Insurance Issues

Here we outline the basic requirements for home insurance in Florida

Homeowners DP1 & DP3 Insurance Policies

DP1 and DP3, are the two types of basic policy on file with the State of Florida Insurance Department and available to short-term-rental homeowners. The selection of cover then determines the policy issued and to some degree the insurer.

DP1: covers losses at Actual Cash Value (ACV) rather than the more favorable Replacement Cost (RC). The basic difference is depreciation. ACV takes into account the annual depreciation; RC replaces the item with new. The DP1 covers the following specific perils: Fire, lightning, explosion, wind & hail, smoke, aircraft, riot & looting, vandalism, sprinkler leakage, sinkhole collapse, volcano/lava.

DP3: adds everything else to the perils covered in a DP1 unless it is specifically excluded: like earthquake and flood, in Florida. A DP3 covers a loss at RC, as opposed to ACV. In brief, the DP3 is?the far more comprehensive policy, and therefore? more desirable, but?obviously more expensive!

Flood Insurance

Many people wrongly believe that the U.S. government will take care of all their financial needs if they suffer damage due to flooding. The truth is that Federal disaster assistance is only available if the President formally declares a disaster. Even if you do get disaster assistance, it's often a loan you have to repay, with interest, in addition to your mortgage loan that you still owe on the damaged property.

Most importantly, you must consider the fact that if your home is flooded and disaster assistance isn't offered, you'll have to shoulder the massive damage costs alone. The bottom line? If you're looking for secure protection from financial loss due to flood damage, Federal disaster assistance is not the answer.

Buy flood insurance and stay protected no matter what.

When disaster strikes, flood insurance policyholder claims are paid even if a disaster is not Federally declared. Flood insurance means you'll be reimbursed for all your covered losses. And unlike Federal aid, it never has to be repaid.
As long as your community participates in the National Flood Insurance Program (NFIP), you're eligible to purchase flood insurance. To find out if your community participates, check the Community Status Book on FEMA.gov. Only 7 localities in Florida do not participate, and these are not known as vacation home areas. As a homeowner, you can insure your home up to $250,000 and its contents up to $100,000. If you're a renter, you can cover your belongings up to $100,000. As a non-residential property owner, you can insure your building and its contents up to $500,000.

In general, a policy does not take effect until 30 days after you purchase flood insurance. So, if the weather forecast announces a flood alert for your area and you go to purchase coverage, it's already too late. You will not be insured if you buy a policy a few days before a flood. A flood insurance policy is easy to get, affordable and offers invaluable peace of mind. With flood insurance, you know you're covered no matter what.

Use the risk assesment form at floodsmart/riskassesment to check the flood risks of your property. This FEMA operated website will also provide a list of insurance brokers offering flood insurance in your area.