Tips on Buying Homeowner's Insurance

Your insurance agent needs extensive information from you to quote you the best rate for your policy. To determine insurability, an agent will ask:


When was the home built?
How old is the plumbing and electrical?
What type of roof?
What’s the square footage?
How many claims have been filed over the past 5 years?
Where is the home located?

You can save money by having a higher deductible on your policy.

You have other choices on your home insurance policy that you can tailor. Liability coverage is a part of your homeowner's insurance policy that is often overlooked. This protects the insured against claims arising from bodily injury and property damage to others.

Make sure that you are getting all of the credits for which you are eligible. If you have an alarm system that reports to a central station (a company such as Brinks or ADT), in some cases, you can get up to a 20% discount. The most common discount is the multi-policy discount. This will save you money on your home and auto insurance.

Call your agent and review your homeowner policy at least every year. Needs change, markets change and coverages change. You should stay up-to-date on your insurance because you never know when you will need to rely on it.

Identity Theft - On the Rise

Identity theft is on the rise: Last year 9.9 million consumers had their data stolen, a 22% jump from 2007.

When shopping online look for the Verisign and other security verification, however also shop larger retailers who are more apt to follow the proper security and privacy guidelines.

When out at the mall or ATM beware of shoulder surfers, look for privacy when making your transaction.

Use the right card, it is always best to use a credit card over a debit card. Credit card companies offer protection from unauthorized transactions. Be sure to report any suspicious activity or a lost card immediately.

Understanding Residential Reconstruction Cost

Most Insurance companies today perform an home inspection after a new homeowner policy is issued. I am consistently asked Why is the insurance coverage amount greater than the current market value? Below is some insight into WHY....

Although we are always mindful of housing values, construction activity and other related trends, insurance companies adjust their coverage limits based on the costs to rebuild after a loss. Experience has shown that rebuilding figures often are significantly higher than the costs associated with building a new home.

Rebuilding versus new construction. Newly built homes usually do not include features added after occupancy, such as interior decorating, window treatments, expensive electronic systems and home theaters. The promise is to rebuild a policyholder's home to the same specifications of the original at the time of the loss. Doing so can lead to higher costs due to high-end custom features and the use of materials that are difficult to replace.

Unreported renovations. Homeowners spent $276 billion on home renovations in 2008; 30% of that amount ($83 billion) is attributed to high-net-worth households. Two-thirds of these home improvements, from expensive electronic systems to ornate window treatments are not reported to insurance companies but would be covered under a replacement cost contract.

Building in bulk. Developers buy a large parcel of land, subdivide it into building lots and turn a profit on both the land and the home. A contractor rebuilding a single home must make all his profits from a single source. Additionally, when building several homes, materials are bought in bulk at substantial savings.

Increases in labor and material costs. Labor rates in the construction industry increased by 4.5% in 2008, while materials used in residential construction increased by 4.9%. Costs increase even more when rush orders and additional labor are necessary to rebuild a home in a short time frame.

Resale value versus replacement cost. The average resale value for homes in the U.S. dropped about 11% in 2008. However, the cost to replace a damaged home went up. According to Xactware, a supplier of software used to process 80% of U.S. property claims (used by the six largest insurance carriers), the cost to repair a property after a loss increased 5.8% in 2008.

Sources:1 Joint Center for Housing Studies, Harvard University, 2009 2 U.S. Bureau of Labor Statistics3 4Q 2008 House Price Index, Federal Housing Finance Agency, February 20094 2008 Property Report, Xactware, February 2009

Types of Homeowners Policies - Did You Know

Single dwelling homeowners policies

This policy offers a comprehensive package of protection against losses or damage to your house and its contents caused by fire, windstorm, vandalism, theft and personal liability, among others. In addition to coverage to the structure, homeowners policies usually contain additional types of coverage: additional living expenses, personal liability and medical payments.

Condominium

This type of policy insures for the contents and property not covered by the condominium association’s policy.

Tenants or Renters

In addition to its availability to homeowners, similar protections are available to those who rent homes or apartments. If you are a renter, you do not need protection against damage to the building itself, but you do
need protection against damage to or theft of your personal property and liability in the event someone falls or gets hurt on the part of the premises you rent.

Types of Coverage

Homeowners Basic Form (Form 1)

Covers damage due to fire or lightning, windstorm or hail, vandalism or malicious mischief, theft, damage from vehicles and aircraft, explosion, riot or civil commotion, glass breakage, smoke, volcanic eruption, and
personal liability.

