Tag: homeowners insurance policy

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.

 

A New Mortgage Contingency Looms

Editor’s note: Since this post’s original publication date of December 5, 2022, changes in the insurance marketplace make the need for a new mortgage contingency clause a reality.

Too many companies to count ceased accepting new applications for home and dwelling insurance in many states. Many companies now employ geospatial resources in deciding whether to insure homes at a local level.

Many companies are ceasing to write insurance in ‘coastal areas.’ These encompass communities located near the coastlines of oceans, rivers, inlets, bays, and lakes. This will prove problematic for mortgage and real estate professionals as insurance coverage either be highly expensive or impossible to secure.

A new mortgage contingency looms in the near future.

 

In this post, I’ll do a quick review of some of the better-known mortgage contingency clauses. And I’ll discuss one I believe many, if not all real estate attorneys and allied professionals should add to client contracts.

What are the contingencies in a real estate deal?

A contingent offer is a standard way that buyers agree to purchase a home if certain conditions are met. If the conditions are not met, then the buyer can back out of a sale without fear of losing their downpayment.

The Home Inspection

For example, a home- inspection is one of the most common contingencies. Some buyers are not willing to spend money on inspections unless they can back out of the purchase, or renegotiate it, at the end of the process.
A home inspection can reveal all sorts of problems from mold to bad floor joists. It is one contingency that is nearly always made on a sale.

Also, in my experience, the home buyer who hires a qualified home inspector, and stays with the inspector during the inspection is a more informed buyer. I can’t tell you home many home buyers call me for home insurance proposals who don’t even know the outside and inside square footage of their future home. Heck, how do you know your bed and living room furniture will fit? And how many can’t provide the month and date of important home upgrades that are part of normal maintenance? Not to mention the shutoffs for the gas, oil, electricity, and water services.

Which are the best-known contingencies?

The Mortgage Contingency

Another important contingency is the mortgage contingency is also, at least until now, the most common.  The mortgage contingency protects the buyer and the seller from a situation where the buyer can’t get a loan to cover the sale price. The buyer receives a certain amount of time to get a loan. He may think he has the mortgage lined up, but things happen. If he can’t get a lender to agree to the loan, then the buyer can back out of the agreement. This wastes everyone’s time and that’s why there is also an appraisal contingency.

The Appraisal Contingency

The appraisal contingency is good for the buyer because it helps ensure the property is actually worth what he is paying for it. In this case, a lender hires a third party to put a value on the property. If the value is less than the buyer is paying, then the buyer can cancel the deal.

While you may hear of non-contingency deals in hot real estate markets, these can be extremely risky for buyers and sellers.

You might hear of them in a case where the price is low and the buyers have cash. In this situation, the buyers sign the contract without an inspection. It is somewhat risky for the seller because if there is something dramatically wrong with the property, the buyers could sue. On the other hand, it is terribly risky for the buyer because they don’t know what the pitfalls of the property are.

A New Contingency Clause. The Availability of Home Insurance Clause

I strongly suggest real estate attorneys begin to include a new contingency clause in their contingent offers.

The new clause?  The Availability of Home Insurance Clause.

The reason for this new clause is simple – homeowners insurance may simply become unavailable in certain parts of the country. The inability to find home insurance that meets lender requirements may become difficult based on the homes’ location and other factors. What caused homeowner insurance rates to increase exponentially?

Several factors recently caused home insurance rates to skyrocket:

    • A 40.4% increase in the cost of residential building supplies since January 2020;
    • An increase in home replacement costs to match this inflationary rise;
    • Devastating hurricane and flood damage in Florida, the Eastern seaboard, and the Gulf regions of the United States, no doubt caused in large part to climate change;
    • An expected unprecedented increase in January 2023, in the cost and availability of reinsurance purchased by insurance companies.

What is reinsurance and why is it so important to insurance companies?

That will be the subject of an upcoming post. For now, suffice it to say without the ability to purchase affordable reinsurance, home insurance companies will have no choice but to limit their policy offerings.

For example, companies known as reliable markets for coastal or rural risks could severely limit how the number of policies they write or place a moratorium on writing these types of risks for a specified time.

In the past, some companies, concerned about their reinsurance costs and exposure to possible natural disasters simply chose to non-renew policies in certain areas.

