Builders Risk Insurance | E Greaves Jr.

I can’t emphasize enough the need to get the contractor’s firm estimate of the amount of time it will actually take to secure the necessary permits, materials, workers, and perform the work. Builders Risk Insurance policies are issued for terms of three (3), six (6), and nine (9) months, or one (1) year.

Builders Risk Insurance seems, like Flood Insurance before Hurricane Sandy, to be an afterthought.

My good friend, Jackson Robert, a Loan Officer with Prospect Lending, Inc., and a fellow member of the Bedford-Stuyvesant Real Estate Board, sends out weekly emails about trends and happenings in the mortgage industry.

This week’s email was an infographic about the 45-day Renovation Loan process. I was shocked to see no mention made of well, one of my favorite topics, insurance, and in this case, Builders Risk insurance.

So, I sat down and wrote this letter to Jackson. When I was finished, I realized I had the makings of a good blog. So here it is!

Greetings Jackson:

First, thank you for the great emails you send about mortgage lending. They are extremely informative, and when I share them with my clients, you make me look like a genius!

Regarding your latest entry about the 45-day renovation loan process I just have one question – What about the Builders Risk insurance?

Now, most people think they’ll just call a broker and get a quick quote over the phone.  Believe me, it’s not that easy.

A normal homeowner’s policy will not provide protection during any significant renovation. Many so-called “Insurance Experts” will convince your renovation loan clients that a regular homeowner’s policy is all they need. Once the company inspects the property, and believe me, nowadays they inspect every risk, the application will be rejected, and coverage cancelled. This can often make it more difficult to secure proper coverage because few insurance companies like to underwrite a risk once work has commenced.

The homeowner needs to secure a Builder’s Risk policy. Most insurance companies will require the following information in order to generate a Builder’s Risk insurance quote:

  1. A complete Scope of Work from the contractor who will be performing the work. This provides a room-by-room breakdown of the work to be performed, the cost for each job, and the time needed to complete the work, including required inspections.
  2. Certificates of Insurance for the contractor’s Worker’s Compensation, State Disability, and Commercial Liability insurance policies. The homeowner should be listed as an additional insured on these certificates. Your lending institution may also want to be listed on theses certificates. I’d suggest checking with your legal department about that.
  3. Copies of the contractor’s license. In New York City, this license is usually issued by the Department of Consumer Affairs. Caveat: The New York City license does not give a contractor the right to perform similar work in any other county. They must be licensed by each county or city.
  4. A copy of their listing on the New York City Department of Buildings website.
  5. The contractor’s resume or Statement of Ability regarding their past experience with the type of renovation you’re providing lending for and length of time in the business.
  6. Verifiable references from past clients the contractor has worked for in the last six (6) to 18 months.
  7. You also want to get the same information for any subcontractors involved in the renovation.I can’t emphasize enough the need to get the contractor’s firm estimate of the amount of time it will actually take to secure the necessary permits, materials, workers, and perform the work. Builders Risk policies are issued for terms of three (3), six (6), and nine (9) months, or one (1) year. The premium for these policies must be paid in full once bound and are fully earned.  So, if the client purchases a policy with nine (9) month duration, and the work is completed in seven (7) months, there is no pro-or-short rated return of premium.  One the other hand, if the work was supposed to take six (6) months and will, for various reasons, take longer, the homeowner will be forced to purchase another Builders Risk policy. Here’s a tip: If the contractor says the work will take six (6) months, purchase a policy lasting nine (9) months or a year. One good local disaster can set work and inspections back at least three (3) months.

For the insurance broker:

  1. Provide the insurance broker with a copy of any existing appraisals so they can prepare a before and after replacement cost estimator for the insurance company.
  2. Give the insurance broker at least five (5) business days to do their calculations, write-up and submissions.
  4. Inform the insurance broker whether this policy is being put out for bid so they can decide whether they want to offer one. These policies require a great deal of up-front work, on spec. Based on the type of risk, and the client’s relationship with other brokers or agents, an insurance broker may decide to not offer a quote.

A Final Thought

Don’t forget to discuss the need for purchasing flood insurance for these risks. Just imagine the catastrophe when, just a week before the job is done, the water main in the street outside the home breaks, or a severed rainstorm or hurricane and sends thousands of gallons of water rushing into your clients almost-completed home.

Jackson, I hope this information will improve your renovation lending success. Thanks again for the great emails.

You can contact Jackson Robert, Loan Officer with Prospect Lending, Inc. at 917-941-5018. You can also send him an email to [email protected]. 

BrooklynCovered.com is the online alias of none other than Eustace L. Greaves, Jr., LUTCF, a Brooklyn-based insurance agent and broker with more than 30 years of meeting his clients insurance needs. Send your insurance questions to Eustace at [email protected] or [email protected] .

Charitable Giving Rules | Eustace Greaves Jr.

The average tither or charitable donor making their gifts using checks or cash will find themselves facing massive tax penalties at audit if the charity receiving the gift fails to comply with one of the simplest charitable giving rules.

