and includes theft of or damage to personal property contained in the house, and liability protection for the owner in the event of a non-resident being injured while on the property.
Lenders don't usually require these theft or liability coverages, they are for the owner's personal financial protection.
The geographic location of a property contributes to its risk profile and determines other coverages that are suggested or required in addition to a standard hazard policy.
Here in South Florida, lenders require additional windstorm and flood coverage
when the property is in an exposure risk zone.
Standard homeowners hazard policies do NOT include flood
or windstorm (hurricane) coverage. These are considered
separate risks and are covered by separate policies.
We have discussed NFIP flood zones, flood maps, and coverage a few times in earlier newsletters, so I won't go into full detail in this one. Look for a more in-depth Flood Insurance followup in a few weeks.
(Click the NFIP logo to reach the program's homepage)
The general idea is that zones on a FEMA flood map indicate the relative risk of flooding, and a property's location on that map (along with it's Elevation Certificate) show it's basic flood exposure and risk.
Lenders require coverage when the property is located in any A or V zone on the Flood Insurance Rate Map (FIRM), which are considered areas of higher flood risk.
Maximum coverage under NFIP Flood Insurance for single-family properties is
$250,000. If you feel this maximum is low in relation to property values in your area and neighborhood, keep in mind that
complete destruction of a property rarely occurs during flood conditions.
Most common flood losses are to
electrical outlets, and
Due to the potential for significant flood loss payouts, there are
few (if any) insurance companies willing to write additional coverage outside the federally-administered NFIP. Only recently has the
Florida Office of Insurance Regulation
(click for link) even considered applications by a few companies to write
(non-NFIP) Flood Insurance.
For windstorm (hurricane) coverage, there are also specific higher-risk zones.
In Collier and Lee Counties along the Gulf coast, this higher-risk wind zone extends from the Gulf shoreline to 1000 feet (about 2/10 of a mile) inland and includes all barrier islands.
In Miami-Dade, Broward, and Palm Beach Counties along the Atlantic coast, the higher-risk wind zone includes everything between I-95 and the Atlantic Ocean, which can be a few miles wide in some places, and very densely populated.
All of Monroe County (The Keys) is in the higher-risk wind zone.
Lenders require windstorm coverage on most all properties in South Florida, whether or not they're in the higher-risk zone.
Property owners in some windstorm higher-risk zones (direct coastal for example) have had difficulty obtaining coverage from public companies, and are often placed with
Citizens Property Insurance Corporation, a not-for-profit property insurer run by the State of Florida.
(Click the Citizens logo to reach the company's homepage)
In South Florida when a tropical storm or hurricane is
approaching and within a couple hundred miles or so,
insurers stop writing new property coverage.
If a real estate closing is scheduled during this time and the buyer does NOT already have the required windstorm and flood insurance in place, the transaction will NOT close until after the storm passes, the property is inspected for damage, and insurance is in effect.