Tag: Flood Insurance

Builders Risk Insurance for Home Renovations

Builder’s Risk insurance is the insurance needed when your home undergoes a mid-size or major home renovation.

Builders Risk Insurance and Flood Insurance should not be an afterthought

Purchase Builders Risk insurance when doing mid-sized or major renovations to your home

Home renovations mean buying Builders Risk insurance to protect your investment!

Jackson Robert, NMLS # 422697, a Loan Consultant with Loan Depot, sends weekly emails about mortgage industry trends and events.

This week’s email discussed the 45-day Renovation Loan process. It shocked me it lacked any mention of the need for  Builders Risk insurance.

So, I sat down and wrote to Jackson. When I finished, I realized it was important to reshare this information.

Greetings Jackson:

First, many thanks for your great emails about mortgage lending. They are extremely informative. And, when shared with my clients, they make me look like a genius!

Regarding the 45-day renovation loan process, I just have one question – What about the need for Builders Risk insurance?

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

A typical homeowner’s policy doesn’t protect during a mid-sized or major home renovation. Many insurance agents and brokers mistakenly place homeowners insurance policies on homes carrying 203(k) loans. They don’t realize they are placing their clients in.

They forgot insurance companies inspect most properties they insure

New York State licensed insurance companies are given a “60-day free look,” beginning with the day a homeowner’s policy goes into effect. During this period, the insurance company hires an outside inspection company to do exterior and interior inspections of the insured property.

One major deficiency an insurance company inspection uncovers

Insurance companies hate to insure homes remaining vacant for significant periods of time. Should the inspection uncover the home is vacant while undergoing a mid-sized or major renovation, the company can reject the application within the first 60 days. And because the policy was canceled for cause it  becomes more difficult to secure new coverage for two reasons:

  1. This is because many insurance companies won’t underwrite a risk once work has commenced.
  2. The original application for coverage could be considered fraudulent. And no insurance company wants to approve any fraudulent application.
Builders Risk insurance is imperative when your home is undergoing mid-sized or major renovations
Make sure you have Builders Risk insurance when your home is undergoing mid-sized or major renovations

How a homeowner purchases a Builder’s Risk insurance policy

The homeowner getting a 203(k) loan or making mid-sized to major renovations to their home must purchase a Builder’s Risk insurance policy.

Most companies offering Builder’s Risk insurance policies require the following information to generate a Builder’s Risk insurance quote:

  1. A complete Scope of Work from the contractor who oversees the work. This is 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 all required inspections.
  2. Certificates of Insurance for the contractor’s Worker’s Compensation, State Disability, and Commercial Liability insurance policies. The homeowner must be listed as an additional insured on these certificates. Your lending institution may also want to be listed on these certificates. I 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. Their listing is on the New York City Department of Buildings website. (You can find this website at https://www.nyc.gov/site/buildings/industry/check-license-registration-status.page.)
  5. The contractor’s resume or Statement of Ability regarding their past experience with the type of renovation being done and length of time in the business.
  6. Verifiable references from clients the contractor worked for in the last six (6) to 18 months.
  7. You must get the same information and documentation from subcontractors involved in the renovation.

    Get firm time estimates

    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, and workers, and perform the work.

How long do Builders Risk insurance policies last?

Builders Risk policies are issued for terms of three (3), six (6), and nine (9) months, or one (1) year. Premiums for Builders Risk policies must be paid in full once bound and are fully earned.  So, if the client purchases a policy with a nine (9) month term, and the work is completed in seven (7) months, there is no pro-or-short rated return of premium.

When renovations take longer than anticipated

On the other hand, if the work was supposed to take six (6) months and will take longer than anticipated, the homeowner must purchase another Builders Risk policy. Remember this: If the contractor says the work will take six (6) months, purchase a policy lasting nine (9) months or one year.  Just one local disaster can set work and inspections back at least three (3) months.

For the insurance broker:

  1. Give the insurance broker a copy of any existing appraisals. Then they can prepare before and after replacement cost estimators for the insurance company.
  2. The insurance broker needs at least five (5) business days to do their calculations, write-ups, and submissions.

    Give the insurance broker a friendly heads-up

    Tell the insurance broker when you put the policy out for bid. Then, they can then decide whether they want to invest time to develop a quote.

    These policies demand a huge up-front investment of time and energy. Based on the risk type, and the client’s relationship with other brokers or agents, an insurance broker may decide to not offer a quote.

A Final Thought about Flood Insurance

Furthermore, don’t forget the need for purchasing flood insurance, even for buildings undergoing significant renovations.  Flooding creates damage not typically covered by either home or Builder’s Risk insurance policies. Flood damage caused by broken water mains, or severe rainstorms, or hurricanes could inundate the home, thus creating an uninsured loss.