Why You Should Know The Charitable Giving Rules 

The average tither or charitable donor making their gifts using checks or cash will find themselves facing massive tax penalties at audit if the charity receiving the gift fails to comply with one of the simplest charitable giving rules.

Know The Substantiation Rules Or Suffer The Loss.

Whether you tithe for church, or make charitable donations to other local charities, you must know be aware of the need to substantiate your charitable donations, especially for those gifts in excess of $250.00. While most taxpayers keep copies of their cancelled checks used for their gifts, it is not always enough. Again, for gifts in excess of $250.00, the taxpayer should request and receive a letter acknowledging their charitable contribution (s)  from their church or other charitable organization. This letter, like many I’ve seen from clients while preparing their income tax returns this year, must be on the charity’s letterhead. The date on the letter must precede the date the taxpayer files their return (more on this later). The letter must clearly state the amount donated whether the gift was given in one lump sum, or over the course of the year. Several churches provided a weekly accounting of their member’s giving in their charitable giving letters. Most even included an enlightening Bible verse.

While all of these are great, and required, most of the acknowledgement letters I’ve seen this year fail to include a key requirement of the charitable giving rules.

One Of The Charitable Giving Rules Should Wake You Up At 3 AM

Out of the 32 clients with itemizable charitable gifts this year, only three had the most important line on their receipts or letters of thanks. What’s the line?

The simple statement which reads, “No goods or services were provided by the organization in return for the contribution.”

What’s that you say? I must be kidding, you say?

I am not kidding.

No matter what shape or form your letter of acknowledgement may take, when it lacks a statement clearly stating the gift was given for no reason other than the desire to give, you are actually unable to legally take the deduction for the cash or checks you donated. Your letter is in violation of IRS regulations.

How Would The IRS Find Out?

Several new clients were referred to me this year. One such client had the temerity to tell me it was no big deal, there was no way the IRS could ever check everyone’s charitable giving letters. So I told this client the story about the Durden case (Durden, T. C. Memo 2012-140).

In this case, the taxpayers entered charitable deductions on their Schedule A totaling $25,171. Most of these deductions were made by check to their church. Included in their records were their cancelled checks and an acknowledgement letter from the church.

At audit, the IRS disallowed their deduction because their letter lacked, that’s right,  you guessed it, a statement verifying neither goods nor services were given in exchange for their donations.

So, they went back to their church and got a second letter containing the required statement. They thought just getting another letter, in the proper format, would solve all of their problems.

Wrong.

The IRS rejected the second letter. Why? It did not meet the contemporaneous requirement. In order to meet this requirement, the letter had to have been received by the taxpayer by the earlier of the date their return was filed, or the return’s due date, including any legal extensions. The Tax Court agreed with the IRS. The deduction was disallowed. The taxpayers were slapped with additional taxes, penalties, and interest.


So, of course my new client says “Man, that’s no big deal. One family? That’s nothing.”

Sure. Unless you were also a member of their church who itemized their charitable donations on their Schedule A. See, the IRS knew just where to look.

Look, I don’t go fishing to show off my newest lures. I want to eat fish. I’m going to the lake, stream, or part of the shore where those babies are biting.

It only takes one return for the taxing authorities to discover new reasons to open further investigation.

The $100 Bomb.

If you think you only have to worry if you give small amounts, well, you should know me better by now. You know I’ve got another true story for you.

Several tax seasons ago, a good client of mine asked me include a donation she’d made to a friend’s church. She’d gone to hear the friend sing at a special church service, and her spirit was so moved by her melodious tones, she dropped $100.00, in cash, into the Special Offering plate.

And believe me. I know this lady. When she says she gave $100.00, well, it’s gospel.

Now, she gave me the church’s name, but lacked written proof she’d donated the $100.  At my suggestion, she went back to the church in an attempt to secure an acknowledgement letter from the church for her generous gift prior to our filing her return. She decided to include the $100.00 in her return. Meanwhile, her continued attempts to receive the acknowledgement letter met with futility.

Several months later, (nowadays, with electronic filing, it doesn’t take long for those letters to arrive at your door), she received a letter from the IRS requesting proof of the gift. This was the only item in her entire return the IRS wanted verification for. Unable to comply with their request, the deduction was disallowed, and she had to pay additional tax, penalties and interest.

On a $100.00 cash donation.

The moral of the story? Making donations by check or money order isn’t sinful. Doing so will save you additional taxes at audit. Take a few minutes to review your charitable giving letters to make sure they are in compliance with the law. If they aren’t, request a corrected letter, again bearing a date prior to the date you file your income tax return. I would also suggest the church or charitable organization provide corrected letters to each and every donor. It’s the decent thing to do.

Charitable giving rules, like many IRS rules, aren’t always as easy as they may appear. Take a few minutes to learn more about the charitable giving rules for cash and checks, and clothing, boats, stocks and the like, by reading IRS Publication 526 and Publication 1771.

Happy Filing.

Eustace Greaves, Jr. creates order out of client’s financial chaos using insurance, income tax planning and preparation, and sometimes, just good old divine guidance. Send him your questions, and quote requests to [email protected]. And whatever you do, don’t let his clients know he wrote this post when he’s supposed to be working on their returns and insurance quotes. That’s a check even his body can’t cash.

