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Personal Lines Renting Your Seasonal HomeOngoing COVID-19 travel restrictions and, in some cases, travel bans, may have made it difficult or impossible for homeowners to return to their seasonal homes. With this inability to travel, the temptation to list your seasonal home as a vacation rental on websites such as Airbnb, VRBO, or other vacation rental websites seem like an appealing option; however, please be aware that a homeowners’ insurance policy contract is based on owner-occupancy and includes specific clauses that reduce or exclude coverage if the occupancy changes.

In one widely reported case, for example, an Airbnb renter was killed when a tree holding up a backyard hammock he was laying on collapsed onto his head. This case makes clear that, before you become a short-term rental host, you should carefully consider your liability for any injuries someone incurs while staying at your home, and whether you have adequate insurance coverage for property damage or loss.

What to do if you are considering renting out your home?  

Contact your agent to discuss your plans BEFORE renting your home so the proper coverages can be initiated. Filing a claim after injury or damage occurs will likely result in denial by your insurance company if you did not previously report the change of occupancy.

In addition to confirming proper insurance coverage, you should also check with your local City or County to make sure they have not imposed any ordinances prohibiting short term rental due to COVID.

At Gulfshore Insurance we pride ourselves on serving as your trusted advisor. Please contact us with any questions.

Andrea Pelletier, CPRIA, CPIA is Client Advisor and Partner at Gulfshore Insurance specializing in Private Risk Services. Andrea works with successful individuals and their families on creating and customizing package insurance solutions in the areas of luxury homes, car collections, jewelry, fine arts, watercraft, and personal excess liability. Comments and questions are welcome at apelletier@gulfshoreinsurance.com

Gulfshore Insurance is a Naples, Florida based insurance agency specializing in home and homeowners insurance, car and auto insurance, boat and yacht insurance, property insurance, umbrella insurance, valuables insurance for fine art, jewelry, wine, and more. Navigating insurance requires an experienced and trusted insurance agent who understands your high net worth risks and exposures. Gulfshore Insurance services Naples, North Naples, Port Royal, Park Shore, Pelican Bay, The Moorings, Naples Beach, Marco Island, Bonita Springs, Sanibel Island, Captiva, Fort Myers, Sarasota, and Southwest Florida. We have office locations in Naples, Fort Myers, Fort Lauderdale, and Sarasota.

Gulfshore Insurance Flood Insurance Webinar for Realtors on Sept 23 2020

Join us for an informative Flood Insurance webinar where we will discuss the most up-to-date information real estate professionals should know when advising clients on their properties.

In this webinar, we will cover:
• Flood Program Updates
• Insurance Markets & Rate Changes
• FEMA’s 50% Rule
• Map Revisions
• Compliance Considerations

Guest Speakers:
• Andrea Pelletier, CPRIA, CPIA – Client Advisor, Gulfshore Insurance
• Christa Carrera, CFM – Floodplain Coordinator, City of Naples
• Ashley Tharp, AIS, AINS, ANFI – Corporate Training Manager, Wright Flood

Gulfshore Insurance Naples Florida Homeowners Flood Insurance Realtorsregister button copy new

Private Risk Services Home Replacement Cost ExplainedThe replacement cost of a home on a homeowner’s insurance policy has always been a large part of the discussion among homeowners, insurance advisors, and insurance companies. This is due to the significant role a home’s replacement cost plays in insurance pricing as well as its lack of correlation to other home valuation methods.

Let’s say you purchased your dream home for $2.5 million. The replacement cost is estimated at $2 million. Six months later, your home is destroyed by a hurricane. Whole neighborhoods are destroyed. Demand, price for labor, and construction material costs soar, driving up the cost to rebuild. The actual cost to rebuild your home is now $4 million, leaving you in a $2 million deficit. Studies show that nearly two out of every three homes in the U.S. are underinsured by at least 18%. This means that if there is a total loss, such as a hurricane, fire, or otherwise, the homeowner may find themselves responsible for a significant portion of the rebuilding cost.

On the flip side, homeowners are sometimes frustrated in understanding why their replacement cost is higher than the purchase price of their home.  For example, when a property they purchased for $500,000 is required to be insured for $600,000 or more. Insurance agents routinely find themselves answering the question, “why is my home’s replacement cost so high?” And for good reason. Let’s take a closer look at how this is possible.

Every home has three different values at any given time. It is necessary to recognize all three to understand the insurance company’s calculations, particularly the difference between actual cash value and replacement cost.

