All Forum Posts by: Jared Townsend

Hi @Cynthia B.,

There are two types of coverage for ground movement damage (sinkhole) in FL. The first is Catastrophic Ground Cover Collapse (CGCC). This is mandated by the state to be included on all policies. However, it only applies if the following triggers are met:

1) Visible hole or depression

2) Structural damage occurs

3) The movement is sudden 

4) The insured structure is condemned

If any of those are not met, then no coverage. 

Unless you have the sinkhole endorsement which it sounds like you are interested in. Unfortunately as you have found, few carriers offer this coverage any more due to fraudulent activity 10 years ago. A few carriers will offer it with an inspection that you pay for (you rarely pass) and ever fewer offer it without inspection. 

We are able to write sinkhole coverage with a few carriers including American Strategic (Progressive Home), Velocity, and others. Your best bet is to build a relationship with a quality independent agent that can shop the right carriers to get the coverage you are looking for. Best of luck to you!

@Cynthia B.

You're correct - every policy in FL has Catastrophic Ground Cover Collapse (CGCC) coverage as required by state regulations. This covers the home if all of the following triggers are met: visible hole, condemned by the authorities, complete loss. 

You are also correct that to qualify for the sinkhole endorsement you often need to provide a positive sinkhole inspection. However, failing the inspection doesn't mean that you have an active sinkhole under your house and must disclose that upon selling. It simply means that the risk in your area is too high to add that coverage. 

There are a few carriers that will still write the sinkhole endorsement without an inspection though. I would ask your local agent to request quotes from those carriers. 

I hope that helps! 

@David Hayes If you are renting the home for a 3 night minimum it opens up the possibility of insuring the property on a residential policy which tends to be substantially cheaper than a comparable commercial policy. There are carriers, especially in FL, that specialize in writing vacation rental properties, you just have to know where to look. 

There are many Florida carriers that provide coverage designed for vacation rental usage. It is generally better to use these than go to an E&S market like Lloyds of London. If you have any questions about insurance please message me!

Florida is a specialized market with mostly regional carriers and only a few national carriers. Citizens is the state-run "insurer of last resort". This means you can only get insurance with them if you are declined by 3 other carriers or your rates are significantly higher than the Citizens quote. 

Definitely get in touch with a Florida based insurance agent that knows the rental markets. They may have a market or two that are eager to insure a specific area and have much lower rates than the others. Good luck!

 Generally speaking, building insurance rates are based on the perceived risk of damage and cost to repair the building. Proving to the carrier that the building is a lower risk through methods like the wind mitigation report is your best bet to get a lower price without sacrificing coverage. 

You mentioned the roof is not in great condition right now. I am speculating but if the rest of the home is in similar condition then your agent may have only quoted the property with carriers that have looser underwriting requirements but are more expensive. As you rehab the home and show that the building is in good shape you may find that they provide quotes with different carriers that are more competitive. 

It all comes down to having a relationship with a good insurance agent that can help educate you on these things with specific regard to this property. If you have any other specific questions related to this property feel free to message me and I will help any way that I can! 

@Glenn P. I would assert that without knowing the coverage terms and carrier quality we can't know if the policy is a good deal or not; all we know is that it is a cheap price! 

With that out of the way...a duplex will be insured on a residential policy while a 6 plex is insured on a commercial policy which has different coverage levels and rating factors. For example, a standard residential policy will provide $100-300k liability coverage while a commercial policy commonly provides $500k-1mil liability. 

One easy strategy is to get a wind mitigation report and send it to your agent. This report identifies things like nail size, nail spacing, extra hurricane tie down, etc. and qualifies you for a corresponding discount on the hurricane portion of your premium. Any licensed home inspector can provide one for you. 

@Greg Tomita Being inland in Eustis should help keep your rates reasonable compared to the rest of the country. You are on the right track searching for a commercial policy since the property is larger than a 4 unit. 

@Jason Malabute I don't have the employment numbers but UCF is about 5-10 minutes south of Oviedo. The area is growing rapidly with commercial developments on 3 of the 4 corners at 434/Mitchell Hammock intersection. What are you looking to invest in?

@Chuck Masters You are absolutely right. In that scenario you would be better covered by a commercial liability policy that is not limited to the premises only. That is another reason to work with an agency experienced in writing STR coverage so they can help find solutions to the unique risks that each rental property has.

You should be able to get a general liability in your name, most carriers don't require a business name. 

@Angela Signore I am glad you are away from Citizens Insurance -- their underwriting guidelines do not allow for more than 4 rentals in a year. Great for renting to snow birds that stay for a while, bad for true short term rental though!