 Helpful
Real Estate Tips
For more real
estate tips, see our Tips Archive
 Home Owner
Insurance Shopping Tips
Just a few days before your closing
you will be mandated by your lender to obtain homeowner’s
insurance on your newly purchased home. Typically you will pay one
year premium in advance. First off do not make the mistake of
insuring your house AND your land. Confused? Most homeowners are
asked by their insurance companies what the home they are buying
is worth. They typically blurt out the price they are paying for
their home. Wrong. Think about how much it would cost to rebuild
the house and replace its contents. Example: If the home price is
$300,000 the home cost (without the land it is sitting on) to
rebuild will probably only be $150,000. So you pay an insurance
rate on a lesser amount to rebuild which will mean a lesser
premium payment. An INFLATION RIDER is usually available for an
additional charge to keep up with inflation. This can help prevent
any future problems of being underinsured. Don’t forget when
adding improvements to the property such as additions, pools,
covered patios, etc. you should contact your insurance company to
make sure you are properly covered.
-
Ask about discounts. A security
system, being close to a fire hydrant, close to a fire station,
fire extinguisher or may just save you some money.
-
If your current automobile insurance
offers homeowners insurance it would be wise to get a quote. In
most cases they will offer you a better savings.
-
Consider a higher deductible on your
policy. Typically the deductible is $250 or $500. Increasing your
deductible could save up to 25% on your premium.
-
Another decision to consider is a
“FULL REPLACEMENT COST” or a “CASH VALUE” policy when insuring the
contents of your house.
Full replacement cost coverage (my
personal choice) for your home’s contents, will enable you to be
reimbursed the amount necessary to replace the destroyed or stolen
items with the same type and quality. This coverage’s premium is a
little bit higher than “cash value” policy coverage.
Actual cash value covers the ORIGINAL value of the item, less
depreciation, age, wear and tear. Example: Your couch that was
purchased 3 years ago for $1,000. It may only be valued $500 by
the insurance company due to depreciation. They will only pay you
$500 and it might cost you $1,500 to replace it!
Antiques and other valuable items in the home may need to be
appraised and insured separately.
HOW DO INSURANCE COMPANIES DETERMINE RATES?
Firstly if an insurance company wants to increase their rates,
they are required by law to submit the request to the Office of
Insurance Commissioner. If the analysts are satisfied with the
facts provided for the increase, then they are obligated by law to
approve the increase.
The factors for the amount you pay are based on the amount of
coverage you have, your claims history, your credit standing, and
other factors:
Credit History – Your insurance company may use information from
your credit history to determine an insurance “score”. Yes that’s
right folks here we go again…digging into our credit reports for a
rate. They take the relationship between your score and try to
determine the likelihood you will file a claim in the future.
There is a website:
www.choicetrust.com that will determine your “insurance score”
for a fee.
Claims History – Some companies may charge differently for the
number of claims you have filed. If you do have to file a claim I
would suggest not to file small frivolous claims but only file a
necessary big claim. Don’t be surprised when it is time for your
renewal if you are given a notice that they are dropping you
instead! It is a common practice when an insurance company has
paid out a claim.
Geographical Area – Some areas may be prone to wind damage,
hurricanes, or water damage (flood zones). The crime rate or
emergency response time in an area could also impact the premium
rate.
WHAT ABOUT YOUR HOME BUSINESS?
If you are setting up a home business you should check your
insurance coverage on your policy. Your policy may cover some
business related losses, but may be capped at a specific level.
Be Aware some business items or
products stored on your property may not be covered in full. There
may be some limitations and conditions. Another consideration for
your policy is the setting of your business. The insurer may
demand reasonable safety measures that are needed to deal with
certain kinds of equipment.
WHAT ABOUT YOUR PET DOG?
Believe it or not with the rising incidences of attacks insurance
companies have become very strict regarding pet dogs. Some
insurance companies will not issue a policy if you have a pet dog.
Others may issue a policy but as an additional rider to your
homeowner policy and yes you guessed it…an additional yearly
premium. There is an actual “list” of specific dogs that are
uninsurable or insurable only on a separate rider. Some of these
dogs on this “list” are: Pitbulls, Chows, and Dobermans.
Irene
For more Be
Aware topics, tips, and real-life real estate experiences, please
order your copy of:
The
Be Aware of Real Estate Handbook Today!!
|
Paperback
Edition $13.95
AVAILABLE NOW!
Order
Today and Save on Shipping!
CHECK OR MONEY ORDER ACCEPTED
Don't make the
same mistakes that have already been made by other home buyers and
sellers.
Learn the secrets
of
realtors, mortgage companies, buyers, sellers, etc. and
others involved in the home buying and selling.
Qualities that
you should look for when choosing your Real Estate Agent and
Mortgage Company.
A helpful
checklist to use when selling your home by owner.
|
