Owning a home in Florida is anything but cheap, so it’s no wonder many of us get sucked into risky money-saving habits. It’s true that while there are many smart ways to nab discounts on premiums – by installing a home security system or obtaining a wind mitigation report, for example – other ways can turn out to be more expensive in the end.
According to the Insurance Information Institute, homeowners tend to reduce their insurance coverage in an effort to save some money – a risk that could potentially leave a homeowner underinsured and on the hook for much bigger bills in the event of a disaster. Here are the three most common mistakes Florida homeowners make.
Insuring a home for its real estate value instead of rebuilding cost
Here’s a big misconception: when the real estate price of a property falls, homeowners should also bring down the amount of insurance they have on that property.
But in reality, insurance is designed to cover the cost of rebuilding the property, and not the sales price of the home. Homeowners should ensure that they always have enough insurance to rebuild the home from the ground up, as well as replace belongings. This is despite any fluctuations in the real estate market.
A better way to save is to raise your deductible, says the III. For example, increasing your deductible from $500 to $1,000 could save you up to 25 percent on premium payments.
Ditching flood insurance
Most Floridians are accustomed to annual visits from aggressive tropical storms, but not everyone is aware of their flood risk. Despite many Florida homes located in high-risk zones, few homeowners insurance companies cover flood damage.
Flood insurance must often be purchased separately from a standard homeowners policy, and many do so with the federal National Flood Insurance Program as well as with other private companies. Because of this, many Florida homeowners tend to avoid adding on an extra policy unless forced to by their mortgage provider.
But this is a rookie mistake, says the III, considering 25 percent of all flood losses occur in low-risk areas. A better way to save would be to look into mitigation efforts that can reduce your risk of flood damage and minimize your losses in the event of a flood.
Choosing an insurer based on price alone
Low prices can be attractive, but Florida homeowners need to look beyond the numbers to ensure they are completely looked after. Don’t get me wrong: it’s crucial to purchase from a company with competitive prices. You can compare quotes in seconds from insurers around Florida at HoneyQuote.com.
However, there are other factors homeowners should consider before choosing an insurance company. These include financial stability, customer service, and efficiency. Check out our Reviews section to see which insurers are killing it in these areas.