Home insurance in Central Florida: do you need it, and what it covers

Does Florida law require it?

No. The state's Department of Financial Services writes: “Florida law does not require homeowners to have homeowners insurance.” It continues: “Additionally, if you have a mortgage, your lender may require you to have homeowners insurance, as they have a financial interest in the property and want to ensure it’s protected” (Florida Department of Financial Services, Homeowners Insurance). The state's insurance regulator says the same of lenders: “Mortgage lenders usually require homeowners' insurance as part of the mortgage terms” (Florida Office of Insurance Regulation, Homeowners Insurance).

Where a lender requires it, the requirement is a term of the loan. The Consumer Financial Protection Bureau explains why: “When you have a mortgage, your lender wants to make sure your property is protected by insurance. That’s why lenders generally require proof that you have homeowner’s insurance.” It adds: “Many homeowners pay for their homeowner’s insurance through an escrow account as part of their monthly mortgage payment” (Consumer Financial Protection Bureau, What is homeowner's insurance?).

A buyer who pays cash has no lender to ask. The same Department of Financial Services page gives the other side of that freedom: “for most consumers, their home is one of their largest assets and insurance will help to offset the cost to repair or replace the home.” A condominium is its own case: every condominium association must have adequate property insurance as the statute determines it, and the same subsection says which parts of a unit that policy must exclude and leaves to the unit owner; the text is in Florida Statutes § 718.111(11).

What happens if a borrower lets the policy lapse

The Bureau again: “If you don’t have insurance, your lender is allowed to buy it for you and charge you for it—but your lender must give you advance notice.” Of that insurance it says: “that insurance may only cover the lender, and not you. It also may be more expensive than what you could buy on your own” (Consumer Financial Protection Bureau, What is homeowner's insurance?). Florida's regulator calls it lender-placed or force-placed insurance and says: “The premium cost for this insurance is usually higher than conventional homeowners’ premium, and this cost may ultimately be borne by the homeowner” (Florida Office of Insurance Regulation, Homeowners Insurance).

The notices a mortgage servicer must send before it charges for force-placed insurance, their timing, and the refund it owes when the borrower shows there was coverage are in a federal regulation, 12 CFR § 1024.37, which does not shorten to a sentence.

What a lender asks for: Fannie Mae's rules as the example

Fannie Mae's Selling Guide sets the terms of the mortgages Fannie Mae buys from lenders, the insurance on the home among them. On who chooses the insurer: “The borrower has the right to select the insurer of their choice to provide property insurance for the subject property, provided that the insurance meets Fannie Mae's requirements” (Fannie Mae, Selling Guide, B7-3-01).

For a house of one to four units, the perils the policy must cover include “Windstorm (including named storms designated by the U.S. National Weather Service or the National Oceanic and Atmospheric Administration by a name or number)”. On the amount: “The property insurance policy must provide coverage on a replacement cost basis, with the exception of roofs”, and “Roofs must be insured, but do not have to be insured on a replacement cost basis.” On the deductible: “The maximum allowable deductible for all required property insurance perils for one-to four-unit properties is 5% of the property insurance coverage amount”, and “If the property insurance policy includes separate deductibles for different required perils, such as windstorm or wildfire, each individual deductible must not exceed 5% of the property insurance coverage amount” (Fannie Mae, Selling Guide, B7-3-02). The topic's other requirements are in B7-3-02.

On flood: “Flood insurance coverage is required when a loan is secured by a property located in” a Special Flood Hazard Area, or in a Coastal Barrier Resources System or Otherwise Protected Area, and “All flood zones beginning with the letter "A" or "V" are considered SFHAs.” The minimum amount for a first mortgage “must be equal to the lesser of” 100% of the replacement cost value of the improvements, the maximum coverage amount available from the National Flood Insurance Program, or the unpaid principal balance of the loan (Fannie Mae, Selling Guide, B7-3-06). The exceptions are in B7-3-06.

What a standard policy covers

Florida's insurance regulator describes the common homeowner's form this way: “HO-3 is an open-peril policy, as opposed to a named-peril policy like HO-1 and HO-2.” That is, “unless the insurer excludes a peril from the policy, then the policy covers any kind of peril, named or not.” And: “Typically, an HO-3 policy will cover the home’s structure, as well as any structures that are attached, like a carport or garage” (Florida Office of Insurance Regulation, Homeowners Insurance).

The same page names the two exclusions that matter most here: “Insurers often exclude earthquakes and flooding from HO-3 plans and offer coverage for them separately from the main policy.” What a particular policy covers, limits and excludes is written in that policy; the regulator's words are “typically” and “often”.

