by Connie Smith
Though there hasn’t been a direct hit in our area since 1929, hurricane season and storms are a fact of life here in Florida. Insurance companies here may be a little more particular before insuring a new purchase than they are in some other areas of the country. In fact, some national companies may not insure in Florida at all.
The 4-Point Inspection
Most insurance companies require a 4-point inspection report for single family houses that are more than 30 years old. The four points are the roof, electric, plumbing and HVAC system. The report must be prepared for the insurance company by a Florida licensed contractor, home inspector, or building code inspector. There is a specific Florida 4 pt Inspection form that must be used and must include photos of the following:
- Dwelling: Each side
- Roof: Each slope
- Plumbing: Water heater, under cabinet plumbing/drains, exposed valves
- Open main electrical panel and interior door
- Electrical box with the panel off
- All hazards or deficiencies
***This information obtained from 4-Point Insurance Form***
In order for the house to be insurable for a standard HO3 policy (for single family homes, duplexes and some townhouses), those four items must be in good working order with no hazards present. The form asks for specifics such as the type of wiring, the age of the HVAC, if there is a pressure relief valve on the water heater, the age of the roof and condition, such as curling shingles, and other pertinent information that could affect future insurance claims.
If there are existing deficiencies noted on the 4-point inspection, that doesn’t mean you can’t get any insurance at all. Sellers aren’t always willing or able to fix or replace.
If the buyer wants to move forward with the purchase, or is buying a house that he or she already knows has deficiencies, there is an transitional policy that can be obtained that is referred to as a builder’s risk policy. It protects your investment until all deficiencies have been repaired or replaced.
After a clean 4 point can be obtained, the insurance agent can issue a standard HO3 policy. There are certain stipulations to the builder's risk policy, (such as the house can’t be occupied) that can be better explained by an insurance professional. However, it does allow for a buyer who requires a loan to purchase a fixer-upper. Without that option, homes that fail the 4 point inspection where the seller refused to repair would be completely off limits.
The Wind Mitigation Report
Though the 4-point inspection asks for roof details, there is another insurance report that gives more in-depth information to the insurance company. The wind mitigation report is also prepared by the home inspector using information obtained during the normal home inspection. While this report is not required, submitting it to the insurance company can be advantageous, especially if a new roof has been installed after March of 2002. The wind mitigation report gives even more detail about the roof, its construction, what type of nails are used, how the roof is attached to the house (hurricane clips, etc.), and other pertinent information. Other features such as hurricane rated doors, windows or shutters are noted. Together, some of these features can give a substantial discount, or credits, to the annual policy.
Although there are one or two exceptions, by state law, insurance on the exterior of the building is included in the monthly maintenance fee of the association. That is usually referred to as the master policy. If the buyer is getting a loan, the lender will ask for a copy, which we obtain through a request to the management company. Even when paying cash, asking for and keeping a copy of the current master policy with your important documents is a good idea.
The condo owner is responsible for obtaining HO-6 insurance, which covers the interior "drywall-in" improvements, contents and some liability. The cost varies but largely depends on how much content insurance the buyer wants. I am always happy to get quotes for you when asked.
Although, again, there are one or two exceptions, flood insurance, if required, is also covered by the association through the monthly maintenance fee. For those who require copies, that would be a separate policy from the master building insurance policy.
Flood Insurance for Single Family Homes
Whether a house is required by lenders to have flood insurance is determined by FEMA flood zone maps. If a house is in a flood zone, I am always happy to get a quote for a buyer if possible. Occasionally, but not always, the insurance agent asks for an elevation certificate in order to give an accurate quote. He can usually still give us a ballpark figure but elevation certificates are used to determine flood policy rates. Sometimes, the elevation certificate has been filed with the county who has an elevation certificate map, along with other flood information. If the county has a copy, it is downloadable at that link. Since 2017, surveyors have been required to file a copy with the county. If one isn’t available from the county or current homeowner and if the buyer is purchasing -- or serious about purchasing -- we can get one done by a survey company for about $250. Any property built after 1974 will require a elevation certificate in order to be able to quote through the NFIP as this is when they started flood mapping, prior to 1974 a quote can be completed but an EC can help improve the premium. There are a lot of alternative markets that do not require an EC and can sometime come in at a better rate.
For comprehensive information on flood insurance for buyers, Pinellas County has created a brochure for buyers: Know Your Flood Risk.
For further questions about Florida insurance, I am happy to get the answers you need or you can go straight to my source: Drew Scott of Royal Insurance 727-786-0090 or email him at Drew@royalinsuranceinc.com.