A first-time buyer in Sanford goes under contract on a 1994 house near the historic downtown. She uses the inspection period for the structural inspection and the termite report, and everything checks out. Eleven days before closing, she asks for insurance quotes. The roof is nineteen years old and the electrical panel is a Federal Pacific. Two carriers decline outright, the third quotes a premium that breaks her budget and her inspection period expired a week ago. Nothing about the house had changed. She had simply asked the insurance question after the point where the answer could still help her.
In Florida, whether a house can be insured is part of due diligence, and it belongs in the inspection period alongside the roof and the termites. Central Florida has every kind of house a first-time buyer is likely to look at, from 1950s and 1960s block homes in Orlando’s older neighborhoods to 1980s and 1990s subdivisions across Seminole and Orange counties and new construction in Lake Nona, Horizon West and Clermont. Each comes with a different set of insurance questions, and the time to answer them is before you lose the right to walk away.
Get Real Quotes During the Inspection Period
This is the most useful advice in this article. Before your inspection period expires, get real quotes on the specific property, based on the address, the year built, the roof and the systems, not a general estimate or a number from an online calculator. One of two things can come back. The house may simply be expensive to insure, which is a budget problem you can still negotiate around or walk away from. Or the house may be difficult or impossible to insure in the standard market, which is a much larger problem and one you want to find out about while you still have a way out. Knowing during the inspection period gives you options, and knowing eleven days before closing gives you none.
What Makes a Florida House Hard to Insure
Four things matter most, and they have almost nothing to do with how the house looks. Roof age comes first. Carriers apply age thresholds that vary by roof type, and past them a house is often declined rather than just quoted higher, so ask for the permit date rather than the seller’s estimate. Florida law gives some protection here. An insurer generally cannot refuse to write a home solely because its roof is under fifteen years old, and for an older roof, an inspection showing at least five years of useful life remaining can keep the house insurable, as our article on roof age and Florida insurance explains.
The electrical panel is second. Federal Pacific, Zinsco and Challenger panels are refused by many carriers at any price, and fuse boxes or sixty-amp service suggest a system untouched for decades, as our article on electrical panels Florida insurers won’t accept explains. Plumbing is third, because polybutylene supply lines and cast iron drains each narrow the market considerably, and both are common in Central Florida homes of certain eras. The fourth is the property’s claims history. Claims follow the house, not the seller, so a home with significant water or weather claims is harder to place, and you inherit that record. On a home roughly thirty years or older, carriers will require a four-point inspection of the roof, electrical, plumbing and HVAC anyway, and getting one during your inspection period shows you what they are going to find. Our article on home insurance for older homes covers what carriers look for.
Central Florida has one more question that most of the state does not ask as often, which is sinkholes. Florida policies must include catastrophic ground cover collapse coverage, but broader sinkhole coverage is an optional endorsement, and in parts of Central Florida carriers may limit it or require an inspection before offering it. Our article on sinkhole coverage versus ground cover collapse explains the difference.
Three Numbers That Are Not the Same
New buyers often treat three different numbers as one. The purchase price is what you are paying, and it includes the land. The loan amount is what your lender requires you to insure to protect its interest. Replacement cost is what it would take to rebuild the structure at today’s construction prices, and that is what the dwelling limit should reflect. On a lakefront or high-demand lot, replacement cost can be well below the purchase price because the land carries much of the value, and the land does not burn. On an older home, or in a market where construction costs have outrun sale prices, it can be higher. Satisfying the lender and being properly insured are two different standards, and only one of them is checked at closing. Our article on replacement cost versus market value explains how the limit should be set.
The Hurricane Deductible Is a Percentage
Florida policies carry a separate hurricane deductible expressed as a percentage of the dwelling limit rather than a flat dollar amount, so convert it before you choose it. Two percent of $400,000 is $8,000, and five percent is $20,000. That is money you pay yourself before the policy pays anything, in the days after a storm. A higher percentage lowers the premium, which is tempting on a first purchase when every dollar of the monthly payment matters. The real question is whether you could produce that amount within weeks of a hurricane, in a year when your savings went into the down payment. Our article on how to read your Florida homeowners declarations page shows where to find it.