It simply means a disruption in the availability of home insurance, especially for those purchasing a new home. In some cases, insurance companies will require more underwriter approvals, and proof of sound maintenance of the proposed risk. They may also be limited in the number of policies they are able to write with particular companies.

In the worst-case scenario, some independent agents and brokers, and captive agents, may find themselves losing insurance markets altogether.

And this matters because . . .

Without reliable and affordable markets for home insurance, home lending will crawl to a stop.

image shows relation between owning a home and the need for insurance
Let’s talk about home insurance

The bank will not close any mortgage unless ample proof of coverage in the form of a binder and a paid receipt is received by them prior to the closing. Without both, there will be no closing, and the purchaser will lose their downpayment.

There is a simple fact I’ve tried to share with members of the real estate and mortgage professions for my entire insurance career:

Don’t save the search and eventual purchase of home insurance for last.

Everyone looking to purchase a home should begin their home insurance search as soon as they receive their mortgage commitment.

Not two weeks before their lender anticipates closing their loan.

No, as soon as they sign on the dotted line.

In this way, homeowners and purchasers of new homes will best guarantee they will find and purchase the homeowner’s insurance they need.

A closing suggestion for real estate brokers, mortgage lenders, and real estate attorneys

Your local independent insurance agent is no longer an afterthought. You need to have good if not great relations with professionals able to provide you and your clients with the insurance they will need to close. Also, you might get calls from clients asking for referrals to independent agents able to assist them should companies stop offering home insurance in certain areas, and are in danger of being non-renewed.

Now is a good time to reach out to insurance professionals you know, and get referrals to other insurance professionals in your area. Over a virtual chat, an in-person cup of coffee, or a simple telephone call, find out whether their insurance resources are solid. And then, stay in touch.

Strengthening these relationships could make all the difference.

About the author

Eustace L. Greaves, Jr., LUTCF, is an NYS-licensed Independent Insurance Agent and Broker with over 40 years of experience, 26 of those years as the owner of Bridge Insurance Agency.

Like to speak with Eustace?

Eustace is ready to assist you with your home, life, flood, disability, renters, auto, cooperative, condominium, and wedding insurance needs. He can be reached at his mobile number,  718-489-2218, his office number, 718-783-2722, or by email at [email protected]. You can also 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.

Have insurance, income tax, real estate, mortgage, or home inspection questions for Eustace? He’ll be happy to provide the insurance and income tax answers you seek. For everything else, he’ll gladly call on his contacts for help. Just email him at [email protected] with the subject line, “Ask Eustace.”

Three Insurance Policy Discounts Which Can Save You Money, Part One

Betcha Never Knew About These Three Insurance Policy Discounts

“Bundling and saving”, is not the only method to save money on your home and automobile insurance policy. There’s a better way to realize massive insurance policy discounts.

Generating insurance policy discounts using shears to cut insurance costs
Use insurance policy discounts to cut your home and automobile insurance costs!

Improve your Insurance Credit Score. Not A Discount, But It Will Still Save Your Money

This is the easiest way in the world to lower your home and auto premiums. Companies place you in excellent, good, fair, poor, and ‘forget about it’ pricing tiers. So, if you begin with a poor score, do all you can to pay bills on time, lower your credit utilization, and give the five (5) major insurance credit score no-no’s a chance to come off your credit record.

What are these five (5) no-nos?

  • Judgments
  • Foreclosures
  • Repossessions
  • Liens
  • Bankruptcies, or going into or coming out of a bankruptcy

    Don’t forget, these no-nos will affect your insurance credit score for Five (5) years.

    Hey, five and five. How about that?

Now, on to the three insurance policy discounts.

How Much Can These Three Insurance Policy Discounts Save You?

Based on your insurance company, you can actually save up to 40% on your annual homeowners’ insurance premium. So, imagine your annual premium is $2000. Using these three insurance policy discounts could help you realize an annual savings of $800. And that is not chicken feed.

Fire Extinguishers, Smoke and Carbon Monoxide Detectors, Deadbolt Locks 

Some companies give you an immediate five percent (5%) discount when you keep functioning fire extinguishers, smoke and carbon monoxide detectors, and deadbolt locks. Fire extinguishers and smoke and carbon monoxide detectors are required in many cities. So, you actually benefit from obeying the law.