Jackson, I know this information will greatly improve your success in making renovation loans. Thanks again for the great emails.

About our expert:

 Jackson Robert is a 23-year veteran of the mortgage business. You can contact Jackson Robert, your favorite Loan Depot Loan Consultant, NMLS # 422697, at 917-941-5018. You can also email him at [email protected]

About the author

Eustace L. Greaves, Jr., LUTCF, is an NYS-licensed Independent Insurance Agent and Broker. He has 41 years of experience, 26 of those years as the owner of Bridge Insurance Agency.

Like to speak with Eustace?

Eustace wants to assist you with your home, life, flood, disability, renters, auto, cooperative, condominium, and wedding insurance needs. You can reach him at his mobile number,  718-489-2218, his office number, 718-783-2722, or by email at [email protected]. Or, go to his website, https://greavesinsurance.com, and complete any of the available “Contact Us” forms.

How to subscribe to the “Never Knew News” newsletter

If you’d like to receive a free subscription to Eustace’s monthly newsletter, “Never Knew News,” go to his website, https://greavesinsurance.com, and click on any of the Subscribe buttons.

 

Live Life Fully Covered

One of the best things you can do in life is to “Live Life Fully Covered.”

It’s time to just be honest and admit many bad things, gruesome tragedies and heart-rendering losses don’t always happen to “The Other Guy or The Other Woman.”

You Can Be “The Other Guy”

One day you could be “The Other Guy or The Other Woman” who;

  • Loses their husband or wife whose income helped meet mortgage payments, to cancer;
  • Suffers a life-changing heart attack which requires you to stay home to recuperate for six (6) months to a year or more;
  • During their prime working years finds themselves as the primary care-giver for a parent, other elderly relative, or even a sibling who lacks long-term care coverage;
  • Experiences the pain of  burying a child;
  • Watches as their house containing all their treasured belongings accumulated over a lifetime burns to the ground;
  • Comes home after a hard day at work to discover they’ve been burglarized;
  • Needs money to secure a new place to live while your home, co-op or condo is being rebuilt;
  • Gets sued by the cyclist, pedestrian or other driver who can prove you were at fault;
  • Gets sued by the cyclist, pedestrian or other driver who can’t prove you were at fault, but you must engage the services of an attorney to defend you against a baseless suit;
  •  Watches as their home is inundated by two (2) to ten feet of floodwaters even though you bought your home in a non-Special Flood Hazard Area (SFHA).
  • Owns the sweet and gentle nice old dog walking off the leash who rears up and mauls or takes a bite out of your neighbor’s child;
  • Wonders who stole their new car;
  • Never gets their wedding and bridesmaid dresses because the bridal shop went out of business unannounced, and the owners didn’t return your deposit.

It doesn’t always happen to “The Other Guy or The Other Woman.” It’s also amazing how these types of tragedies frequently happen yesterday, last night or while you were thinking about taking action to put the proper coverage in force.

Can Life’s Tragedies Be Stopped?

You can’t stop life’s tragedies. You can, however, take intelligent, adult steps to control their outcomes using;

  • Life Insurance
  • Disability Insurance
  • Long Term Care Insurance
  • Homeowners Insurance
  • Renters Insurance
  • Co-op Insurance
  • Condominium Insurance
  • Flood Insurance
  • Auto Insurance
  • Personal Umbrella Liability Insurance
  • Wedding Insurance

In over 37 years of helping my clients reach successful life outcomes using insurance and related financial services and products, I’ve realized for me it all comes down to one simple phrase:

“Live Life Fully Covered.”

I would be honored to help you reach your desired outcomes. Call me at 718-489-2218, or reach me by email at [email protected] .

Let’s work together to make sure you “Live Life Fully Covered.”

Hurricane Season Preparation

There is no substitute for Hurricane Season preparation

With the 2019 hurricane season underway, we would like to remind you of the importance of preparing for potentially destructive storms. Here are some things you can do today, before a storm approaches, to help keep you and your family safe throughout the hurricane season.

How do Hurricane Watches and Warnings differ?

Understand the difference between a hurricane watch and a hurricane warning. A hurricane watch means that a hurricane may occur within the next 24 to 36 hours. A hurricane warning means that a hurricane will probably strike your area within the next 24 hours.

Prepare a storm survival kit.

  • A complete list of essential supplies is available on Ready.Gov.
    Certain preparations must also be made for disabled persons, senior citizens, and pets.
  • Taking any medications? Ask your pharmacist and physician for an increased prescription package so you will always have an additional 30 days of medication available in waterproof containers.
  • Make complete front and back copies of drivers licenses, identification cards, and all credit and affinity cards. Other important documents such as mortgages, deeds, birth and death certificates should be copied and the originals should stay in a safe deposit or a water and fireproof security chest.
  • Plan your evacuation route in advance of the storm.
    Arrange for a family or friend who lives far away from the danger zone to act as a central communications hub so family members who may be split up can call and confirm where they are and their condition.