 

 

Covered For Plane Crashes? |E. L. Greaves Jr.

When I realized I was talking to Mr. and Mrs. Worrywarts, I asked them if a plane crashed into their home. They confirmed their lovely home was still in one piece, and I calmed them down. When I asked them why in the world they were worrying now, after living in their home for several years, about plane crashes, they told me about the tragic accident in Indiana.

Is Your Home Covered For Plane Crashes?

A private plane crashed into a residential neighborhood in South Bend, Indiana on Sunday, March 17, 2013. The plane which appeared to suffer mechanical malfunction clipped two (2) houses before crashing into a third home.  At last report no deaths were attributed to this disaster.

I learned of this disaster yesterday evening when a client, whose home lies in one of the flight and landing paths for JFK airport called.

Meet The Worrywarts

“Greaves! Am I covered if a plane crashes into my house? Am I covered, or what?”

My immediate response was, “Huh? What happened? Who calling, please?”

So he, calling to his wife yells out, “Honey, Greaves say we don’t have coverage if a plane crash into the house.”

“What?! Oh Lord, what we going to do then?”

When I realized I was talking to Mr. and Mrs. Worrywarts, I asked them if a plane crashed into their home. They confirmed their lovely home was still in one piece, and I calmed them down. When I asked them why in the world they were worrying now, after living in their home for several years, about plane crashes, they told me about the tragic accident in Indiana.

You should have heard their joint sighs of relief when I told them “Yes, your home is covered,” should an airplane crash into their home. Of course they asked me if I was sure about that. So I asked them to take out their homeowners insurance policy and turn, in this case, to pages five (5) and six (6) for a list of Specific Perils covered by their Homeowners 3 -Special Form policy. And yes, they keep it handy in their waterproof, fireproof, everything proof portable safety box.

Covered Peril number five (5) of fourteen (14) concerns “Aircraft, including self-propelled missiles and spacecraft.” So if little Rupert next door, who fancies himself a future rocket scientist, fires a model rocket through your window, and the subsequent fire burns your home, rental, coop or condo to the ground, you’re covered.

They were happy to hear that. Turns out they do have a little rocket scientist living next door. Kid’s name is Philbert.

Now I’m the one who’s worried.

 

Double Dees New Meaning | BrooklynCovered.com

This year, the cost to your employer to provide you with employer-sponsored health insurance (nontaxable, at least so far), is represented by the box 12 amount next to the DD’s. According to Notice 2011-28 in IRS Section 6051 employers are now required to show on each employee’s annual Form W-2 the value of the employee’s health insurance coverage sponsored by the employer.

Double Dee’s New Meaning, or, They Ain’t What They Used To Be

When I was a young lad, when somebody said “Double Dees”, it didn’t mean what double dees (DD’s) mean today. Today, the only place most people who aren’t artificially enhanced or children doing poorly in two (2) school subjects will find code DD is on the 2012 W-2 they received from their employer.

W-2 Wage and Tax Statement for 2012
W-2 Wage and Tax Statement 2012

Take a look at box 12 of  your 2012 W-2. If you work for an employer, large or small who offers a package of employee benefits, you’ve become accustomed to seeing the letter C, which refers to the taxable amount of group-term life insurance over $50,000. This is included in the amounts in boxes 1, 3 (up to the Social Security wage limit) and 5.

Another popular letter code is D, which refers to income deferrals you elected to make into a 401(k)  plan. This code can also include deferrals to SIMPLE retirement accounts that are a part of a 401 (k).

W-2 Instructions For Employees applicable to all, yet only read by a few
The W-2 Instructions For Employees applicable to all, yet read by only a few.

For those of you working for a local, state or federal agency, you’d see either the letter E or G. These letters refer to elective deferrals under a section 403(b) or 457(b) deferred compensation plan, respectively.

Back To The DD’s

This year, the cost to your employer to provide you with employer-sponsored health insurance (nontaxable, at least so far), is represented by the box 12 amount next to the DD’s. According to Notice 2011-28 in IRS Section 6051 employers are now required to show on each employee’s annual Form W-2 the value of the employee’s health insurance coverage sponsored by the employer.

Why Is This So Important?

Remember the 2010 Health Care Reform which finally became law on June 28, 2012? Well, the individual mandate requires all non-exempt U. S. citizens to maintain minimum health insurance coverage, beginning January 2014.  Failure to do so will result in their paying a penalty.

So Guess Where You’ll Pay The Penalty?

As a income tax professional, I will, beginning with the preparation of 2014 income tax returns, be required to confirm whether or not a client owns “minimum essential health insurance coverage. Doing returns for employees of firms with more than 50 employees will be easy – the information will be right there on the W-2.

I work with many sole proprietors and single-and-two person LLCs who will be required to show certain proof, such as a letter from the insurance company, cancelled checks, etc. In either case, proper proof must be submitted, or the penalty will be applied to your total tax liability on Form 1040.

