What's Up With Insurance In the Florida Keys?

Insurances are required in the Keys an a property if you have a mortgage. If you are a cash buyer, insurance is not required! Some homeowners "self insure" that is, they choose not to purchase insurance in the belief that the savings in not paying the premiums is what they will use to do any repairs in the event of damage from a hurricane. The latter is, of course, not recommended!

Insurance costs will vary widely depending on whether it is a primary residence, a second home, or an investment property. Also, the amount of your deductible will affect the insurance premiums. The three types of insurances are outlined below:

Wind Insurance
Flood Insurance
Homeowners Insurance

Wind Insurance

Wind insurance is based on protection of the home from strong winds. All openings (doors, windows, or any other opening) must have some form of protection (Class A protection is best) to qualify for wind mitigation credits to lower your insurance costs. That protection can be in the form of panels, shutters, or impact windows and doors. Any shutters or panels must satisfy the current building code requirements. Typically, clamshells and older Bahama shutters will not qualify for those credits.

The other factor for wind insurance is the roof. The insurance agencies require that the roof not be older than 20 years, be in good condition (no leaks), and the insurance company will require your inspector to look to see how the roof is strapped down! Are there straps and are they nailed down or screwed in? How many nails or screws are used? If the roof on the home you are thinking of purchasing is older, then exceptions can be made by getting a licensed roofer or inspector to issue a roof certification report, which will buy you a few more years before you will need to replace the roof.

The shape of the roof and the size of the home are the other factors that determine the cost of your wind insurance. As to the materials that roofs are made of, concrete roofs are the best, closely followed by metal roofs, then tile roofs and shingle roofs.

Many condo buildings include the building exterior insurance as part of their condo fees. Townhome owners tend to be responsible for the exteriors of their homes. For average size single family homes, it is not uncommon to pay $5 -7,000 on average for your wind insurance! There are exceptions in both directions and of course the cost will be higher the larger the home.

Update 2023: Wind insurance now requires that a property also carries flood insurance.

Flood Insurance

Flood insurance is required (for lenders) on most properties in the Keys. The only exceptions used to be properties that are in the FEMA flood zone of X... but no longer, though at least the coverage is at a minimal cost. There are 3 designations for flood zones, VE, AE, and X. VE is direct coastal waterfront, with the highest risk of flooding. The cost of insuring a building located in a VE zone is prohibitive! Most structures are located in some AE Zone. The most common AE numbers are AE6 through AE11. The lower the number the better! 

In order to determine the relationship of the FLA or Floor Living Area to the FEMA flood zone, an Elevation Certificate is required. That will show whether the property is above flood, at flood, or below flood levels on the Fema map. All structures built after 1975 were required to be built above flood.

Any properties built prior to 1975, that were built below flood, are considered to be legal nonconforming (to current code) and are grandfathered in for insurance purposes Those below flood Floor Living Areas are insurable. Any structure built after 1975 that has living area below flood is ILLEGAL nonconforming and is NOT insurable!

The higher the structure is above fllod, the lower your flood insurance costs. Conversely, the lower a structure's Floor Living Area is below flood, along with what zone the structure is in, the higher the insurance costs! We have seen flood insurance as low as $600 a year and as high as $23,000 a year! The average flood insurance tends to be between $3-5000 for single family homes. Many condo buildings include flood insurance as part of their condo fees.

So, lets say that a home in in the flood zone of AE8. The EC shows that the base floor elevation is at 9'6". That means that that home is one foot six inches above flood. But what if the EC showed that the base floor elevation was only 7'3"  in the same AE8 zone? Well that home would be nine inches below flood. Insurance rates would be higher, but not nearly as much as a hoe that is say, 3 feet below flood. 

Homeowners Insurance

Homeowners insurance typically covers the contents of your home, fire, hazard, and liability. If you are in a property where the HOA fees cover exterior building insurance, then you will need an HO6 policy, also called walls-in insurance. You may also want to consider additional HW6 wind policy to cover personal property/contents in the unit and the interior of the unit. If you are renting the property, different insurance policies are available that cover the business activity. Vacation rental insurances vary and if you are renting a lot, business interruption insurance may be an option to look into as well. 

All information on this page regarding insurances is personal opinions and should not be relied on. Please contact a licensed and registered insurance agent for accurate information.

Please reach out with any further questions the thekeyslifestyle@gmail.com or call 305-781-5704! Return to the Useful Information Page!