Alarm Systems

You can realize additional discounts up to 20% of your annual premium by installing a central-station monitored alarm system. It’s like getting paid to protect yourself and your loved ones.

Claim-Free Discounts

I’ve always questioned the sanity of people who say, “I’ve been paying this policy for ten years and never put in a claim. I think it is time for me to put in a claim and get some of my money back!”

Okay, first off, you’ve just informed your agent you intend to commit fraud. So, when you go to trial, I will testify against you. Purposely screw up my great loss ratio? I don’t think so.

Better you should just maintain your home to prevent losses and get a part-time job to supplement your income. Why? Because many insurance companies offer what is called a”Claim Free Discount” when you don’t have claims. 

How Much Can A Claim Free Discount Save Me?

One of the insurance companies I work with as an independent insurance agent offers an annual Claims Free Discount of ten percent (10%).

Let’s imagine your annual homeowners’ insurance premium is $2000 at this years’ renewal. With just a Claims Free Discount, you would automatically qualify for the ten percent (10%) discount of $200. Now your annual premium drops to $1800.

What Should You Do With All The Money You Save With These Three Insurance Policy Discounts?

I learned long ago what you earn isn’t as important as how you use what you earn. So, you’ve perhaps saved up to 40% of your annual homeowners’ premium. You can choose to use the money for a new bag, a vacation, or a fabulous pair of shoes. Or, you can use your savings to enhance your insurance portfolio. You can purchase additional

  • life insurance to pay your mortgage or rent should you die;
  • disability insurance to provide an income when you are too sick or injured to work;
  • long term care insurance to get skilled nursing care not covered in your health insurance policy. And, it will also to protect your home from Medicaid’s dreaded, “Five Year Lookback.”;
  • increase your automobile insurance; and
  • add a Personal Umbrella Liability policy for greater protection from lawsuits.

My next post will cover other insurance policy discounts. 

 

About the author

Eustace L. Greaves, Jr., LUTCF is an NYS-licensed Independent Insurance Agent and Broker with over 38 years of experience. He is celebrating 25 years as an Independent Insurance Agency Owner.

Like to speak with Eustace?

Eustace is ready to assist you with your life, disability, home, flood, renters, auto, cooperative and condominium, and wedding insurance needs. He can be reached at 718-783-2722, or by email at [email protected]. You can also contact him by going to his website, https://greavesinsurance.com, and completing any of the available “Contact Us” forms.

How to subscribe to his newsletter

If you’d like to subscribe to his monthly newsletter, “Health, Safety, and Good News You Can Use,” go to his website, https://greavesinsurance.com, and click on any of the “Subscribe” buttons.

Have insurance, income tax, real estate, mortgage, or home inspection questions for Eustace? He’ll be happy to provide the insurance and income tax answers and will continue to call on his expert contacts for help in the other areas. Just email him at [email protected] with the subject line, “Ask Eustace.”

Let’s Set The Record Straight About – Customizing Your Insurance

Today’s clever insurance commercials are a necessary evil. They provide more information about bundling and saving and less about the coverages you, your family, and your business really need.

We can change that by simply asking the right questions.

Customizing Your Insurance

No insurance company owns a monopoly on helping you customize your insurance.

None.

Commercials, Commercials, Commercials

Commercials are designed to increase brand awareness using gimmicks, including celebrity spokespersons, animals, car crashes and chases, and, well, anything they think you will remember when it is time to buy insurance.

Does Every Company Allow You To Customize Your Insurance?

You can customize your home, life, auto, renters, co-op, condo, disability, long-term care, personal umbrella, and, yes, even your flood insurance with any company licensed to do business in the State of New York and every other state in the Union.

Every company gives you the ability to customize your insurance.

Every single one.

The problem is that most consumers aren’t served by most of the television commercials aired today.

They are goaded into a perpetual state of dissatisfaction with their current career, even when their current career is doing a good job for them.

It’s What Consumers Don’t Know About Their Insurance Which Hurts Them

Each year, I make at least 25 insurance-based presentations for HUD-approved housing agencies and organizations such as Neighborhood Housing Services of New York City, Harlem Churches for Community Improvement, and Impacct. I always ask those in attendance to tell me their automobile insurance coverages. Inevitably, 14 out of 15 give the same answer, “Full Coverage.”