Before issuing a homeowner's policy, an insurer must offer replacement cost coverage and coverage for the added cost of meeting building laws and ordinances, with the exceptions the section states; what each offer must contain, and what a policy is deemed to include when the owner does not refuse in writing, is in Florida Statutes § 627.7011.

Windstorm and hurricanes

The statute opens with a duty on the insurer: “An insurer issuing a residential property insurance policy must provide windstorm coverage.” The same subsection says to which risks the section does not apply, by reference to Citizens Property Insurance Corporation's eligibility rules; that part is in Florida Statutes § 627.712(1).

An owner may decline it, in writing and in a set form. “A property insurer must make available, at the option of the policyholder, an exclusion of windstorm coverage.” When the policyholder is a natural person, the coverage may be excluded only if the policyholder personally writes or types and provides to the insurer this statement, signs it and dates it, and every other named insured on the policy signs it too: “I do not want the insurance on my (home/mobile home/condominium unit) to pay for damage from windstorms. I will pay those costs. My insurance will not.” Where there is a mortgage, the lender must agree: “If the structure insured by the policy is subject to a mortgage or lien, the policyholder must provide the insurer with a written statement from the mortgageholder or lienholder indicating that the mortgageholder or lienholder approves the policyholder electing to exclude windstorm coverage or hurricane coverage from his or her or its property insurance policy” (Florida Statutes § 627.712(2)). The form for a policyholder that is not a natural person is in the same subsection, and how long an exclusion lasts is in the same section.

For hurricane losses, the Department of Financial Services states the deductible options: “All insurance companies must offer hurricane deductible options of $500, 2 percent, 5 percent, or 10 percent of the policy dwelling or structure limits, unless the specific percentage deductible is less than $500. The hurricane deductible must be listed as a dollar amount, even if the deductible is listed as a percentage amount” (Florida Department of Financial Services, Florida's Hurricane Deductible). The page lists five exceptions, by the amount the dwelling is insured for; the second reads: “Dwellings with insured limits of $250,000 or more: The insurance company does not have to offer the option of a $500 hurricane deductible, but must offer options of 2, 5, or 10% hurricane deductible”. The statute behind the page, Florida Statutes § 627.701, has the others and also says how the deductible applies across more than one hurricane in a calendar year. A policy with a separate hurricane deductible must say so on its face, in these words: “THIS POLICY CONTAINS A SEPARATE DEDUCTIBLE FOR HURRICANE LOSSES, WHICH MAY RESULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU” (Florida Statutes § 627.701(4)).

What counts as a hurricane loss is defined, not assumed: for the purposes of hurricane coverage, windstorm “means wind, wind gusts, hail, rain, tornadoes, or cyclones caused by or resulting from a hurricane which results in direct physical loss or damage to property”, and the same subsection fixes when a hurricane begins and ends for a policy (Florida Statutes § 627.4025(2)).

Building features can lower the wind premium. The regulator's page says: “Insurance companies are required to provide you with a copy of the Wind Mitigation Notice of Premium Discount Form with each new policy and at each renewal thereafter”, and “To take advantage of the discounts, homeowners will need a qualified inspector to properly document your home’s wind mitigation features” (Florida Office of Insurance Regulation, Homeowners Insurance). The rule that a rate filing must include those discounts is Florida Statutes § 627.0629.

Flood is a separate policy

FEMA's flood insurance site says: “Most homeowners and renters insurance do not cover flood damage. Only a flood insurance policy will help you recover after a flood” (FEMA, FloodSmart, Buy a Flood Insurance Policy). On whether it is required, the Department of Financial Services writes: “Florida law does not require homeowners to have flood insurance”, and adds that a lender may require it of a borrower with a mortgage (Florida Department of Financial Services, Flood Insurance).

The federal rule turns on the map and the loan: “In communities that participate in the National Flood Insurance Program (NFIP), flood insurance is mandatory for properties located in high-risk flood zones if mortgages are government-backed.” The zones are lettered: “High-risk flood areas begin with the letters A or V on FEMA flood maps”, and “Moderate- to lower-risk flood areas are designated with the letters B, C and X on FEMA flood maps” (FEMA, FloodSmart, What is my flood risk).

Being outside a high-risk zone is not the same as being outside the risk. FEMA's figure: “Over the past 10 years (2014 - 2024), nearly one-third of NFIP flood insurance claims (29%) came from areas located outside of current high-risk flood areas” (FEMA, FloodSmart, What is my flood risk).

