The Skinny on Loss of Use/Loss of Rents

Coverage D on dwelling and homeowners’ policies is often misunderstood by insureds. In the first place, all policies do not include this coverage: flood does not have provisions for this loss in any policy. The loss will be paid by the company that covers the peril it insures. So, if it is your policy that excludes wind it will not cover loss from a wind event. That would be covered by the wind policy. Example: the roof blows off and you cannot live in it, only the wind policy pays that loss of use. You don’t get loss of use and loss of rents both. You don’t get to claim anything unless the damage was done to your house; not because you have no electricity, your road is torn up or the bridge is damaged and you cannot get to your house.

Those are civil disruptions. You cannot claim your potential loss of rents but only those that can be proven to have been reserved for the dates in question which have to be refunded because the house has been damaged. Don’t expect a policy to pay for a hotel because you had to evacuate in advance of a storm. As with any question regarding your coverages, read your policy and contact your Agent to find out about your policy specifics.

Thumbnail Info for Flood

  • Everyone’s property is in a flood Zone: X, A or V and variations of those letters (AE, AO, VE etc).

  • Flood zones can split a property. A home can be in two zones.

  • A lender typically does not REQUIRE flood coverage in an “X” zone but may require it if any part of the property is in a V or A Zone and the house is an X zone.

  • X zone flood premiums are CHEAP.

  • Assumptions can be done on any federal flood policy provided both parties agree and PROVIDED there have been no structural changes to the home since the elevation certificate upon which the flood policy was based. If, for example, the flood policy was based on a home with no enclosure and there is an enclosure now, the flood policy is wrong and a claim could be denied.

  • If there is no lender involved, there will, by law, be a thirty day wait to get flood insurance on a property.

  • You can get more than $250,000 worth of flood coverage. It is called Excess flood and can be purchased up to the full value of the home or any increment over $250,000.

  • Elevation certificates that are usable must be signed and dated to bind coverage. Photos are required. Unsigned ones can only be used for a quote. Outdated EC’s can be determined by an Agent.

  • Flood policies must be paid in full. No payment plans or financing.

  • Rates do not vary from Agent to Agent or Agency to Agency if a policy is rated correctly. If it is rated incorrectly (such as an undocumented structural change) a claim may be denied.

  • The rate for a flood policy premium is affected by the replacement value of the house even though the limit on the basic flood policy is $250K.

  • Franklin County flood maps change on February 5, 2014
    The changing of flood maps requires that prospective buyers understand the impact of those changes on current and future flood policies

  • CBRA Flood (Schooners Landing, Cape San Blas,etc.) is not Federal flood and the guidelines and premiums are different!

  • For specific questions, call this Agent, Denise Butler at 850-670-1200 or email


    The Pros
  • A cash buyer can have flood in place at closing and not have to wait 30 days
  • Avoid the cost of an elevation certificate

  • The Cons
  • The buyer assumes the policy lock, stock and barrel including any possible errors
  • The seller may have changed the structure since the policy was issued
  • The value of the house may have changed since the policy was written
  • You cannot change deductibles until renewal
  • You cannot delete contents until renewal
  • If it is written incorrectly, a claim could be denied
  • It could cost more than you should be paying


    "Fixer Uppers"/"As Is-zers" Oh My!

  • Not all properties are insurable…not even by Citizens…really!
  • Companies want to know that licensed folks are pulling permits and overseeing renovations.
  • Nobody likes cedar roofs so there are hoops to go through.
  • Renovation policies require that the house not be inhabited while work is being done
  • Renovation policies do not include wind coverage on the island. This is not acceptable to lenders. NO MARKET FOR THIS.
  • All companies do inspections to evaluate the structures and to determine liability issues.
  • Areas of utmost concern include but are not limited to: Roofs, Electrical, Railings, Debris, exposed wiring and any unsafe condition. If it looks iffy, an inspector will think it doubley iffy.

  • Those who should consider the above:
  • Cash buyers
  • Ability to delay living in structure if major renovation is being done
  • Willingness to hire licensed contractors to do work and to have a licensed general contractor
  • Willingness to get appropriate county inspections. Those who get new roofs and don’t have final inspections done will be short-changed on credits.
  • Willingness to be placed with one company temporarily while work is being done and then moving to another company when work is completed.
  • Folks who don’t want insurance and have no lender.

  • Other noted considerations:
  • Age/Condition of roof is paramount. If it has leaks and does not have three years of life left there is no one who will insure it until the roof is replaced or repaired. Citizens (and most companies) don’t care if it is going to be replaced as soon as you close.
  • Any discounts require forms to be completed and photos to be submitted.
  • Companies do not want to see a 45 page inspection. They prefer the abbreviated forms. Forms used by Citizens are generally accepted by all companies. Now they want photos of all.
  • The market value of the house or loan amount is unrelated to the replacement cost required by the companies. A good insurance agent will tell your client that up front.
  • All companies require a valuation based on replacement cost. And, if a house is valued by an agent incorrectly, the companies will revise it and bill the client accordingly…even after the sale.
  • There is no advantage to over insuring a home. That is pure myth. There are big disadvantages for being under insured. They are known as co-insurance penalties. That is pure fact.
  • If a policy is cancelled for misrepresentation then the client may not able to get insurance at all.