Not 25/50/10.

Not 250/500/100.

Full coverage.

When I ask them how much their policies cover in an accident, they usually reply that they’re not sure, but they did save money by bundling their home and auto.

Yay,

Buying What You Need Is A Two-Edged Sword

As long as the policy or policies quoted for you meet your state’s required minimum coverage limits, buying the cheapest policy or bundle possible is actually all you need.

What if, though, you just struck and killed a pedestrian or lost control of your vehicle and totaled a house? Will your policy provide you with the actual amount of money you will need when the jury hands down some obscenely massive award against you?

Imagine coming home to find;

  • Your home is on fire.
  • Two (2) feet of toxic sewage water sloshing about your finished basement.
  • Burglars paid you an expensive visit while you are at work or the market.
  • Your good dog had a bad day.
  • There are three feet of floodwater in your home, and you don’t own a flood insurance policy.

What Questions Should I Ask?

  • What, if any, hoops must I jump through in case of a claim?
  • Are policy coverages or exceptions more important to know?
  • Why do I have duties after a loss?
  • In case of a covered cause of loss, how easily will my claim be settled?
  • Is your claim service fair?


What Should My Insurance Company and/or Independent Agent and Broker Teach Me?

  • Why buying home insurance based on your home’s replacement cost is essential.
  • How to determine your condominium and cooperative apartment “walls in” insurance coverage based on what a licensed contractor would charge to completely repair fire or water-damaged walls, ceilings, and floors.
  • It is important for renters to complete a personal home inventory down to the last sweat sock.
  • How owning Life and Disability insurance will prevent financial disaster should death or disability destroy the earning power of a family breadwinner.
  • Reasons why every property policy should include Water and Sewer Backup coverage. And why every cooperative and condominium apartment owner should add the Loss Assessment endorsement to their coverage.
  • Why buying flood insurance, even when their home is not in a high-risk flood zone, is a smart financial move.

And, of course, what coverages do I actually need to protect my family and home from most disasters?

The other day a woman asked me for my honest opinion of who I felt was the best insurance company out there.

My answer?

The one with whom you secured the proper policies, with sufficient coverages, which is in force at the time of your claim.

A company that won’t make you jump through hoops to settle a  claim fairly. An independent insurance agent and broker willing and able to service your policies. With premiums accurately reflecting the coverages your policies provide.

Nothing else matters.

As for the commercials, well, give my regards to Broadway.

At least until we can enjoy live theater again. Until then, stay healthy and safe.

 

Eustace L. Greaves, Jr., LUTCF is an independent insurance agent and broker, licensed to conduct business in New York State. Contact Eustace at 718-783-2722, 718-489-2218, by email at [email protected] or by completing the contact form on this page, or  one of the many contact forms on his website, https://greavesinsurance.com.

 

 

Tax Cuts and Jobs Act (TCJA) Overview 1.5

“The new law increases the credit for qualifying children (i.e., children under 17) to $2000 from $1000, and increases to $1,400 the refundable portion of the credit. It also introduces a new (nonrefundable) $500 credit …”

An overview of the Tax Cuts and Jobs Act

The recently enacted Tax Cuts and Jobs Act (TCJA) represents major changes our nation’s tax code.

Here’s a look at some of the more important elements of the new law that have an impact on individuals. Unless otherwise noted, the changes are effective for tax years beginning in 2018 through 2025. That’s right. The next seven (7) years.

 