Any preparer like myself, who fails to properly document the existence of this minimum essential coverage, will probably find themselves paying hefty fines for failure to conform to preparation rules. Here’s a hint: Additional rules will create additional forms to know and complete. Budget for certain increases in your income tax preparation fees. Just a word to the wise.

What If An Employer With More Than 50 Employees Doesn’t Offer Health Insurance?

Well, according to IRS Section 4980H, if they don’t offer their employees affordable health insurance, they will be subject to a penalty of up to $2000 for each employee.

Ouch.

So What’s So Good About The DD’s Now?

One of my clients came in for their tax preparation appointment just moaning and groaning about his job. When I explained what the DD code meant, he looked at me and said, “I will never complain about my job again.”

Amazing how little it takes for folks to appreciate all their job has to offer.

Even more amazing? These are the type of DD’s which turn me on now.

Oh, the humanity.

 

 

 

 

Blizzard Nemo Causes Accident on Flatbush Avenue | BrooklynCovered

Talk about your empty roads. On Vanderbilt Avenue, there was only me and an Evelyn Car Service car. I experienced the joy of solitude circling the Grand Army Plaza rotary. I was shocked to see no evidence of any accidents.

My joy was short-lived as I drove down the hill on Flatbush Avenue. There, about 75 yards away from the entrance to the Prospect Park Wildlife Center, were the remains of an accident between a parked tractor-trailer and a sedan.

Blizzard Nemo Takes It’s Pound of Steel

When I left my office tonight, (I was waiting for an income tax client to show up for her appointment. She called me at 9:00 pm to tell me she went straight home to get out of Blizzard Nemo, and tell me she wasn’t coming. This happens.) I thought about the various winter driving tips I’d shared with my January Point and Insurance Reduction Workshop class. Especially my advice that there was no shame in crawling.

Use first gear in bad weather
See the number one at the bottom of the tree? During a snowstorm, heavy rain, or the end of the world, put your car in first and leave it there.

 

“During a blizzard, suppress your ego and put your car in first gear and crawl. Better still, park the car and  stay in the house. There is absolutely no reason to have your car in drive when there is snow or ice on the road.

“And don’t forget to remove all the snow and ice from your vehicle. For your safety, you’ll have relatively clear fields of vision. For other drivers’ safety, they won’t have to worry about snow and ice flying from your vehicle and smacking their windshields.”

So, I cleaned off the car, put it in first gear, and started to crawl home.

Talk about your empty roads. On Vanderbilt Avenue, there was only me and an Evelyn Car Service car. I experienced the joy of solitude circling the Grand Army Plaza rotary. I was shocked to see no evidence of any accidents.

Enter The Reckless Driver

My joy was short-lived as I drove down the hill on Flatbush Avenue. There, about 75 yards away from the entrance to the Prospect Park Wildlife Center, were the remains of an accident between a parked tractor-trailer and a sedan.

Impact with a tractor-trailer
Totaled car after impact with a parked tractor-trailer

The tractor-trailer won.

The impact was so great the air bags deployed. And any ambulance driver will tell you that once the airbags deploy, someone is usually on their way to the emergency room.

What caused the accident? Looking at the markings in the snow I could only surmise the driver lost control when they crested the hill before the long downslope, or  tried to avoid another driver’s reckless driving.

 

Damaged bumper
Damaged bumper

Whatever the reason, you have to hope the driver of the vehicle and any passengers survived this accident.

And why do I think the accident could have involved another driver? While I was crawling my way along Ocean Avenue, a stupid idiot in an SUV suddenly got right up on my tail and started to flash their high beams.

I kept crawling.

They kept flashing. And started to honk, too.

Finally, I relented in my quest to keep this fool alive, and pulled over so some deity could take their wheel. Big Dummy flashed past, made the right on Newkirk, and kept on trucking.

I did get a look at their license plate. Florida, of all places.

I guess they took umbrage with my recent Facebook timeline.

Dear readers, in this and every dangerous weather condition, alway remember it’s okay to crawl home.

Read Your Homeowners Insurance Policy | Brooklyn Covered

Why did they think their flood losses were covered? I’m sure their insurance agent didn’t tell them they were covered. Heck, I inform each and every one of my clients about the need for flood insurance, even if they live in the middle of Bedford-Stuyvesant, Crown Heights, or Prospect Heights. The usual response? I usually get a “Oh, I don’t need that. I’m not near the water.”, or “Why are you trying to take more money out of my pocket? I can’t deduct you on my income taxes!”

Read Your Homeowner’s Insurance Policy.

It’s amazing. We nearly go over the fiscal cliff, people are still without heat, hot water, or even a home,  and lawmakers in New Jersey propose legislation to make insurance companies produce a single-page summary of a homeowners insurance policy.

This bill, A-3642, produced by the Financial Institutions and Insurance Committee, would require insurers writing homeowners insurance policies in New Jersey to provide each and every insured with a consumer-information brochure “written in a simple, clear, understandable, and easily readable way”, explaining the hurricane deductible and the need for flood insurance.

What a bunch of garbage. Just read your homeowners insurance policy.