  1. Market Value – This is the value any one individual or entity would pay you at any given time for your home, with fluctuations based on the economy. The insurance company isn’t the slightest bit interested in the market value of your home. They stick with measurable constants, such as current cost for labor and materials and depreciation based on the functional life of any piece of property.
  2. Actual Cash Value – This is literally the current value of the wood, nails, drywall, roof, brick, etc. The actual cash value of your home, known as ACV, decreases by the minute. Each day that passes, the physical materials which make up the construction of your home depreciate; do not confuse this with the value of a home depreciating.
  3. Replacement Cost Value – This is the estimated cost to rebuild your home from scratch as it is now; including today’s material and labor costs, removal of debris from the initial loss, cost of permits and architectural drafting, among other things. However, if you don’t insure to the full value of your home, you may find yourself responsible for a significant portion of the rebuilding costs in the event of a loss.

Insurance companies have the most accurate data regarding what a home costs to rebuild. How? Well, they are the ones who pay to rebuild every home that has ever been destroyed (assuming it was properly insured). Your insurer compares your home to the thousands of similar homes they have rebuilt and estimates the cost to rebuild yours accordingly.

What factors help determine the replacement cost of your home:

  • Local construction costs
  • Square footage
  • Year built
  • Exterior walls/roof/trim
  • Style of home
  • Number of bedrooms/bathrooms
  • Garage
  • Unique finishes
  • Customizations
  • Improvements/renovations
  • Upgrades
  • Ultra-high-end items

 

One of the major challenges with estimating replacement cost of a home is that there are many factors that could cause the replacement cost to increase after a loss that are unknown when the replacement cost estimate is being developed.

Some of these factors include:

  • Demand surge after a catastrophe
  • New technologies being used in home construction
  • Changing construction code requirements
  • Limited availability of skilled labor after a catastrophe
  • Government restrictions on site access enforced after a catastrophe
  • Trends in materials costs
  • Fluctuating fuel costs

 

In addition to the current upward trend in basic building costs, rebuilding a home is almost always more expensive than constructing a comparable new one. Local ordinances often place regulations on demolition that increase expenses sharply. In general, rebuilding sites are much less accessible than a vacant lot when it comes to moving and storing materials and equipment.

A major loss to your home is traumatic enough, but to not be able to recoup rebuilding costs could be devastating. It is critical to make sure you have necessary coverage. For over 50 years, Gulfshore Insurance has weathered the storms and we know how to protect homeowners against the perils of living in paradise. If you have any questions or concerns, please do not hesitate to reach out to me.

 

Ron Lazarto, CPRIA is Client Advisor and Partner at Gulfshore Insurance specializing in Private Risk Services. Ron specializes in offering customized property and casualty insurance solutions for successful individuals and their families. Comments and questions are welcome at rlazarto@gulfshoreinsurance.com

Gulfshore Insurance is a Naples, Florida based insurance agency specializing in home and homeowners insurance, car and auto insurance, boat and yacht insurance, property insurance, umbrella insurance, valuables insurance for fine art, jewelry, wine, and more. Navigating insurance requires an experienced and trusted insurance agent who understands your high net worth risks and exposures. Gulfshore Insurance services Naples, North Naples, Port Royal, Park Shore, Pelican Bay, The Moorings, Naples Beach, Marco Island, Bonita Springs, Sanibel Island, Captiva, Fort Myers, Sarasota, and Southwest Florida. We have office locations in Naples, Fort Myers, Fort Lauderdale, and Sarasota.

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The availability of top-rated specialty insurance markets can vary each year due to the ongoing threat of catastrophic hurricane damage and a “consumer friendly” insurance regulatory climate. In addition, the impact of the COVID-19 pandemic on the insurance industry is still unknown. We continue to see companies reduce or manage their exposure, with many high net worth, middle market, and E&S carriers taking rate increases and making changes to guidelines in attempts to manage their exposure and reinsurance. At Gulfshore Insurance, we continue to monitor the hardening market and work diligently on our clients’ behalf to secure competitive options.

Below is an update on the changes taking place in the market for these top-rated specialty providers:

AIG

  • AM Best A Rating
  • AIG has earned a reputation as one of the world’s oldest and largest insurers.
  • While still a great option for clients with multiple homes, AIG continues to have limited capacity in Florida and California.  In Florida, they continue to require a qualifying out-of-state residence.