  • Tax Rates.  The new law imposes a new tax rate structure with seven tax brackets: 10%, 12%, 22%, 24%,  32%, 35%, and 37%. The top rate was reduced from 39.6% to 37% and applies to taxable income above $500,000 for single taxpayers, and $600,000 for married couples filing jointly. The rates applicable to net capital gains and qualified dividends were not changed. The ‘kiddie tax’ rules were simplified. The net unearned income of a child subject to the rules will be taxed at the capital gain and ordinary income rates that apply to trusts and estates. Thus, the child’s tax is unaffected by the parent’s tax situation or the unearned income of any siblings.
  • Standard Deduction.  The new law increases the standard deduction to $24,000 for joint filers, $18,000 for head of household, and $12,000 for single and married taxpayers filing separately. Given these increases, many taxpayers will no longer be itemizing deductions. These figures will be indexed for inflation after 2018.
  • Exemptions.  The new law suspends the deduction for personal exemptions. Thus, starting in 2018, taxpayers can no longer claim personal or dependency exemptions. The rules for withholding income tax on wages will be adjusted to reflect this change, but IRS was given the discretion to leave the withholding unchanged for 2018.
  • New deduction for “qualified business income.”  Starting in 2018, taxpayers are allowed a deduction equal to 20 percent of “qualified business income,” otherwise known as “pass-through” income, i.e., income from partnerships, S corporations, LLCs and sole proprietorships. The income must be from a trade or business within the U.S. Investment income does not qualify, nor do amounts received from an S Corporation as reasonable compensation or from a partnerships a guaranteed payment for services provided to the trade or business. The deduction is not used in computing adjusted gross income, just taxable income. For taxpayers with taxable income above $ 157,500 ($315,000 for joint filers), (1) a limitation based on W-2 wages paid by the business and depreciable tangible property used in the business is phased in, and (2) income from the following trades or businesses is phased out of qualified business income: health, law, consulting, athletics, financial or brokerage services, or where the principal asset is the reputation or skill of one or more employees or owners.
  • Child and family tax credit.  The new law increases the credit for qualifying children (i.e., children under 17) to $2000 from $1000, and increases to $1,400 the refundable portion of the credit. It also introduces a new (nonrefundable) $500 credit for a taxpayer’s dependents who are not qualifying children. The adjusted gross income level at which the credits begin to be phased out has been increased tp $200,000 ($400,000 for joint filers).
  • State and local taxes. The itemized deduction for state and local income and property taxes is limited to a total of $10,000 starting in 2018.
  • Mortgage interest. Under the new tax law, mortgage interest on loans used to acquire a principal residence, and a second home is only deductible on debt up to $750,000 (down from $1 million), starting with loans taken out in 2018. And there is no longer any deduction for interest on home equity loans, regardless of when the debt was incurred.
  • Miscellaneous itemized deductions. There is no longer a deduction for miscellaneous itemized deductions which were formerly deductible to the extent they exceeded 2 percent of adjusted gross income. This category included items such as tax preparation costs, investment expenses, union dues, and unreimbursed employee expenses. So, all of your auto expenses, for example, are no longer deductible.
  • Medical expenses. Under the new law, for 2017 and 2018, medical expenses are deductible to the extent they exceed 7.5 percent of adjusted gross income for all taxpayers. Previously, the AGI “floor” was 10% for most taxpayers.
  • Casualty and theft losses. The itemized deduction for casualty and theft losses has been suspended except for losses incurred in a federally declared disaster. So, if you are renter, or a coop or condo or dwelling owner who lacks comprehensive coverage for your personal property, now is the time to purchase coverage.
  • Overall limitation. The new law suspends the overall limitation on itemized deductions that formerly applied to taxpayers whose adjusted gross income exceeded specified thresholds. The itemized deductions of such taxpayers were reduced by 3% of the amount by which AGI exceeded the applicable threshold, but the reduction could not exceed 80% of the total itemized deductions, and certain items were exempt from the limitation.
  • Moving expenses. The deduction for job-related moving expenses has been eliminated, except for certain military personnel. The exclusion for moving expense reimbursements has also been suspended.
  • Alimony. There is some truth in the old song, “It’s Cheaper To Keep Her.” For post-2018 divorce decrees and separation agreements, alimony will not be deductible by the paying spouse and will not be taxable to the receiving spouse.
  • Health care “individual mandate.” Starting in 2019, there is no longer a penalty for individuals who fail to obtain minimum essential health coverage. (This will probably lead to fewer Americans purchasing health insurance, and more states reducing or eliminating Medicaid contributions for health care plans.)
  • Estate and gift tax exemption. Effective for decedents dying , and gifts made, in 2018, the estate and gift tax exemption has been increased to roughly $11.2 million ($22.4 million for married couples).
  • Alternative minimum tax (AMT) exemption. The AMT has been retained for individuals by the new law but the exemption has been increased to $109,400 for joint filers ($54,700 for married taxpayers filing separately), and $70,300 for unmarried taxpayers. The exemption is phased out for taxpayers with alternative minimum taxable income over $1 million for joint filers, and over $500,000 for all others.