Now, I don’t know about homeowners insurance policies in New Jersey, but here in New York, the second page of the homeowners policy covers Policy Deductibles, including the Hurricane Deductible, and tells the client their homeowners or dwelling policy does not provide coverage for losses caused by flood or mudslide.

It even gives you the short definition of what a flood is.

Don’t believe me? Well, here’s the renewal homeowners insurance policy of one of my long-time clients:

Homeowners Insurance Declarations Page One
Homeowners Insurance Declarations Page One

 

Homeowners Insurance Policy Declarations Page Two
Homeowners Insurance Policy Declarations Page Two

My client and I speak every year, and every year I remind them of the need to purchase Flood Insurance. (Heck, we’ve got to increase the Liability Insurance too.) As you can plainly see, page two of the policy clearly describes the Policy Deductibles, including the Hurricane Deductible, and even states there is no coverage for losses caused by flood or mudslide in the bottom half of the page.  It even reminds you who your insurer and mortgagee are.

It’s not that it isn’t there. Policy owners just don’t read it.

After 30 years in the insurance business, I know one hard truth: Ninety-five percent of all policy owners will never read their policy (ies) until, and only when, they suffer a loss. And they’re told they’re not covered for what caused the loss. Then, and only then will they actually take an interest in their policy coverages.

Oh, and this is when they tend to get really ticked off.

Look at what happened with Hurricane Sandy. How many people, either while evacuating, or remaining trapped in their homes, shared the mistaken belief their homeowners insurance policy covered them for losses caused by flood? Only to get the shock of their lives when they learned their homeowners insurance policy offered them zero (0) protection for their losses?

Too dang many.

Why did they think their flood losses were covered? I’m sure their insurance agent didn’t tell them they were covered. Heck, I inform each and every one of my clients about the need for flood insurance, even if they live in the middle of Bedford-Stuyvesant, Crown Heights, or Prospect Heights. The usual response? I usually get a “Oh, I don’t need that. I’m not near the water.”, or “Why are you trying to take more money out of my pocket? I can’t deduct you on my income taxes!”

I remind them they’re not covered for flood, which includes the water flooding your basement after a heavy rainstorm, or when the 90 year-old water main running down the middle of your street finally decides to burst and send hundreds of thousands of gallons of water cascading into your basements and cellars.

What’s really sad is it’s not just insurance policies which consumers don’t read. Recently, a client purchasing a condo came in for insurance. During the conversation, the client made statements leading me to believe they thought didn’t have to pay for any necessary repairs  done in their unit.

Luckily, the client had Offering Plan with them which provided not only a drawing of the unit, but the condo association rules and regulations as well.

With minimum effort, I showed the client where repairs to their unit were their responsibility.

Lord, why did I do that?

“They didn’t tell me anything about that!”

“Didn’t you read this Offering Plan from cover to cover?” I asked.

“Man, I couldn’t be bothered to read that whole book. You’re looking at it. What does it say?”

And therein lies the problem.

Real Housewives of Atlanta or L. A.? We’re all over it.

The Voice and American Idol? We’re watching every stupid episode.

Watching virile athletes vie for athletic glory? Sure, while filling our kegs with booze from a keg.

Reading trashy romantic novels, getting all sweaty over the sex, while your sexually frustrated man (or woman) is lying next to you, waiting for you to read their pages?

Heading for divorce court.

But ask someone to read, question and understand their condominium association’s Offering Plan? Or read the two (2) pages of their policy called the Declaration Pages?

Can’t be so bothered.

Hated it. Two snaps down in the deepest, dankest, dungeon.

Now, this sad state of affairs does not apply to every client. It just applies to too darn many.

I am blessed with more than a few clients who meet with me every year for their annual  homeowners insurance policy review. They want to make sure they own all the coverages they need to be fully indemnified in case of a loss. They may not enjoy being told it’s going to cost them a little more, but most of them upgrade their coverage.

Most important, they know what is covered and what is not.

And, at the end of the day, isn’t that what counts?

So, don’t make insurers kill more trees. Tell policyowners it’s their responsibility to read their policies. If they don’t understand what they are reading, then they should call their agent and set up an appointment to review their insurance policy (ies). Heck, they should do that every year.

So, save the trees! Read your policy!

 

Brooklyn Nets New Owner Takes Over | Brooklyn Covered

They took advantage of any educational opportunity they could get their hands on, often while working at minimum-wage jobs to achieve their goals. They instilled the value of education into their children, demanding they become the number one student in their class and their school. It’s an annual rite to read about some high school valedictorian on their way to an Ivy-League school, carrying SAT scores in the high 2200’s, who four years earlier couldn’t read or write any English at all.

This post won’t be about insurance, or taxes, or even defensive driving.

Next time.

This post is about the sea change already happening to the Brooklyn Nets. Changes for the good.

And many folks who read this post won’t like what I’ve written because it’s the truth.

I know many people who were poor immigrants to this country, only to become successful. When they first arrived, they cared less about buying cars and clothes, big-screen TVs, sneakers costing more than $40.00, and even having their own bed or own apartment. They shared apartments, and slept in shifts, sharing a bed. They shared a pot of stew or peas and rice. And if someone had a good week, there might have even been a piece of pork thrown in the pot for seasoning.

