Wednesday, October 12 2011
Do the geese flying south have you thinking of closing up your house and spending the winter in a warmer climate? Before you pack your swimsuit and sandals, take note: If you leave your house empty for too long, you could lose your home owners insurance — and your home equity if a fire or other disaster destroys or damages your house.
Insurance companies hate vacant houses, whether you’re taking a extended vacation or you’re moving out of town and leaving your house empty. If you’re not home and a water pipe busts, a fire starts, or someone breaks in, chances are the subsequent mess is going to be pretty big — along with the insurance claim for the damage.
If you’re lucky, your insurance company will let you leave the house vacant, but just won’t pay for certain things like broken glass, vandalism, or malicious mischief. At worst, your home owners insurance company will yank your policy if you go away and leave the house unattended for a month or more.
Some companies, like State Farm, decide on a case-by-case basis whether you can keep your policy when you’re temporarily not living in your home, especially if you’ve got a plan to take care of the place while you’re out of town.
Say you’re going on a two-month, around-the-world cruise (lucky you!). You’re more likely to keep your coverage if you hire a company to shovel the snow so your home looks occupied while you’re gone.
Some insurers will cancel your policy if your house is vacant for 30 days. If that happens to you, call a commercial insurance broker. Commercial agents sell insurance to landlords who have vacant houses all the time — during renovations, or when they’re between tenants.
Expect to pay about 15% to 20% more than you were paying for your regular home owners insurance.
The bottom line is that if you’re heading south for the winter, read the fine print in your home owners policy to see what it says about vacancies. Then, email your agent or insurance company to double-check the rules. Don’t call, because an email is a written record of your communication. You might need that record later if the company refuses to pay a claim because your house was vacant.
Have you left your house vacant for more than a month? Did you check your home owners insurance policy before you left?
Read more: http://www.houselogic.com/blog/home-insurance/vacant-house-insurance/#ixzz1a1kCq7uq
Wednesday, September 07 2011
An annual check-up on your homeowners insurance can result in a healthier policy and a healthier pocketbook.
It’s time for your annual check-up. The good news is that for this one, you won’t have to don one of those revealing hospital gowns—and you may walk away with a healthier pocketbook. We’re talking about a homeowners insurance check-up, a task you should complete once a year, ideally around renewal time. This will ensure your policy still provides the right level of coverage for your family, and your premium isn’t costing you more than it should.
Remember, homeowners insurance is essential. The coverage is designed to protect your home and its contents, as well as shield you from liability for accidents and such on your property. Block out an hour of your time, call an insurance agent, and get answers to these three important questions.
What type of coverage do I have?
The most effective type of coverage is known as “replacement cost,” which covers, up to your policy limits, what it would take today to rebuild your house and restore your belongings, says Jerry Oshinsky, a partner at Jenner & Block in Los Angeles who has represented homeowners in litigation against insurers.
“Extended” replacement cost coverage provides protection to your policy limit, say $500,000, and then perhaps another 20% of the cost after that. Percentages vary, but in this example you could recoup up to $600,000 on a $500,000 policy, assuming your losses reach that high. Extended coverage can compensate for any unanticipated expenses like spikes in construction costs between policy renewals. Now harder to find due to the industry shift toward extended replacement coverage, “full” or “guaranteed” replacement coverage covers an entire claim regardless of policy limits.
A less attractive alternative is “actual cash value” coverage that usually takes into account depreciation, the decrease in value due to age and wear. With this type of policy, the $2,000 flat-screen TV you bought two years ago will be worth hundreds of dollars less today in the eyes of your claims adjuster. Kevin Foley, an independent insurance broker in Milltown, N.J., favors replacement cost coverage unless you can save at least 25% on the premium for going with actual cash value coverage instead.
Even if you have replacement cost protection for your dwelling and personal property, don’t assume everything is covered. Structures other than your home on your property—such as a detached garage or swimming pool—require separate coverage. So too do luxury items like jewelry, watches, and furs if you want full replacement cost because reimbursement for those items is typically capped.
How much coverage do I really need?
OK, now that you’re clear on what type of policy you have, you need to figure out how much policy you truly require in dollar terms. Let’s say you purchased your home five years ago and insured it for $200,000. Today, it’s worth $225,000. Simply increasing your coverage to $225,000 may nonetheless leave you underinsured. Here’s why.
The key to determining how much dwelling coverage you need isn’t the value of your home but the money you’d have to pay to rebuild it from scratch, says Carlos Aguirre, an agent for Liberty Mutual Insurance in Arlington, Texas. Call your local contractors’ or homebuilders’ association and inquire about the average per-square-foot construction cost in your area. If it’s $150 and your home is 2,000 square feet, then you should be insured for $300,000.
There’s no rule of thumb for how much your homeowners insurance should cost. Insurers use numerous factors—age, education level, creditworthiness—to determine pricing, so the same policy could run you more than your neighbor. In recent years the average annual premium was $804. Oshinsky advises against scrimping on insurance because big increases in coverage probably cost less than you’d think. He recently purchased a liability policy that cost $250 for the first $1 million in coverage. Adding another $1 million increased his premiums only $12.50 more.
How can I lower my premiums?
The higher your deductible, the amount you pay out of pocket before coverage kicks in, the lower your premium. Landing on the appropriate deductible level requires remembering that insurance should cover major calamities, not minor incidents, says Foley, the independent insurance broker. Most homeowners should be able to absorb modest losses like a broken window pane or a hole in the drywall without filing claims. If you can, then you’re wasting money with a $250 deductible.
Foley’s rule: If you’re a first-time homeowner and don’t have a lot of savings, moving up to a $500 deductible will probably stretch your budget. However, if you live in a ritzy home and drive an expensive car, then you should be able to afford a $1,000 deductible. In Milltown, N.J., for example, the premium for a $200,000 home with a $500 deductible would be $736, according to Foley; moving up to a $1,000 deductible drops the annual premium to $672. That’s $64 in savings.
Every major insurer offers discounts to various groups, such as university employees or firefighters. Figure about 5%. Ask which affiliations would entitle you to a discount and how much. If an AARP membership would result in a $50 savings, pay the $16 dues and pocket the $36 difference. Many insurers also offer discounts ranging from 1% to 10% or more for installing protective devices like alarms and deadbolt locks, for going claim-free for an extended period, or for insuring both your car and your home with the same carrier.
G.M. Filisko is an attorney and award-winning writer who has been involved in insurance litigation. A frequent contributor to many national publications including Consumers Digest, Bankrate.com, REALTOR(R) Magazine, and the American Bar Association Journal, she specializes in real estate, personal finance, and legal topics.
Read more: http://www.houselogic.com/articles/homeowners-insurance-time-for-annual-check-up/#ixzz1Vln66sNJ
Friday, February 04 2011