As you can see from this overview, the new law affects many areas of taxation. I plan to hold at least one (1) public seminars in Brooklyn, to ‘drill down’ into just how the new law will affect you. There will be a fee charged for attendance at these seminars to offset the cost of the venue, and painkillers.

Eustace L. Greaves, Jr., LUTCF is a frequent presenter in the areas of personal insurance, personal income taxation,  and budget and credit strategies for many organizations, including, Neighborhood Housing Services of NYC, Inc., HCCI, Impacct Brooklyn, and Bridge Street Development Corporation. He is a New York State licensed insurance agent and broker, and  NYS Defensive Driving Delivery Agent and Instructor.

You can reach Eustace at [email protected], or 718-783-2722.

 

8 Tips For Saving Money On Your Automobile Insurance

Many companies will charge more for an auto insurance policy if you cannot show evidence of being currently insured for at least one (1) to three (3) years prior to your application …

 

Every automobile insurance commercial tries to sell you on saving money on your automobile insurance by ‘bundling and saving.’ I’ve got a better idea; here are 8 tips for saving money on your automobile insurance.

Ah, as the cool nights of autumn become the, well, the warm days of winter, and holiday joy becomes the pain of looming credit card payments, you, like many others, may begin an annual search of finding ways to save money on everything from the cellular phone bill to food. Let me help with these 8 ways to save money on your automobile insurance.

Tip Number One: Maintain Continuous Coverage

Many companies will charge more for an automobile insurance policy if you cannot show evidence of being currently insured for at least one (1) to three (3) years prior to your application. So, even if you don’t own an automobile, consider the purchase of a Non-Owned Automobile Insurance Policy. You can also join an organization like ZipCar for about $19.00 each month, which includes liability coverage limits of $300,000. Either way, you can save thousands of premium dollars.

Tip Number 2: Head Back To School

Take a Point and Insurance Reduction Class. You’ll automatically
qualify for a 10% discount on your personal liability, no-fault, and collision
coverages. And make sure your children, and anyone else who regularly drives your car (and is hopefully listed on your automobile insurance policy as a driver), takes the class.

8 tips to save money on your automobile insurance
Accidents happen. Practice safe driving habits so accidents don’t happen to you!

Here’s Number Three: Send The Kids Away To College, Far, Far Away

If you have children in high school, and they are trying to choose between a college  88 miles away, and another one at least 100 miles away, choose the school at least 100 miles away. As long as both schools offer similar need-based tuition plans, you will save money by sending your offspring just another 20 or so miles away. Why? Many companies offer a “Student Away At School” discount and depending on the company, your premium will either not increase, or only suffer a small increase.

Your child must simply go to school at least 100 miles away from home.

Number Four: Good Grades Matter

If you have high-schoolers on your current family policy, encourage them to maintain at least a “B” average, so you will qualify for the Good Student discount. And they still get to live indoors.

Number Five: Okay, I Give Up. Get A Multi-Policy Discount

Purchase your automobile and home, renter, and condo or coop policies
from the same company. You’ll qualify for multi-policy discounts, which can save you at least 10% on each policy.

Number Six: Ask Your Agent For Help Before You Purchase

Before you actually purchase a car, call your agent and ask them to give you the symbol for the vehicles you are considering. One young lady was going to purchase a car with the letters “XL” in the model name. I told her the model with only an “L” was two symbols lower, which would result in much lower comprehensive and collision insurance premiums. The major difference between the two models of the same car? One had sun visors with extensions, and the other did not. So, she purchased the “L” model, ordered the fancier sun visors from the dealership, and installed them herself, saving a ton of money on her auto insurance.

Seven’s The Charm: Improve Your Credit

Improve your insurance credit score. The higher your insurance
credit score, the lower your premium will be. And do everything you can to
avoid having any of the “Five Deadly Insurance Credit Score Sins” on your credit report in the last five years.

The “Five Deadly Insurance Credit Score Sins” are:

a. Foreclosures

b. Judgments

c. Repossession

d. Bankruptcy, or filed for bankruptcy

e. Liens

Always remember, ‘the higher your insurance credit score, the lower your premium’ and the reverse, ‘ the lower your insurance credit score, the higher your premium.’ Any of the “Five Deadly Insurance Credit Score Sins” can hurt your chances of qualifying for a lower automobile insurance rate.