Berkley One

  • AM Best A+ Rating
  • Berkley One is now writing in 17 states.  They are targeting well-balanced, multi-line accounts in Southwest Florida with a qualifying second residence.
  • Berkley One recently launched recreational marine in Connecticut with plans to add more states.


Chubb

  • AM Best A++ Rating
  • The world’s largest Property & Casualty company operating in 54 companies & territories, Chubb has always been a strong performer in the marketplace.
  • Chubb has a $2M minimum entry for primary homes in Charlotte, Collier, Lee, Manatee, Pinellas, and Sarasota counties. The minimum entry for primary homes outside those counties is $1M.
  • Chubb has been reviewing their Condo/Co-Op policies in New York and Florida to ensure the residences are insured to value.  Chubb now requires a minimum $50,000 total account premium for Florida condos regardless of whether the condo coverage is with or without wind.


Cincinnati

  • AM Best A+ Rating
  • Cincinnati fell off the Fortune 500 List this year.  As of May 2020, they did make the Forbes Global 2000: Cincinnati Financial is No. 1,354 among the top 2,000 public companies in the world based on a mix of four metrics for 2019 results: sales, profits, assets and market value.
  • While Cincinnati continues to be a competitive solution for multistate accounts they have broadened their appetite to include qualifying Florida accounts with no out of state balance.


PURE

  • AM Best A Rating
  • Policyholder-owned insurance offering broad and flexible policies, allowing you to tailor the coverage to meet YOUR needs.
  • Named “Best Insurance Underwriter” by Family Wealth Report Awards 2020 and “Best High Net Worth Insurance Company” at the 2020 Private Asset Management Awards.


Vault

  • Available in FL, SC, NJ, CT, PA, GA, TX, MD, DC, ME, LA, RI, VA, TN, MA.
  • Vault has tightened up their guidelines around year built, Dwelling Coverage, and are no longer allowing monoline secondary homes.
  • Vault Reciprocal Exchange is rated “A-” and Vault E&S is rated “A” by A.M. Best.

 

For individuals and families with distinctive assets, it is critical to make sure you have specialized coverage. Trust the advisors at Gulfshore Insurance to know precisely how to meet those needs.

Kevin Havemeier is an Associate Client Advisor at Gulfshore Insurance specializing in Private Risk Services. Kevin works with successful individuals and families with complex insurance needs. He analyzes his clients’ risks and collaborates with them to design customized solutions with the goal of ultimately delivering peace of mind. Comments and questions are welcome at khavemeier@gulfshoreinsurance.com

Hurricane DedutibleWith the devastation and damage left by past hurricanes, it is important to note some of the nuances that apply to homeowners coverage. Did you know that if you have hurricane coverage on your homeowners’ policy, you most likely have a separate hurricane deductible? A hurricane deductible is the amount a homeowner must pay (or is deducted from total claims payout) before insurance will cover the damage caused by a hurricane.

Many homeowners don’t realize that hurricane deductibles are separate from regular homeowners’ insurance deductibles and are based on a percentage of the home’s value, typically two to 10 percent. That percentage, along with details about a policy’s hurricane deductible, usually appears on the first page of your policy.

Nineteen states and the District of Columbia have hurricane deductibles. Florida laws are very specific regarding when the hurricane deductible applies, for what duration of time, and how many can be applied in a calendar year.

In Florida, hurricane deductibles apply for damage that occurs from the time a hurricane watch or warning is issued for any part of Florida, up to 72 hours after such a watch or warning ends, and anytime hurricane conditions exist throughout the state.

Most deductibles apply on a calendar year basis (some are per occurrence). Therefore, policyholders should always file claims even when the cost to repair the windstorm damage is less than the hurricane deductible. If you file the claim, the insurance carrier has a record of the amount of credit that should be applied towards the hurricane deductible for the second or subsequent claim resulting from a hurricane. For example, in 2004, some areas of Florida were hit by three major hurricanes in about 40 days.

Hurricane damage is usually extensive. Even though a $10,000 deductible may seem steep, it pales in comparison to the cost of rebuilding your home from the ground up without the financial help hurricane coverage offers.

If you have any questions or concerns, please do not hesitate to reach out to Gulfshore Insurance, we are here to keep you informed.

Andrea Pelletier, CPRIA, CPIA is Client Advisor and Partner at Gulfshore Insurance specializing in Private Risk Services. Andrea works with successful individuals and their families on creating and customizing package insurance solutions in the areas of luxury homes, car collections, jewelry, fine arts, watercraft, and personal excess liability. Comments and questions are welcome at apelletier@gulfshoreinsurance.com