Create Your Family Communication Plan

  • Establish a safe location for family members to reconnect.
    Make sure you have at least one credit card with the full credit limit available to you should you need to rent hotel or motel accommodations until you are able to return home.
    Secure storm shutters and board up all windows.
    •Stock up on drinking water and non-perishable goods.
    •Have a supply of batteries and be sure you have flashlights and a hand-chargeable portable radio in good working condition.
    •Keep your cars gas tank at least 3/4 full just in case you are forced to leave your home or town immediately.
  • Purchase a five-gallon gasoline or diesel fuel container (Yes, they are different. The gasoline containers are usually red in color, while the diesel containers are yellow.), and fill them at the first mention of a Hurricane Warning or Hurricane Watch to prevent the possibility of your running out of fuel.

Don’t Forget Your Flood Insurance

The typical home, dwelling fire,renters, co-op or condo insurance policies do not cover losses caused by a flood. And unless you’re buying your coverage for a closing, you will have to wait 30 days for your coverage to become effective, so purchase your flood insurance coverage today.

Please remember, we are here to help. If you have any questions, do not hesitate to contact us.

Check your local weather

Eustace L. Greaves, Jr., LUTCF is a New York State licensed independent agent and broker. parYou can reach him through email at [email protected], or by phone at 718-489-2218.

Floodplains Outside Your Front Door

Unfortunately, for many homeowners, the answer they receive from their agent or broker will be “No, you don’t have flood insurance. You’re three and one-half miles from the nearest coastline. And if you recall we discussed adding flood insurance coverage to your insurance portfolio and you refused to spend money on a flood insurance policy when you lived in what you considered a very safe flood zone.”

Floodplains in Bedford-Stuyvesant? Bushwick? Brownsville? Park Slope? Fort Greene / Clinton Hill? Carroll Gardens? Getouttahere!

Floodplains are everywhere?

Who knew?

Picture this. It’s another beautiful day in the wonderful city of Brooklyn, New York. The birds are singing, the flowers are blooming, and that annoying depression in the middle of the street halfway down the block (which happens to be right in front of your house), suddenly erupts into the most glorious of geysers. Hundreds of thousands of gallons of water burst into the air,  land on the street and your sidewalk, and begins to pour into the first floor, garden level, and basement of your beautiful home.

Well, your formerly beautiful home. I mean, you can still use the upper floors.

You hope.

Strange how you never noticed your block is one of three forming a shallow valley. No matter which point you turn to on the compass, you realize adjoining streets and avenues all slope down to where you stand. In fact, it reminds you of the pictures you’ve seen of floodplains around the country. So that geyser spewing tens of thousands of gallons of water each minute from a broken underground water main, is filling up yours and the surrounding blocks as though they were one huge swimming pool.

And the water is getting deeper by the minute.

You suddenly realize what floodplains are, and your existence in one.

Thank Goodness For City Services

One real positive about living in New York City is how quickly the Department of Environmental Protection, (DEP), reaches your block and shuts off the main which gave life to the geyser, just an hour or two. Once they shut the water off, they set about pumping out the water which collected underground. After that they’ll invite each local utility with underground pipes, tubes and wires in the general vicinity of the water main break to come and check their equipment, making any necessary repairs.

Once this and other work, including repairs to the water main, are completed, the giant crater in the street is repaired, the water service restored, and all will be well with the world again.

Well, almost. You see, several major problems remain.

Property Owner, We Have A Problem

As the water poured into your home, you quickly called your homeowners insurance company to report the claim, only to learn your loss isn’t covered by your homeowners insurance policy.

Flood, as your insurance company’s customer service representative explained, is not covered by the typical homeowners insurance policy. This is clearly discussed in the Exclusions section of each homeowners insurance policy which reads,

“WATER DAMAGE, MEANING:

a.    Flood, surface water, waves, wave wash, tidal water, overflow of a body of water, or spray from any of these, whether or not a result of precipitation; or driven by wind … “

So, even though your property located miles from the coast, and you are not in a high-risk flood zone, you suffered a loss caused by a flood.

Your basement is a disaster. You need to rip out and replace floors, ceilings and walls, and replace your hot water heater and boiler and the freezer. Where will you find the money going to come from for all of these unexpected expenses?

The customer service representative asks you a frightening question. “You don’t have a flood insurance policy with our company. Do you have a flood insurance policy with any other company?”

Will You Get Good News or Bad News?

Now comes the moment of truth. You call your insurance agent to see if you have a flood insurance policy.

