cover personal liability and medical payment to others respectively. 

Possible Pitfalls if Loss Occurs 

Although you will feel much more secure with home insurance, there are some possible pitfalls associated with this real estate insurance.  These pitfalls do not come into play until loss occurs. The deductible associated with the insurance policy is important.  The insurance deductible is the out-of-pocket expense that the policyholder pays before the insurance policy starts paying out. High deductible can render the policy useless for damage with lower amounts.  The policy will have a high amount deducted from the payout as well.  Other pitfalls are the limitations placed on the category of loss.  Higher limitations are ideal, however, these types of policies tend to have higher monthly premium. 

West Palm Beach Real Estate Attorney 

Homebuyers should contact an attorney who has his or her interest in mind when shopping around for home insurance. The attorney can advise the homeowner on the mechanics and legal implications.  The Law Offices of Larry E. Bray, P.A. in West Palm Beach has years of experience advising individuals on home insurance and other real estate issues. We are here to ensure that your interests are fully met.


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