Flood Is Separate, and the Timing Matters
No homeowners policy covers flood. If the property is in a high-risk zone and you are financing, the lender will require flood insurance and confirm it before closing. If it is not, nobody will require it, even though a significant share of flood claims come from outside high-risk zones, and Central Florida saw that after Hurricane Ian flooded neighborhoods in Orlando, Seminole County and along the Little Econ and the St. Johns that many owners never thought of as flood areas. Outside high-risk zones, the premium is generally modest. Check the floor elevation as well as the zone, as our article on checking the floor elevation before you buy explains, because a low elevation can make flood insurance expensive enough to affect your loan. Florida sellers are also now required to disclose flood history, including prior flood claims and federal flood assistance, so read that disclosure carefully.
There is also a timing rule. Federal flood policies normally take effect thirty days after purchase, but the waiting period does not apply when the policy is bought in connection with a loan closing. Arranging flood coverage as part of the transaction avoids the wait, while deciding to add it three months later does not. Our article on whether you need flood insurance in Florida covers the decision.
What Happens at Closing and After
Coverage has to be in force on the day of closing, and the lender will require proof before funding the loan. In practice, that means the policy is bound and the evidence of insurance is delivered to the title company and the lender several days before closing, because leaving it to the last forty-eight hours is how closings get delayed. The first year’s premium is usually paid at closing, and after that it is typically escrowed with your property taxes, so a premium increase at renewal raises your monthly payment. First-time buyers are often surprised by that at the first escrow analysis.
After closing, get a wind mitigation inspection if the seller did not provide a current one. The credits are among the largest available in Florida, the inspection is inexpensive and it often pays for itself in the first year, as our article on wind mitigation inspections explains. Do not let the policy lapse, because the lender will buy force-placed insurance that protects the bank, covers only the building, costs considerably more and is added to your payment. Update the dwelling limit if you renovate, and tell the carrier about changes such as a pool, a dog, a home business or a short-term rental, all of which change the risk it insured.
What First-Time Buyers Should Confirm
-
Have you gotten real quotes on this property before your inspection period expires?
-
What year was the roof installed, by permit date?
-
What brand is the electrical panel, and is the plumbing polybutylene or cast iron?
-
Is the dwelling limit based on replacement cost rather than the purchase price or loan amount?
-
What is the hurricane deductible in dollars?
-
Do you need flood insurance, and is it being arranged as part of closing?
Homeowners Insurance for Central Florida Buyers With Prestige Insurance Group
Prestige Insurance Group writes homeowners coverage for buyers across Orlando, Sanford, Winter Park, Oviedo, Kissimmee, Clermont and the rest of Central Florida, as well as in Miami and across our nine-state footprint for clients who moved out of state and stayed with us. If you are under contract, send us the address and the year built, and we will tell you what we find before your inspection period runs out. That call is free, and it sometimes changes which house someone buys. With access to over twenty homeowners carriers in Florida, we can usually find options when a house is harder to place. Learn more on our Central Florida homeowners insurance page, or see how much home insurance costs in Florida and what changes when you go from renting to owning. Call the office nearest you. Se habla español.
Orlando: 407-993-2331 Miami: 305-969-8776
Frequently Asked Questions
When should I get homeowners insurance quotes when buying a house in Florida?
During your inspection period, before it expires. If the house turns out to be hard or expensive to insure, you still have time to negotiate or walk away.
What makes a Florida house hard to insure?
Mainly roof age, outdated electrical panels such as Federal Pacific or Zinsco, polybutylene or cast iron plumbing and prior claims on the property.
Should my dwelling limit match the purchase price?
No. It should reflect replacement cost, what it would take to rebuild the structure at today’s prices. The purchase price includes the land, and the loan amount reflects only what the lender requires.
Do I need flood insurance if I’m not in a flood zone?
Your lender may not require it, but many flood claims come from outside high-risk zones, and coverage there is generally affordable. Buying it at closing avoids the usual thirty-day wait.
General information only, not legal advice. Carrier guidelines, coverage forms, settlement provisions, lender requirements, disclosure rules and flood program terms vary and change over time. Refer to your actual policy, loan documents and purchase contract for the terms that apply.