A homeowner's National Flood Insurance Program policy has limits and a wait. “Building policies cover up to $250,000 of flood damage and contents policies cover up to $100,000 of flood damage for belongings kept inside your home.” And: “Your flood insurance coverage will go into effect 30 days after your date of purchase. There are four exceptions to this rule:” no wait when the policy is bought while making, increasing, extending or renewing a mortgage; no wait when the coverage is changed while renewing the policy; a one-day wait if the property is in a newly designated high-risk flood zone and the policy is bought within 12 months of the update; and a one-day wait if a flood is caused or worsened by a wildfire on federal land and the policy is bought within 60 days of the wildfire containment date (FEMA, FloodSmart, Buy a Flood Insurance Policy).

Citizens: the state's insurer, and its flood rule

Citizens Property Insurance Corporation is, in the statute's words, “a government entity that is an integral part of the state, and that is not a private insurance company”, and its job is stated beside that: “The corporation shall provide insurance for residential and commercial property, for applicants who are entitled, but, in good faith, are unable to procure insurance through the voluntary market” (Florida Statutes § 627.351(6)). Who is entitled, including the limits by replacement cost and the comparison with a private insurer's offer, is in the same subsection and does not shorten to a sentence.

Citizens does not sell flood coverage and now requires it. Its own notice: “Citizens does not provide flood insurance, and flood coverage is not provided under standard multiperil policies” (Citizens Property Insurance Corporation, Flood insurance coverage rules). The statute: “Except as otherwise provided in this paragraph, the corporation shall require the securing and maintaining of flood insurance as a condition of coverage of a personal lines residential risk” (Florida Statutes § 627.351(6)(aa)). Citizens' page states the requirement for its personal residential policies that include wind coverage: homes inside the special flood hazard area must have and maintain a flood policy, and homes outside it must have one by the schedule in the table below. The paragraph's exemptions and its other conditions are in § 627.351(6)(aa).

Citizens also says this of its own policyholders: “Citizens’ policyholders are subject to a potential assessment of up to 45% of their premium following a major storm or series of storms” (Citizens Property Insurance Corporation, Flood insurance coverage rules). The surcharge and assessment rules themselves are in § 627.351(6).

Sinkholes: what an insurer must cover, and what it need not

Central Florida's ground gets its own statute. “Every insurer authorized to transact property insurance in this state must provide coverage for a catastrophic ground cover collapse.” The term is narrow: the statute requires four things together, and says “Damage consisting merely of the settling or cracking of a foundation, structure, or building does not constitute a loss resulting from a catastrophic ground cover collapse”. And “The insurer may restrict catastrophic ground cover collapse and sinkhole loss coverage to the principal building, as defined in the applicable policy” (Florida Statutes § 627.706). Coverage for sinkhole losses beyond that is something the insurer must make available for an additional premium, on the conditions in the same section.

Claims and cancellations: the clocks

After a loss, the first clock is the owner's. “A claim or reopened claim, but not a supplemental claim, under an insurance policy that provides property insurance, as defined in s. 624.604, including a property insurance policy issued by an eligible surplus lines insurer, for loss or damage caused by any peril is barred unless notice of the claim was given to the insurer in accordance with the terms of the policy within 1 year after the date of loss. A supplemental claim is barred unless notice of the supplemental claim was given to the insurer in accordance with the terms of the policy within 18 months after the date of loss” (Florida Statutes § 627.70132(2)). The same section says what the date of loss is for a hurricane and when the time is tolled.

The next clocks are the insurer's. It “must provide a Homeowner Claims Bill of Rights to a policyholder within 14 days after receiving an initial communication with respect to a claim” (Florida Statutes § 627.7142). And: “Within 60 days after an insurer receives notice of an initial, reopened, or supplemental property insurance claim from a policyholder, the insurer shall pay or deny such claim or a portion of the claim unless the failure to pay is caused by factors beyond the control of the insurer” (Florida Statutes § 627.70131(7)).

On the policy itself: “The insurer shall give the first-named insured written notice of nonrenewal, cancellation, or termination at least 120 days before the effective date of the nonrenewal, cancellation, or termination.” The paragraph then lists its exceptions, among them cancellation for nonpayment of premium; they are in Florida Statutes § 627.4133(2).

What these sources do not say

They do not say what a policy costs. No state or federal document read for this guide prints a premium with a date, so this guide prints none; a figure from anywhere else would be a guess with a dollar sign. They do not say whether a given homeowners' association asks its owners to insure: this guide found no primary source on that, and says nothing about it. And they do not say which flood zone a given house is in: that is on FEMA's flood map for the address, and the lender's determination follows from it.