Insurance is a critical element that has to be included in your financial calculations regarding a Florida property.

There are a number of different insurance's that will be more or less important depending on your circumstances.

HOMEOWNERS INSURANCE
This is the most important insurance wrapper, covering what would normally be separate buildings and content cover in the UK.

When you take out homeowners insurance, make sure you insure for the total amount it would cost to rebuild your property if it were destroyed, and to replace your possessions. If you don't have sufficient insurance, your insurance company may only pay a portion of the cost of replacing or repairing damaged items.

There are three main ways to insure the structure of your home:

• Replacement Cost. Insurance that pays the cost of replacing the damaged property up to an agreed limit but without any deduction for depreciation.
  
  
• Guaranteed Replacement Cost. Insurance that pays the full cost of replacing damaged property, without a deduction for depreciation and without a dollar limit. This coverage is not available in all states and some companies limit the coverage to 120% of the expected cost of rebuilding your home. One of the uses of this type of insurance is to provide protection against a sudden increase in construction costs due to a shortage of building materials following a natural catastrophe – which do happen in Florida.
  
  
• Actual Cash Value. Insurance that pays an amount equal to the replacement value of damaged property minus an allowance for depreciation. Note – unless your policy specifies that property is covered for its replacement value, you can assume the cover is for actual cash value.

Local real estate appraisers and builders’ associations keep track of a key figure – the “local building cost” – for different house types. Multiplying this by the total square footage of your house gives you a quick estimate of the cost of rebuilding your home to make sure you are adequately insured.

This rough figure has to be combined with additional factors to get a more accurate cost:

• Type of exterior wall construction
  
• Style of the house (ranch, colonial, etc)
  
• Number of rooms
  
• Number of bathrooms
  
• Type of roof
  
• Attached garages, fireplaces, exterior trim
  
• Special features like arched windows

You should check the value of your insurance policy against rising local building costs each year. Ask your insurance agent or company representative about adding an "Inflation Guard Clause" to your policy. This automatically adjusts the limit when you renew your policy to reflect current construction costs in your area. Also, be sure to increase the limit of your policy if you make improvements or additions to your house.

HOW TO SAVE MONEY ON HOMEOWNERS INSURANCE

Shop Around
Friends, family, the phone book and Internet are some of the sources you can use to find homeowners insurers. Get a wide range of prices from several companies, but don't consider price alone. The insurer you select should offer both a fair price and excellent service. Quality service may cost a bit more, but you really appreciate it when you have an insurer you can depend on in an emergency.

Don’t Shop Around!
Some companies that sell other insurance's – such as car and liability insurance – will take 5-15% off your premium if you buy two or more policies from them.

Raise Your Deductible
Deductibles are the amount of money you have to pay toward a loss before your insurance company starts to pay. Deductibles on homeowners policies typically start at $250 and you can save 10-30+% on the policy depending on how much you are willing to pay per claim.

Hurricane Deductible
You should be aware that there is a law in Florida that establishes a special-case relationship between hurricane deductibles and policy discounts. About 70% of Florida homeowners take advantage of a system that gives them a discount on the wind related portion of their policy in return for accepting a special deductible for hurricane related damage that amounts to 2% of the policy limits.

Buy With Insurance In Mind
When looking at potential properties to purchase, consider how much they will cost to insure. A new home's electrical, heating and plumbing systems and overall structure are likely to be in better shape than those of an older house. Insurers may offer you a discount of 8-15% if your house is new. Check the home's construction; is it the best choice for the area? The closer your house is to the local firehouse or other major fire fighting equipment … the lower your premium will be.

Insure The House, Not The Land
The land under your house isn't at risk from theft, wind, storm, fire and the other risks covered in your homeowners policy. So don't include its value in deciding how much homeowners insurance to buy. If you do, you'll pay a higher premium than you should.

Improve Home Security And Safety
You can usually get discounts of at least 5% for a smoke detector, burglar alarm, or dead-bolt locks. Some companies offer to cut your premium by as much as 15-20% if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police station or other monitoring facility. These systems aren't cheap and not every system qualifies for the discount. Before you buy such a system, find out what kind your insurer recommends, how much the device would cost … and exactly how much you'd save on premiums.

Stop Smoking
Smoking accounts for more than 23,000 residential fires a year. That's why some insurers offer to reduce premiums if all the residents in a house don't smoke.

Act Your Age
Retired people stay at home more and spot fires sooner than working people and have more time for maintaining their homes. If you're at least 55 years old and retired, you may qualify for a discount of up to 10% at some companies.

Be Loyal
If you've kept your coverage with a company for several years, you may receive special consideration. As well as straightforward loyalty discounts, “no-claims” discounts may be available too.

Review Your Limits
You want your policy to cover any major purchases or additions to your home, but equally there is no point insuring items that you no longer own, use or value … or that have depreciated to the point where you couldn’t claim anything for them. Don't spend money for coverage you don't need.

TITLE INSURANCE
Title insurance protects your ownership right to your home both from fraudulent claims against your ownership that arise after you have bought it, and from title-related mistakes made in earlier sales. These might include a mistake in the spelling of a person’s name or an inaccurate description of the property. Worst case, title insurance protects you in case it is subsequently discovered that someone in your home’s history didn’t actually have the right to sell it. Yes, it happens!

Title insurance is a one-time cost, paid as part of the closing package and usually based on the price of the property. Taking out such a policy will trigger a thorough search of the appropriate public records relating to the property to establish the current status of the title.

There are separate policies for owners and for lenders. An owner's policy protects only the owner while a mortgage policy protects only the holder of the mortgage on the property. Separate policies are required to protect both interests, but special rates are often available when both owners and mortgage policies are applied at the same time.

Title insurance is often cheaper if the home has been bought within only a few years since not as much work is required to check the title.

FLOOD INSURANCE
Flooding (including storm surge from a hurricane, which is considered flooding) is not covered by a standard homeowners insurance policy.

To determine if you need flood insurance, ask your insurance professional, mortgage company or neighbours about the flood history in your area. If there is a potential for flooding, you should consider purchasing a policy that covers the structure and your personal belongings.

Flood insurance is only available where the local government has adopted adequate flood plain management regulations under the National Flood Insurance Program (NFIP), and not having flood cover where required will count as being under-insured (see above), resulting in under-payment of a claim that includes several elements including flood damage.