Is there a component of homeowners insurance that is getting more expensive because of a rise in a certain type of disaster?
Since the hurricanes of 2005, many hurricane and wind deductibles have increased. This has become such a big problem that some of the larger insurance companies are pulling out of Florida because they can’t make money.
What can homeowners do to increase their coverage?
First, it is vital that homeowners verify they are properly covered for all the different losses they may incur. For example, many people believe if they don’t live in a flood plain, they shouldn’t have flood coverage. However, if a storm drain clogs and causes water to leak into a home, that is considered a flood by the insurance company.
Additionally, a homeowner should ensure the policy has proper Law & Ordinance (L & O) coverage (e.g., code upgrades). If it’s an older house, it should have at a minimum 25 percent L & O coverage. This type of coverage is important because it will provide funds to meet any new code upgrades that may have changed since the home was constructed (e,g., framing tie downs, windows, insulation, etc.). As an example, if the dwelling coverage is $100,000, then there will be an additional $25,000 specifically for code upgrades. Note: these funds can only be used for code upgrades and the insurance adjuster will require documentation from the contractor.
