Whoever said owning a home was a good idea clearly never had one on the coast. So much money has already been spent when buying a home that the temptation is to find the cheapest insurance possible and go with that. But is that is a good idea? What are you actually getting when you go with the most affordable home insurance available? If it's a new home purchase or if it's been a few years since you last looked at it, here are some things to consider when insuring your home.
Coverage A - The main structure
This is what I call the "big number", the main one that everyone looks at some people never look past. It is NOT always the price you paid for the house, the amount of your loan, or the market value of the house. It IS the cost to rebuild the home, or at least it should be. So how do you come up with that number?
Ask a local builder what is the average cost per square foot for a similar style home and multiply that by the number of square feet (not the # you want it to be). Your floorplan is listed on the property appraiser website (see resources below) so that's what the insurance company will defer to. The value of the land should be left out because odds are it wont get blown away or stolen. That's a good start, but insurance agents use software called Replacement Cost Estimators that give a much more accurate valuation. The more detail the better, it goes into types of flooring, windows, exterior features, door quality, you name it.
Little things like age, updates, siding, roof material, or special features like fireplaces or patios make a big difference in the value. This gives the home insurance agent a starting point and the insurance company a reference point. When using the replacement cost estimator below, you can leave out your address and just fill in the required spots.
The cost to rebuild your house may have changed in the last few years since you looked at it. The price of building materials is very dependant on the market and right now prducts are scarce and building is hot. Some policies have a built-in increase in coverage every year but most need to be revised every so often to account for inflation.
You can see why many people never look past this number, they just want to know their home will be rebuilt if it burns down. It can be exhausting (and sometimes annoying) just getting this far, but your homeowners insurance policy has lots more to offer.
Coverage B - Other structures
This one is often undervalued because people are already sick of insurance at this point and it's a quick way to lower the premium, but hang in there! This is the cost to rebuild Other Structures on your property, such as a carriage house or detached garage or shed. In Seagrove, Watercolor, Seaside, Rosemary, Inlet Beach and nearby this is a big deal because those other structures didn’t come cheap, often totaling hundreds of thousands of dollars.
Coverage B is a % of Coverage A so it's easy to overlook but makes a big difference in price, that's why agents knock it down so much. I recently quoted a home that had a two story carriage house with garage underneath, worth about $250,000, but only had it insured for 10%. It was really only insured for $80,000 (because coverage A was $800,000), less than a third of what it should be. Take care to examine this one becasue you could be overpaying as well if you have no other structures
Lasltly, separate flood policies are needed for each structure so make sure to ask about that.
Coverage C - Contents
Contents are also usually a % of Coverage A (50% is common) but the more important thing with this coverage is whether it is Replacement Cost or Actual Cash Value, often abbreviated as RCV or ACV. Replacement Cost is what you want and it's not always obvious on a quote which one it is so MAKE SURE you find out before choosing companies.
An easy example is to imagine replacing everything in your house with items from a thrift store (ACV) or buying it new (RCV). The coverage on your quote may say $100,000 but if there were a claim and you had ACV, you could expect far less than that. Like way less.
We're happy to answer any questions about home insurance, the value of your home, how much you should be paying, or general questions about anything at all! There are plenty more factors that go into the price, please take time to look past the first number and get a policy that will take care of you. Feel free to contact us anytime, quotes are always free!
Bay County Property Appraiser website
Walton County Property Appraiser website
Okaloosa County Property Appraiser website
Santa Rosa County Property Appraiser website
Replacement cost estimator - www.building-cost.net
Norton Insurance has been writing homeowners insurance, auto insurance, business insurance, commercial property insurance and more for over 35 years in Florida. Contact us today!
The views expressed here are the opinion of the author and do not attempt to make any recommendation for insurance coverage. Eligibility is determined by the insurance carrier and not all applicants will qualify. Please contact your licensed insurance agent regarding your area's coverage and eligibility.