Five Tips for Agreeing to Terms on Homeowners Insurance Coverage

If you’re a resident of Florida, or are contemplating a Florida home loan in the near future, the issue of homeowner’s insurance is an important one to focus on. More and more companies are refusing to write new policies in vulnerable areas such as this, while others are canceling policies in order to help their bottom line.

With that problem in mind, here are five tips concerning what you can do if you find yourself without coverage …

1. You have options

If your insurer refuses to renew your policy coverage, don’t worry about it. States as populated as Florida have hundreds of insurers you may not know about. The Internet has opened up many more opportunities to find these players.

If you do live in an area that has seen more than its fair share of natural disasters, chances are your state has set up a joint underwriters program that sells insurance to people who can’t get coverage in the private market. This should really be a last resort, however. These policies are expensive and don’t give you as much coverage as a private insurer.

2. Get the blueprint
There are three basic ways you can get coverage: Go to one of three insurance behemoths - State Farm, Nationwide and Allstate. Here you will work with one agent who will assess your situation and suggest policies within that company for you. You’ll be paying commissions of about 15 to 18 percent generally.

You can also go through independent insurance agents who can help you compare quotes from several large insurers, but you’ll be paying about 20 percent in some cases.

The cheapest option may be to call agents like AIG Direct or Geico and avoid commissions altogether. Unfortunately, there aren’t many homeowner policies that are sold directly by the seller.

3. Meet your needs
Make sure you know how much insurance you’re going to need. Estimate how much it would cost to replace your home by calculating how many square feet you have and multiply that number by the local construction cost per square foot for homes in your neighborhood.

To find out these construction costs, call your local real estate agent or builders association. Websites such as InsWeb have free cost calculators.

4. Shop around
Get quotes from direct sellers and Websites like insure.com. You always want to see what the smaller guys are offering before you go to a large insurer. This way you may have more leverage as a customer.

5. Get flood insurance
We’ve all seen the headlines about how financially strapped the Federal Flood insurance program is. That shouldn’t deter you from getting flood insurance, however, especially if you are taking out a Florida home loan. This region is obviously affected by this type of disaster.

Considering that flooding is the most costly natural disaster in the U.S. - and only about 1 in 4 homes in high risk areas carry this kind of protection - you should think about this coverage.

Conclusion: There are many policies available to potential or current homeowners. Another example is title insurance. Those thinking about a Florida home loan need to consider their surroundings and at least insure themselves during hurricane season.