Owning a vacation property in Florida is a dream for many Canadians, offering a warm escape from the cold winters and a vibrant lifestyle. However, with this dream comes the responsibility of ensuring your investment is well-protected. For high-net-worth individuals, this means not only securing standard homeowners insurance but also considering additional coverage options like umbrella liability policies. Below, we explore the essentials of insuring your Florida vacation property, the costs involved, unique perils for affluent clients, and the differences in liability policies between the U.S. and Canada.
Maintain coverage amid rising weather risks
As the incidence, frequency, and severity of weather-related events continue to increase, it's crucial to maintain comprehensive coverage for your Florida property. At this time, we're cautioning clients to refrain from reducing or removing coverages that they may wish to add back down the road. When there is inclement weather in the forecast, moratoriums can be enacted, preventing clients from adding or re-adding certain coverages later. If there's any doubt, we advise keeping the coverage on if you can afford it.
Understand homeowners insurance in Florida
Homeowners insurance is a fundamental requirement for protecting your property against various risks, including natural disasters, theft, and liability claims. In Florida, the unique climate and geographical location present specific challenges that make comprehensive coverage essential.
Standard homeowners insurance in Florida includes several key components. Dwelling coverage protects the structure of your home, including walls, roof, and built-in appliances, against perils like hurricanes, fire, and vandalism. Personal property coverage insures your belongings, such as furniture, electronics, and clothing, in case of damage or theft. Liability protection offers financial security if someone is injured on your property and decides to sue. Furthermore, additional living expenses (ALE) coverage helps cover the cost of temporary housing and other related expenses if your home becomes uninhabitable due to a covered event.
Given Florida's susceptibility to hurricanes, it's crucial to ensure your policy includes these special considerations:
- Hurricane Coverage: This often comes with a separate deductible
- Flood Insurance: Standard homeowners insurance does not cover flood damage. Considering Florida's flood-prone areas, purchasing a separate flood insurance policy through the National Flood Insurance Program (NFIP) or private insurers is advisable
- Windstorm Insurance: In some high-risk areas, windstorm damage may not be included in standard policies and might require additional coverage
You may also be asked for reports/certificates related to Elevation or Wind before obtaining coverage or possibly qualifying for more coverage or better rates.
Find the right financial solutions that best suit your needs.
Insuring your high-value vacation property
The cost of homeowners insurance in Florida can vary significantly based on factors including the location, age, and construction of the home, as well as the coverage limits and deductibles chosen. On average, homeowners in Florida can expect to pay higher premiums compared to other states due to the increased risk of natural disasters.
Factors influencing premiums:
- Location: Homes in coastal areas or regions prone to hurricanes and flooding typically have higher premiums
- Home value and construction: High-value homes and those with unique or high-end construction features may require more coverage, leading to higher premiums
- Deductibles: Choosing higher deductibles can lower your premium but means you'll pay more out-of-pocket in the event of a claim
- Claims history: A history of frequent claims can increase your insurance costs
High net worth clients often face unique risks that require specialized insurance solutions, particularly in Florida, due to the state's climate and geographical features. Natural disasters such as hurricanes and flooding pose significant threats, with hurricanes capable of causing extensive property damage and flooding being a substantial risk in coastal areas. Policies should provide adequate coverage for these perils, and purchasing additional flood insurance may be necessary.
Property-specific risks also need to be considered, as high-value homes with unique architectural features, high-end finishes, and luxury amenities require higher coverage limits to ensure complete protection. Additionally, valuable personal belongings like art collections, jewelry, and high-end electronics must be adequately insured. Liability risks are another concern, especially for those who entertain guests at their vacation properties or employ staff and contractors for property maintenance and management, as these activities increase the likelihood of liability claims if someone is injured on the premises.
Umbrella liability policies for extra protection and peace of mind
For high-net-worth clients, standard liability coverage may not be sufficient to protect against significant financial losses in the event of a lawsuit—this is where umbrella liability policies come into play.
An umbrella liability policy provides additional liability coverage beyond the limits of your standard homeowners, auto, or watercraft insurance policies. It acts as a financial safety net, offering protection against large claims and lawsuits that could otherwise deplete your assets.
The benefits of umbrella liability policies are substantial. They include increased coverage limits, typically starting at $1 million, with options to increase based on your needs. These policies offer broader coverage, encompassing claims not included in standard liability coverage, such as libel, slander, and false arrest. Additionally, umbrella policies often provide worldwide coverage, ensuring protection for incidents that occur outside the United States, which is particularly beneficial for frequent travellers. Given the high coverage limits, umbrella policies are relatively affordable, providing significant value for the protection they offer.
Liability policies in the U.S. and Canada can differ in terms of coverage limits, legal requirements, and the types of incidents covered. Canadian property owners with U.S. vacation homes need to understand these differences and ensure their policies provide adequate protection in both countries.
When insuring a Florida property, it's important to note that liability limits offered in the U.S. are often lower than those required in Canada. For instance, a client might only be able to secure $300,000 in liability coverage in Florida. At the same time, Canadian insurers might require at least $500,000 to $1 million in liability coverage to add the property to an umbrella policy. In such cases, Canadian insurers can sometimes provide a top-up to meet the required limits, ensuring that clients have adequate coverage and can integrate their U.S. property into their broader insurance portfolio.
Personalized coverage for unique needs
High net-worth individuals can have unique insurance needs that require personalized solutions. Working with an experienced insurance advisor can help tailor your coverage to ensure that all aspects of your property and lifestyle are adequately protected.
With access to multiple broker partners in Florida and the U.S., depending on your insurance provider for your Canadian locations, Cowan can assist you directly in securing coverage for your U.S. property.
Contact Cowan Private Client today for personalized recommendations. We have a strong network of brokers in Florida. We can open up the dialogue, provide any pre-existing information we have about the location or the client, and connect you with a trustworthy contact in the U.S. to lighten your burden and ensure you have reliable support for your insurance needs. Should you have your Canadian assets insured with Chubb, we can potentially help you get coverage for your Florida property directly through them.
