Homeowners Insurance FAQs
Top 5 Common Concerns
I bought my home for $300,000 but my insurance company says I only need dwelling coverage for $240,000. Why can’t my home be insured for its full purchase price?
Insurance policies generally provide a coverage limit that is based on the cost of rebuilding a structure if it is destroyed due to a covered loss. This cost to rebuild is called the Replacement Cost. The Market Value includes items such as the value of the land. On the other hand, the Replacement Cost Value does not include the land value because your land is not being insured for property damage.
Most Replacement Cost policies require you to carry a coverage limit equal to a certain percentage of the replacement value. An insurer can require you to carry a coverage limit of 80% 90% or 100% of the Replacement Cost. So, if the total Replacement Cost of your property is determined to be $240,000, insurer A may require you to carry at least 80% of the Replacement Cost coverage limit, which is $192,000; insurer B may require you to carry at least 90% of the Replacement Cost coverage limit, which is $216,000; and insurer C may require you to carry 100% of the Replacement Cost coverage limit, which is $240,000.
If you do not carry the limit required by the insurer, the insurer may not fully cover your loss by applying a penalty. As an example, if you carried $100,000 coverage limit for your dwelling when in fact the amount needed to meet the policy requirements is $200,000.00 and you have a loss of $50,000, the insurer would only pay $25,000 which is 50% of the claim.
The formula used in the example above is the amount of insurance carried divided by the amount of insurance needed, times the amount of loss, equals the amount payable for the claim by the insurance company.
I filed a claim more than 30 days ago and the insurance company hasn’t resolved it or issued any payments. Can they do this?
Within 60 days after a company receives notice of a new, reopened or supplement property insurance claim (damage to property only), the company must pay or deny the claim or a portion of the claim unless the failure to pay the claim or a portion of the claim is caused by factors beyond the control of the company.
My premium went up significantly from last year’s policy. How is this possible?
Insurance companies must submit their rates to the Office of Insurance Regulation (OIR) and justify the need for any increase. The OIR reviews these rates to ensure they are adequate for the company to continue paying claims. If the company has justified the rate increase with actuarial evidence, the OIR is required to approve it.
The company sent me a non-renewal notice. However, I have existing damage on my home. I thought the insurance company was not allowed to cancel policies with an open claim/existing damage?
There are no laws that prohibit an insurer from nonrenewing a property policy if you have a pending claim except for the following: Only upon a declaration of an emergency pursuant to s. 252.36, Florida Statutes, and the filing of an order by the Commissioner of Insurance Regulation, an insurer cannot cancel or non-renew a personal or commercial residential property policy if the insured has damage from a hurricane or wind storm until 90 days after the repairs have been made. The structure is considered repaired when it has been completely restored to the extent that it is insurable by another insurer. The insurer may however, non-renew the policy with 45 days of notice if the insurer determines the insured has unreasonably caused a delay in the repair of the structure, there has been a material misstatement or fraud related to a claim, or if the insurer has paid the policy limits.
My policy was cancelled, and I still have not received my refund. Isn’t the insurance company supposed to send my refund during a certain timeframe?
When a Property Policy is cancelled by the insurer or the insured, any unearned premium must be returned to the insured within 15 working days after the effective date of the cancellation (unless the policy is subject to an audit). If the premium is financed with a Premium Finance Company, the unearned premium must be returned to the Premium Finance Company.
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