When Dilman Thomas bought his home in Lee County 17 years ago, his homeowner’s insurance was $304 annually; it’s now $5,600.
“The biggest issue for homeowners to overcome is cost,” says Thomas, vice president of Oswald Trippe and Company, a Fort Myers insurance firm. “If homeowners have homesteaded their property or are locked into the Save Our Homes [program], which mandates that premiums can rise no more than 3 percent a year, they are safer than those who haven’t done either.”
In January, Gov. Charlie Crist signed into law the Florida Legislature’s bill to reduce property insurance. Florida residents besieged state lawmakers with complaints about rising insurance costs after the 2004 and 2005 hurricane seasons. During those two years, eight hurricanes cost insurance companies $36 billion, which they passed onto policyholders through large premium hikes. Some homeowners saw their insurance costs increase by as much as 90 percent through their carriers.
The new law freezes the premiums of the state’s Citizens Property Insurance, which now holds 1.3 million policies throughout the state.
“Citizens is supposed to be the smallest insurance company in Florida—the company of last resort,” Thomas says. “It’s now the biggest.”
The law also allows residents to drop wind coverage if they sign a statement confirming they understand the risk.
It is not a decision Thomas supports. “The three biggest areas
homeowners need to concern themselves with are mortgages, hazards and floods,” he says. “If homeowners can’t get windstorm coverage, they need to get a supplemental insurance.”
So exactly how much insurance should the owner of a home or a condo or a renter have? Is flood insurance really needed? What potential damage will a condo association cover? We asked Thomas to give us the basics on home insurance in Southwest Florida.

Replacement insurance. “The purpose of replacement insurance is to [assist you in being able to] sustain a loss from which you can’t recover [from otherwise],” Thomas says. Take an inventory of items in your home. Some insurance companies will give you cash value for items when making such a claim; for instance, an item that cost $700 a decade ago may now only be worth $300. Other insurance policies consider the rate of inflation to replace an item of similar value. Thomas says 50 percent of the policy should cover personal contents.
Get the flood, fire and windstorm coverage. Even if you don’t live in a flood zone, Thomas suggests getting the coverage. A $200,000 policy for flood insurance should be adequate. “People may not live in a flood zone, but they can live in an area that is flood-prone,” Thomas says. Expect a 30-day wait for the policy to kick in if it is for an existing home. The delay is to prevent a rush on the purchase of flood insurance in the case of a storm event and then a drop as soon as the threat passes. Thomas recommends $250,000 minimum coverage each for fire and windstorm damage.
Liability insurance. This covers homeowners and renters against a claim or a lawsuit in which bodily harm—such as a fall—or property damage occurs. Thomas says this kind of policy provides insured coverage of at least $300,000.
Condo associations only cover so much. Thomas says condo associations may or may not have a windstorm damage policy. Even if they do, condo associations are only responsible for damage to the exterior of the building, he says. “The carpets, the kitchen counters, the furniture—these are the unit owner’s or renter’s responsibility.” Condo residents should also consider a flood-insurance policy, especially if they are near the beach. “If the storm surge is strong enough, it can knock out the foundation of the condo, and your eighth floor unit becomes the first,” he says.
Even older homes can catch a few breaks. Do your homework. Even if your home is 20 years old, you may be able to get a few discounts if you have a hip roof, put on a new roof that is up to code, or add hurricane shutters or hurricane-proof glass.
“You can get credit for windstorm mitigation that you’ve installed,” Thomas says.
The impact of the law passed in January will be seen much further down the road. The Florida legislation expanded the role of the state’s Hurricane Catastrophe Fund as a cheaper alternative to the private reinsurance market. The law boosts the cap on the fund by $12 billion and lowers the threshold for insurance companies to tap the fund from about $6 billion to $3 billion.
Insurance companies are required to pass on the savings they get to their policyholders under the law. The estimated savings on insurance premiums range from 5 percent for many inland customers to averages of nearly 20 percent for others, particularly those in high-risk areas, such as the coast.
Whether or not the premiums drop, residents need to protect themselves as best they can.
“The better prepared you are, the less loss you are going to suffer,” Thomas says.
For more information about homeowners insurance, visit the Florida Department of Financial Services Web site at www.fldfs.com/consumers/literature/home guide2007.pdf.