They took advantage of any educational opportunity they could get their hands on, often while working at several minimum-wage jobs to achieve their goals. They instilled the value of education into their children, demanding they become the number one student in their class and their school. It’s an annual rite to read about some high school valedictorian on their way to an Ivy-League school, carrying SAT scores in the high 2200’s, who four years earlier couldn’t read or write any English at all.

And children born here can’t read and write well enough to save themselves from becoming the profit margin for the prison industrial complex. 

And another thing. They came here with goals, written down on paper. They left themselves no room for excuses. In the words of Yoda, “There is no try. Do, or do not.”

You see, for them coming to the USA is not a joke, it’s life’s greatest opportunity. There’s always be another party.

So, here’s Mikhail Prokharov, a guy who worked his tail off in Russia, acquired great wealth, and even has the cojones to run against Vladmir Putin for the Presidency of Russia. He’s so busy building his empire, he doesn’t even have a girlfriend.

Which is driving his sister nuts. She won’t be happy until he’s married with children.

I don’t think he wanted to fire Avery Johnson: He simply made a statement. Everyone in the Nets organization, from Billy (“Baby, let’s pay off the mortgage, the cars, and the kids’ educations right now”) King, down to the lowliest ticket taker or floor sweeper, that for them, the new American way is based on the Russian values he grew up with.

Values that will send NBA prima donnas to basketball Siberias they didn’t even know existed. 

So to everyone who screams “Brooklyn” in the new arena like it’s some inane proof of fealty to the County of Kings, there’s a new sheriff in town. And “good enough” in his language, means failure. Pity these poor Nets should they fail to achieve the goals Prokhorov’s written on his piece of paper.

Tell you one thing: The Nets will win an NBA championship within three years. Only the best of the best will want to play for this owner, because they know he’ll do everything in his power to help them win.

Failure to win is not an option.

Your Duties After A Loss | Brooklyn Covered

If your policy includes coverage for additional living expenses (and if it doesn’t, go out today and buy a policy with this important coverage), you must again keep accurate records of your expenses for housing, food, and transportation.

Whether you rent or own your home, your insurance policy, in the Conditions section, lists your duties after a loss. Should you fail to comply with the duties which follow, your insurance company could deny you coverage.

  1. You must immediately notify your Broker, Agent, or your insurance company’s claims department of how, when and where the loss happened. Make sure to include the names, addresses and contact information of any witnesses and other injured parties.
  2. Notify the local authorities.
  3. You must protect the property from further loss or damage. This is where many people endanger their full indemnification after a covered loss. For example, if your roof has suffered damage, take as many photos as possible. Then, make reasonable and necessary repairs to prevent further damage. When this is done, take more pictures.
  4. Keep an accurate record of the expenses you incur to protect the property from further damage.
  5. If your home suffered water damage when the roof was compromised, make an inventory of the damaged property before you toss things out on the sidewalk, for example. Your inventory should include describe each item, and it’s cost. Again, take as many pictures as possible to prove your loss. Original receipts, and/or instruction manuals, are a terrific source of proof of ownership. I always tell my clients to prepare a complete Personal Home Inventory using a Travelers Insurance brochure as a guide. Your work at preparing a claim will go a lot faster and easier when you already have a prepared inventory.
  6. If your policy includes coverage for additional living expenses (and if it doesn’t, go out today and buy a policy with this important coverage), you must again keep accurate records of your expenses for housing, food, and transportation.
  7. Remember, you will be required to sign a sworn statement about all the damages and costs you’ve incurred. Don’t listen to anyone who tells you to inflate your loss and expense amounts. These are acts of fraud, and your company could refuse to provide coverage for any insured engaged in these acts.

Suffering a loss is tough, but you can make your recovery easier by following these tips.

Eustace L. Greaves Jr., LUTCF is a New York State licensed independent insurance agent and broker. To get a copy of the Personal Home Inventory Brochure, send Eustace an email to [email protected]. Or, stop by his office at 651 Bergen Street, Brooklyn, NY 11238, for a hard copy. Just give him a call at 718-783-2722 so he can tidy up the office before you stop by

Coastal Homeowners Insurance, Part 2.9 | Brooklyn Covered

While these and many of the usual features are important, they now take a back seat to a new and sobering reality; the ability to purchase affordable and good insurance coverage is first based on a property’s proximity to an insurance company’s recognized coastline.

Finding Coastal Homeowners Insurance Is The New Normal

When it comes to purchasing affordable and comprehensive coastal homeowners insurance, your home’s proximity to the coastline is the most important location characteristic.

