If you own a home — or you’re about to buy one — you’ve probably faced the dreaded question: “What about homeowners insurance?”
That question can open the door to a dozen others, especially if you’re wondering what the bare minimum coverage is that your mortgage company will accept.
Today, we’re diving into that “less-traveled” road — exploring what minimal coverage looks like, what your lender actually requires, and what parts of your policy you might be able to adjust to save on premium (without putting yourself at risk).
⚠️ Important Disclaimers Before We Begin
- This isn’t advice to underinsure your home. As an insurance agency, we never recommend reducing coverage to the point that it puts you in financial jeopardy. A “bare minimum” policy is just that — minimal. These policies often include exclusions, limitations, and higher deductibles. Proceed with caution.
- Mortgage requirements vary. We’re not mortgage loan originators or officers. Requirements can differ by lender and loan type. Always confirm details with your licensed mortgage loan professional.
- Every policy is unique. The information here is general. If you have questions about your specific homeowners insurance policy, contact your agent for a personalized review.
- Affordability concerns? Think carefully. If your goal is to lower your premium, reducing coverage may not be the safest or smartest path. Some changes (like higher deductibles) could actually create bigger financial issues after a claim. Always understand how any change could affect your protection.
What Your Mortgage Lender Usually Requires in Florida
After helping thousands of Florida homeowners over the years, we’ve noticed that most lenders follow a similar set of insurance requirements.
Here’s what they typically want to see on your standard homeowners insurance policy:
- Dwelling coverage must be insured for the lesser of the loan amount or the estimated replacement cost of the home.
- Claims must be settled on a replacement cost basis — not actual cash value — unless depreciation can be recovered after repairs.
- The “All Other Perils” deductible must not exceed $5,000.
- The “Hurricane Deductible” must not exceed 5% of your Coverage A (Dwelling) limit.
That’s usually it.
NOTE: If your property is in a FEMA-designated high-risk flood zone, your lender will also require a flood insurance policy. Stay tuned for our next blog post where we’ll cover this topic in more detail!
How to Adjust Your Homeowners Policy and Still Meet Mortgage Requirements
Now that you know what lenders typically require, let’s look at what areas you can adjust to reduce your premium — while still keeping your mortgage company happy.
1. Review Your Dwelling Coverage (Coverage A)
Ask your insurance agent what the minimum dwelling coverage amount is that still qualifies for replacement cost coverage. Each insurer calculates this differently, but a slight reduction (within limits) might lower your premium.
2. Reduce or Remove “Other Structures” Coverage (Coverage B)
If you don’t have significant detached structures (like a shed or fence), you can often reduce this coverage to 1–2% of your dwelling limit — or even remove it entirely, depending on your insurer.
3. Remove Personal Property Coverage (Coverage C)
Florida law allows you to completely remove personal property coverage if you wish. Lenders don’t require it — but you’ll need to handwrite a specific statement (provided by your insurer) confirming your choice. Speak with your agent to get that form.
4. Adjust “Loss of Use” Coverage (Coverage D)
Some insurance companies allow this coverage to be reduced or removed, and most lenders don’t object. It’s not common, but worth asking about.
5. Lower Your Liability and Medical Payments Limits
You can typically reduce:
- Personal Liability to $100,000
- Medical Payments to $1,000
Savings here are modest, but every bit helps.
6. Consider Higher Deductibles
Ask your agent to quote your policy with:
- All Other Peril Deductible: up to $5,000
- Hurricane Deductible: up to 5% of your Coverage A limit
Just remember — higher deductibles mean more out-of-pocket cost if you file a claim.
7. Review Optional Endorsements
Many homeowners insurance policies include endorsements (optional add-ons). These can usually be adjusted or removed.
> Endorsements That Increase Coverage (and Cost)
You can often reduce or remove these to save money:
- Law & Ordinance Coverage (often 25%; can reduce to 10% or remove)
- Pool Cage Coverage
- Water Backup and Sump Overflow
- Service Line Coverage
- Equipment Breakdown
- Increased Replacement Cost on Dwelling
- Personal Injury or Loss Assessment
- Scheduled Personal Property
- Bundled “Enhancement” Packages (ask your agent to break these down)
> Endorsements That Reduce Coverage (and Save Money)
- Limited Water Damage Endorsement: Caps interior water damage claims at $10,000
- Water Damage Exclusion: Excludes water damage entirely (use extreme caution)
RELATED: Florida home insurance costs rose 1.5% so far in 2025. Will they ever get lower?
Bottom Line: You Have Options — But Be Careful
Reducing homeowners insurance coverage can help lower your premium, but it comes with trade-offs. Before making any changes, talk with your insurance agent about how those changes could impact your financial protection — especially in a claim situation.
If you’d like to explore a “bare bones” homeowners insurance quote that still meets your lender’s requirements, our team at Evolve Insurance Agency can help.
We’ll walk you through your options, explain the risks, and make sure you understand exactly what you’re getting.
Contact Evolve Insurance Agency today for a personalized quote or a review of your current policy.
David Kronk
Owner, Evolve Insurance Agency
Photo courtesy of Karola G via Pexels.com