Homeowners Broad Form (Form 2)

Covers damage due to perils listed in Form 1, plus building collapse; freezing of or accidental discharge of water or steam from internal plumbing, heating, air-conditioning systems or domestic appliances, falling objects, weight of ice, snow or sleet, rupture or bursting of steam or hot water heating systems, and personal liability.


Homeowners Special Form (Form 3)

Covers risk of direct loss to physical property except with certain specified exclusions, such as earthquake and flood, for damage to or loss of he home (dwelling) or other structures such as a garage; all perils covered
by Form 2 for damage to or loss of personal property (damage to contents); and personal liability. Form 3 is more comprehensive and offers more protection than Form 2.


Tenants Homeowners or Cooperative Homeowners Form (Form 4)

Offers coverage for personal property for all of the perils covered under Homeowners Form 2 including personal liability.


Homeowners Form (Form 5)

Covers damage to physical property and contents, except with certain specified exclusions, such as earthquake and flood, for damage to or loss of the home (dwelling) or other structures such as a garage, and
personal liability. Form 5 is more comprehensive and offers more protection than Form 3.


Condominium Homeowners Form(Form 6)

Form 6 is designed for condominium owners to cover their personal property and liability, their portions of the building and loss of use from the same perils as Form 2.

Preventing Frozen Pipes

Its that time of the year, the holidays and the winter weather are approaching, the weather outside may be frightful but don't let this affect your holiday. A few simple ideas to keep the water flowing and to avoid unnecessary and untimely damage to your home.

More than half of all claims filed by our homeowners policy clients involve some form of water damage. Pipes that freeze and burst during cold snaps are one of the most common and destructive causes.

Plan ahead: Insulate, Most plumbing is located in the outer walls. And it's there that pipes are susceptible to freezing and bursting, as they are closer to the outside air. Properly insulate rooms where pipes may be exposed, such as the garage, attic, or crawl spaces. Insulate the pipes, too - the more, the better. Consider wrapping exposed pipes with heat tape or thermostatically-controlled heat cables. Just make sure the product is approved by Underwriters Laboratories Inc., and follow all the installation and operation instructions. Check for air leaks near pipes. Seal any with caulk or insulation to keep the cold out and the heat in.

Adding heat to protect plumbing in un-heated areas such as crawl spaces: you may add heat either by installing a short section of heating baseboard, an extra opening cut in a warm air supply duct running through a crawl area, a small thermostatically-controlled electric heater set to operate only at low temperatures, or in small but cold areas, a simple light bulb may provide enough heat to prevent freezing.

Last minute advice: Proper insulation takes planning and time. What do you do when the arctic express is just days or hours away? Here are a few simple precautions when the outside temperature drops below 20 degrees Fahrenheit: Keep the house heated to at least 60 degrees. Run faucets at a trickle of both hot and cold water. Open cabinet doors to allow heat to reach pipes under sinks and appliances near exterior walls. Disconnect outside garden hoses. Close the internal valves on the pipes that lead to the hoses, and then drain the pipes by opening and closing the external valves.

Special steps for vacation homes It's also important to protect your home or vacation home in case a cold snap hits while you're away. Keep the heat on (around 60 degrees). Ask a friend or neighbor to check your house daily to make sure it's warm enough. Consider shutting off the water and draining the water system. To do this, turn off the water at the main shutoff valve and turn on every faucet, both hot and cold, until the water stops running. Drain toilets by holding down the lever until the tank empties. To limit damage if a pipe bursts (or any type of plumbing leak develops), consider having an automatic leak detection and water shutoff system installed. Installing such a system can also earn a premium discount on you homeowner insurance in most states.

Copyright ©2009 PL-580 0409 Important Notice: This safety information is advisory in nature. No liability is assumed by reason of the information in this document.

Independent Agent vs. Do it Yourself Insurance

Everyday you see it, get your auto quotes in 15 minutes online or over the phone; stating they can save up to $500 here, $350 there. My question to you is, at what cost are you saving? Well, you really won't know until you are in that accident or you have a homeowner claim. You call the insurer's claim number and they tell you that the coverage that you selected does not include this and that.

Now I'm not saying you can't research insurance on your own to determine the correct coverage, however with today's hectic pace, is it worth your peace of mind to gamble with financial health by not having the proper insurance coverage that can be the difference between losing your financial assets, including your home.

The best course to save money on your personal insurance for your home, auto, boat, motorcycle, etc. is to contact an independent insurance agent. An independent insurance agent can not only educate you, they provide you with the proper coverage and shop your insurance for you. An Independent agent represents multiple insurance companies and can provide multiple insurance proposals.

Be wary of the national insurers and their agents, they only represent one insurance company and can only provide rates from the company they represent.