I recently had the opportunity to speak with prominent Brooklyn real estate broker Anne-Marie Stanislaus. Anne-Marie, who can be reached at 917-887-7468, holds national certification as a Certified Distressed Property Expert. We spoke about which factors, or characteristics make a home more desirable.  According to Anne-Marie, a property’s location to certain amenities can sometimes be what makes or breaks the sale.  Anne-Marie listed several characteristics of  good property location:

  1. Transportation: In New York City, being near a dependable subway line, especially one with express service into Manhattan, and to Brooklyn’s Downtown Business Hub is a no-brainer. Unlike those commuters in say, Westchester, Nassau, Suffolk, or from points of origin in New Jersey and Pennsylvania, you eliminate the absolute need for a “station car” just to get to the first leg of your transportation day. When you throw in  an express station, and good surface bus service, you’ve got the makings of a winning property.
  2. Shopping:  Proximity to good supermarkets and farmers markets is desirable. This can also eliminate or reduce the need to use a car for food shopping. Add a mall or shopping center where you can get everything for your home, your clothes dry-cleaned, your shoes repaired, and your prescriptions filled,  and the property often becomes even more desirable.
  3. Some home buyers opt for the solitude or isolation of a more remote destination. They may own a home-based business requiring only a few trips into the city for client meetings each month.
  4. Good schools: This ranks high on the list of many young couples. Access to  excellent local public schools permits families to save more for their children’s college educations.

The New Normal

While these and other features are important, they now take a back seat to a new and sobering reality; the ability to purchase affordable and good insurance coverage is based on a property’s distance from the coastline.

You always wanted to buy a home with ocean, lake,  or river views. Ah, you thought, the peace of mind and serenity such views and lifestyle would afford me. Until you live and suffer through natural events like Hurricanes Irene and Sandra and Tropical Storm Lee. Then living near a surging ocean, or overflowing lake, or raging river won’t seem so peaceful.

Many homeowners insurance carriers now understand the risk of insuring coastal properties.  Agents and brokers for these companies will no longer bind homeowners or dwelling insurance coverage for properties within one mile of the coast.  (The coastal rules for condo, coops, and rental units are usually less onerous; ask your broker for their companies rules for these properties).

As an independent agent and broker, that requirement doesn’t pose any real problem for me.  I am able to  place my coastal homeowners insurance business with several good companies who are comfortable with this type of risk. One caveat: you will pay, on average, anywhere from one-half to two times as much for a coastal homeowners insurance policy as you would for the exact home more than a mile away from the coast.

Remember, in insurance, it’s all about the amount and type of risk a company will accept. So, should you present a greater risk, you will pay more for coverage. This is just a new reality many homeowners and home buyers must accept for homes in certain locations.

Companies’ Right To Decide

Every insurance company has the right, , with state approval, to decide where it will and will not offer coverage.

When an insurance company changes its underwriting policies for coastal properties, and then non-renews customers with homes are now in the exclusion zone, those former clients may face difficulty securing new coverage. (See my upcoming blog post about the ” Rule of 60/3 and 2/5″). The same customers who placed their auto, and in some cases, life insurance with a company they thought would be their insurer for a lifetime.

I think it’s wrong to simply dump loyal customers. My suggestion? Let those who are now insured with your company keep their coverage, so long as they pay their premiums and have a good claim history. Adjust premiums and require larger hurricane deductibles to account for the increased risk. If a client chooses to not agree to these changes, they can search for new coverage. Otherwise, replacing homeowners insurance policies in the coastal regions of Brooklyn and the rest of this region will be absolutely devastating for many homeowners. Personally, I don’t mind driving a few miles to reach the  beach. During the last decade, while watching ocean levels rise, and protective wetlands disappear, I tried to warn against the folly of  building and buying coastal properties. To me, it was always a game where Mother Nature ultimately wins.  Some homeowners will always choose a seaside, lakeside, or riverside home. They will, however, pay higher homeowners insurance premiums for their choice. 

For insurance purposes, your first location characteristic question should be  “Is this house at least one to one and one-half miles from the coastline?” Also, make sure to ask the agent or broker who’ll be insuring your home whether the homeowners  insurance company providing coverage will honor renewals should their coastal underwriting rules change.

If you now own a home within more than one and less than two miles from the coastline, you are entitled an answer to the latter question. If the answer is either an emphatic “No”,  or a weak “Yes, I think so”, now’s the time to start searching for a new homeowners insurance company. Otherwise, you may face the task of  buying a new coastal homeowners insurance policy sooner than you realized.

Then, as I mentioned to Anne-Marie Stanislaus, you can worry about schools, transportation, shopping and the like.

Location, location, location, indeed.

Heightened Awareness | Brooklyn Covered

“Increased inflation during their working years left their hard-earned pensions inadequate for the new financial reality of increased rents, and having to purchase Medicare Supplement coverage to fill the gaps in their health insurance. And, even if they own their own home, increased real estate taxes and utility bills will become an increasing burden at a time in their lives when, for the most part, their income will not increase each year.

“Many of these good folk are facing retirement and still have mortgages. Why? They fell prey to the siren song of refinancing during the years of mortgage madness. They used their hard-earned equity for new cars, vacations, window treatments and college educations for their children. They thought the gravy train would still be rolling down the tracks.

Recently, I had the pleasure of sharing ideas about money, savings, mortgages and the like with Mr. John Dallas, Program Coordinator for the East Flatbush office of Neighborhood Housing Services of New York City.

During the conversation, John asked me a question I’d never been asked in all my years of self-employment. “Eustace, as a self-employed person, are you ever afraid?”