Unfortunately, for many homeowners, the answer they receive from their agent or broker will be “No, you don’t have flood insurance. You’re three and one-half miles from the nearest coastline. And if you recall we discussed adding flood insurance coverage to your insurance portfolio and you refused to spend money on a flood insurance policy when you lived in what you considered a very safe flood zone.”

If you think this is wrong, look at the situation in Baton Rouge, where they recently suffered heavy rainstorms which lead to wide-spread flooding. In Baton Rouge and its surrounds, some 82% of the houses suffering flood damage lacked flood insurance.

To make matters worse, some 7,000 plus businesses in the affected area suffered severe flood damage, causing them to at least temporarily, close their doors.

Over 73,000 employees are now unemployed until the affected businesses can secure bank and federal loans to reopen. If they ever reopen.

And some 80% percent of the affected homes and businesses are located in “X” flood zones, the zone where you should only have to worry about floods every 500 years.

Climate Change, Anyone?

This and other past and future flooding events prove there is a new model of what is a “safe” flood zone. Here’s a hint: There are none.

New construction which places concrete and macadam on what was permeable ground, changes the very nature of a community, increasing the flood risk.

Aging infrastructure in the shape of bad roads places more stress on underground water pipes, which themselves are in serious need of replacement, causing more and larger water main breaks.

For properties closer the shore, rising sea levels, and a warmer Atlantic Ocean create hurricanes packing increasingly greater destructive power, resulting in more damage to sandy beaches and dunes, and the homes they were designed to protect.

And the hurricane season, which is ‘supposed’ to only run from the first of June until the first of November, seems to start earlier, and end later, each year.

So please take this simple bit of advice: “Hurricane Season” is no longer just a season, it is a year-round event.

Flood zones are just lines on a piece of paper, and water is no respecter of lines on a piece of paper.

We are all at risk from the danger of flooding, and the rebuilding costs which follow.

Stay dry.

Eustace L. Greaves, Jr., LUTCF is an independent insurance agent and broker based in Brooklyn, NY. Call him today at 718-783-2722 to make an appointment for your personal insurance review of your home, auto, flood, renters, coop, condo, life and disability insurance policies.

You can also reach Eustace with an email to [email protected].

New York City’s Three Rivers

This, unfortuately is when any business and property owners and renters learn they have absolutely no coverage for the foot or two of water which found it’s way into their living spaces.

What, you think Pittsburgh is the only town with three rivers? Trust me, New York City’s three rivers can beat that!

I couldn’t think of a better way to introduce my BrooklynCovered.com series on Flood Insurance, than using the actual example of what happened during and after a water main break on the night of July 31, 2015.

It proved what Rich Slevin of H2O partners, America’s  leading Flood Insurance education providers loves to say:

“If it can rain there, it can flood there.”

The series will answer questions about, but not limited to:

  • What is a flood?
  • What is a FIRM (and no, it’s not a new fitness gym)?
  • What does a flood insurance policy cover?
  • Why doesn’t my homeowners insurance policy cover flood?
  • What’s an Elevation Certificate?
  • What does Remapping have to do with me?
  • What’s this mandate I keep hearing about?
  • What are the requirements I must meet to buy a Preferred Risk Policy?

and other aspects of this little-understood, but oh so necessary coverage.

Our story begins on the evening of July 31, 2015. It was a peaceful, warm and pleasant summer’s night, when suddenly, all hell broke loose.  A twelve-inch (12″) water main burst at the intersection of Flatbush and St. Marks Place at or around 8 pm, shutting down train, bus and car traffic beneath, on, and through the Flatbush Avenue corridor from Grand Army Plaza, all the way down to just before the Barclay’s Center complex.

While the MTA, National Grid, and Consolidated Edison worried how this would affect their subways, gas and electrical services, businesses along Flatbush Avenue, and homeowners and renters on Saint Marks, Prospect Place, and even Bergen and Dean Streets  were even more concerned about how much, if any, water would wind up in their basements and garden level apartment spaces.

This,  unfortunately is when any business and property owners and renters learn they have absolutely no coverage for the foot or two of water which found its way into their living spaces.

So before we begin the Flood Insurance series in earnest, take a minute to watch a brief video of what lies beneath a typical new york city street.

What lies beneath. Sounds like a monster movie.


While I will do my best to work through the intricacies of flood insurance first, I will be touching on other subjects in the coming months. I plan to have Tax Tuesdays, Flood Insurance Fridays, and other insurance and defensive driving posts the rest of the week.

Stay dry,

Eustace

Eustace L. Greaves, Jr., is a New York State licensed insurance broker, qualifying income tax preparer, and defensive driving instructor. He is based in the Prospect Heights section of Brooklyn, with most of his clients residing in the Downstate New York Region. You can reach him at his office by telephone, 718-78–2722, or by email, [email protected] .

 

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