Different types of insurance homeowners  should be familiar with.

Different types of insurance homeowners 
should be familiar with.

December 1, 2016

There are 3 or 4 major
insurances that people ask about.  If you
have a bank mortgage they will require insurance in at least the value of the
mortgage, however, if you do not have a mortgage the choice becomes yours.
Title Insurance.  Depending upon the lot purchase agreement
used in the transaction either the buyer or seller is responsible for title
insurance.  If it is the buyer (and there
is no mortgage) you have a choice of getting title insurance or not.  The same applies to the house contract when
you build.  Title insurance is protection
from old liens, wrongful title transfer, and other items which ultimately may
cloud the title to the land being purchased. 
There are limits to what it protects against.  Usually its protection is against items which
have been recorded.  Unrecorded items may
have no protection in the insurance if they can be enforced.  While I encourage the purchase of title
insurance, particularily when dealing with an individual, there is no
requirement to buy it.  During the
construction process it can provide peace of mind for the new home owner.  If you employ a title insurance company to
both issue title insurance and to distribute the construction draws, you know
that an company experienced in Florida’s mechanics lien law will be releasing
the draws.  In the event of a lien, the
title company can be responsible if they should have found the lien as part of
their release of the draw.    Each issuing
company has different policies so it is important to look at the individual
Flood Insurance.  If your house is in a flood zone, and there
is a bank involved they will required you to have Flood Insurance.  The cost of this insurance varies from location
to location, however, in all cases the normal flood policy is a minimal policy
and will not cover your losses in a major storm event.  There are many areas over 8 miles from the
beach that are in flood zones, so if you are concerned you should check your
survey.  Any zone listed other than X is
a flood zone.  Typical flood insurance
has a $250,000 construction value. 
Contents coverage is purchased separately.  In our part of Florida with new construction,
flood insurance is protection from a major storm with high water levels.  The Hurricane of 2005 left little or no
damage to new construction built at or above the current flood levels.  However, in the event of a storm where we are
on the wind side of the eye with high tides it could be another story.  Most flood insurance is relatively
inexpensive and should be considered.
Property coverage,
including separate wind coverage if required. 
While most people automatically buy homeowners insurance there are those
that elect to self insure.  South Florida
is a tough area to go uninsured.  We have
numerous lightning storms almost every month. 
These do strike houses and can cause major damage including total loss.  We all know the threat of hurricanes.  I have been asked to check several of the
houses we have built after hurricanes by owners who did not purchase
insurance.  There is also possible
significant damage possible from a failure of a plumbing fixture or line,
appliance and air conditioning.  I
believe property coverage is a prudent investment.
In short, the insurance situation is summed up by the
following phrase.  It’s a waste of money
until you need it, and then it is too late.  
To date, I personally have never had a claim on any property that I
own.  However, it is always possible.
Written By,

Stephen Kauffman, CEO of DIVCO Custom Homes