Wow. Talk about being leaning into a Joe Frazier left hook.

I told John in all my years, no one had ever asked me such a question. After some thought, the best answer I could give him was, “While I don’t give in to fear, I do enjoy a ‘heightened awareness’ in all aspects of my life.”

“John, several years ago, I sat in my office with some friends, just shooting the breeze, you know, talking about the economy, business, what we were doing to increase the amount of business we had while keeping our current clients happy.  Everyone in the group was an entrepreneur, responsible for their own financial success.

“As I think back on our conversation that day, one thing stands out: Not one of us was boo-hooing about the economy. Instead, we focused on giving each other good business-growing ideas. In some cases, we exchanged leads, and promised to make introductions to other professionals who could be a source of help.”

“At one point several of us jokingly questioned our lack of intelligence for not having gotten one of those “safe” jobs decades ago, especially those of us who would be near the once-normal retirement age.” As we laughed about that, I stated that for many current and soon-to-be-retirees, the future was actually quite bleak.

Retirement Realities

“Increased inflation during their working years left their hard-earned pensions inadequate for the new financial reality of increased rents, and having to purchase Medicare Supplement coverage to fill the gaps in their health insurance. And, even if they own their own home, increased real estate taxes and utility bills will become an increasing burden at a time in their lives when, for the most part, their income will not increase each year.

“Many of these good folk are facing retirement and still have mortgages. Why? They fell prey to the siren song of refinancing during the years of mortgage madness. They used their hard-earned equity for new cars, vacations, window treatments and college educations for their children. They thought the gravy train would still be rolling down the tracks.

“They never thought it would dry up. And just imagine the financial calamity should the IRS send everyone who refinanced their mortgage a letter asking them to provide, in detail, how they actually used the money they got from refinancing. If they can’t prove they used these funds for the purchase of a property or the improvement of an existing property, and deducted the interest on Schedule A, Schedule E, or a combination of both, they violated income tax law.

“And John, everyone deducted the interest. In many cases, it was the only way the new mortgage was affordable.

“They forgot the story of the three-legged stool we all sit on in retirement. One leg is  income from Social Security, the second is pension income, and the forgotten third leg is personal savings. Just try to balance on a two-legged stool and chances are you’ll fall on your rear end every time.

“You see John, everyone forgot about the third leg. We were too busy cruising, travelling, eating out instead of in, purchasing big-screen tv’s to watch cable and dish programs which added no value to our lives, the newest ‘smartphones’, cellphone packages costing megabucks, and buying clothes which were too expensive and in many cases, never saw the light of day.  And shoes, don’t talk about the shoes.

“John, too many people purchased things to make themselves happy. Instead of cash-value life insurance, annuities, mutual funds, or even a simple bank account, they instead put their money in the street in the form of new cars they really couldn’t afford to insure or maintain, and on their backs for all to see.

“As a result, we don’t own the amount of savings we should. And the stool is real shaky.

John, a really good listener, was taking this all in. ” So what,” John asked, “do people like you do differently than others who work for someone?”

I told John that, while in the meeting, one of my friends used a term so profound, it’s stuck with me to this day. “Heightened awareness”, John, “heightened awareness.”

“My friend deemed those who worked for someone “The Normals.” Most of the time, they don’t even know how much is in their checking accounts because they know in a week or two, more money will magically appear to help them pay the bills. They don’t worry about health or dental care costs because they have benefit plans. Their employer provides them with a pension which may or may not keep up with inflationary pressures.

“What many of them lack is the entrepreneur’s sense of heightened awareness. We know how much a toner or ink cartridge costs. How many miles a gallon our car gets. We turn off lights when we’re not in the room, and are loath to use the air-conditioning until a pool of sweat forms at our feet.

“Most importantly, we spend for fun only after we meet our monthly obligations, not before.”

Now John is one of those folk who while employed by someone else, really has the soul of the entrepreneur. And, as many of my clients deal with the realities of debt, before and after retirement, they too are developing the heightened awareness so necessary to financial success.

So I looked at John and said, “My friend, I’ve yet to give you an answer. While I am never afraid, let’s just say I know when to waste time watching a football game, and when to sit down at the desk and send out an email, or prepare for a presentation. I love coupons in the supermarket, and DSW for the shoes my Little Princess needs.

“I know where just about every dollar goes.

“About a year after my fiancée died, our daughter and I were buying the office supplies I needed for the upcoming income tax preparation season. The total came to just shy of $800.00. When the cashier announced the total, my daughter held up her hand and said “Hold up there Daddy. Are you telling me we just spent almost $800.00 and we didn’t have any fun?”

“I looked at her and said, “No, I’m about to spend almost $800.00. And, should the plan reach fruition, this expenditure will enable me to generate the money necessary for the fun we’ll have in the spring and the fall.”

“That day, my daughter received her first lesson in “heightened awareness”, a lesson I’m proud to say she’s never forgotten.”

As our meeting came to an end, John and I agreed we should all work on heightening our financial awareness.

Otherwise, we may crack a hip falling off a two-legged stool.

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