Last But Not Least, Tip Number Eight: Skip The Coach Bags. Pay Your Premium

Lastly, whatever you do, never, never, never let your automobile
insurance, or any insurance policy for that matter, lapse due to the
non-payment of premium. This alone will disqualify you for coverage with
many preferred companies for several years.

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 to check your home, auto, flood, renters, coop, condo, life, and disability insurance policies. You can also request a meeting or subscribe to his monthly newsletter by completing a “Contact Us” form at https://greavesinsurance.com.

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

 

New Changes to Coastal Homeowners Insurance

Now the insurance situation, is more dire not just for new homebuyers but for existing homeowners too. In between bites, I reminded Anne-Marie about how Hurricane Irene in 2011, and the big momma, Hurricane Sandy in 2012, gave insurance companies greater insight into number of homeowners risks they insured in certain areas. And it is these new insights which have given rise to newer realities in homeowners insurance.

It’s amazing. Whenever I read or make a presentation about the new changes happening in coastal  homeowners insurance here in New York State’s Downstate Region, (Brooklyn and the four boroughs, Nassau, Suffolk, Westchester counties), I usually run into one of Brooklyn’s leading real estate brokers the very next day. And they wrangle a free lunch out of me.

Talking Coastal Homeowners Insurance with Anne-Marie Stanislaus of Reserved Realty LLC

Late last month, I had the pleasure of enjoying another terrific pizza with Anne-Marie Stanislaus, one of New York City’s leading independent Real Estate Brokers, and the Owner and Principal of Reserved Realty LLC.  We met at the number-one Italian restaurant in Prospect Heights, the world-famous Cataldo’s Italian Restaurant and Pizzeria, at 554 Vanderbilt Avenue, between Dean and Bergen Streets. The first question she asked was “Eustace, I know we talked about this last year, but what’s going on with the coastal homeowners insurance business in Brooklyn? Companies are not just refusing to write certain types of houses. I’m getting calls from clients complaining their insurance companies, after decades without claims or late payments, are cancelling policies in certain areas like they had the plague! And not just in Brooklyn, mind you, but throughout the Downstate region.”

We’d had a similar discussion back in November of 2012, right after Hurricane Sandy, which I detailed in an earlier post, “Coastal Homeowners Insurance, Part 2.9.” Back then, when life seemed simpler,  we were more concerned about changed real estate practices as it pertained to new sales.

The Latest Twist In Coastal Homeowners Insurance

The insurance situation is becoming more difficult not just for new home buyers but for existing homeowners too. In between bites, I reminded Anne-Marie about how Hurricane Irene in 2011, and the big momma, Hurricane Sandy in 2012, gave insurance companies a major case of the willies and greater insight into the number of coastal homeowners insurance risks they insured in certain now-hazardous areas. It is these new insights which created newer realities in coastal homeowners insurance.

Take It Back A Mile

First, when certain companies decided they no longer wanted to insure risks within one (1) mile of a tidal coastline, they just sent the affected policyowners a letter which basically said, “Thank you for being our homeowners client for the past  15, 20, or even 30 years. We also appreciate your not presenting us with any claims during your years with our company. We changed our underwriting guidelines, and since you no longer fit or match them, you’re no longer one of our homeowners insurance clients effective (You fill in the date.).

“Thank you, and don’t worry, you can still keep your auto, life, and whatever else you have with us. We just don’t want the house anymore.”

Now, just for the record, while most insurance companies pulled their coastal boundary line to a distance of at least one mile from the tidal coastline for dwellings, there are those companies who will continue to honor their commitment to their clients, so long as they don’t lapse their policies, submit some really dubious claims, or decide they can make some side money by turning their legal two-family home into an illegal three, four, or even more family house.

Many companies, however, are simply dropping their clients, and, just like that, the homeowner must seek and secure new coverage for their home.

There’s a new twist in this tale of woe, however: Now some insurance companies are cancelling policies if they are within one mile of any body of water.

For example, I’ve recently written a new policy for a homeowner who lives more than one and one-half miles from the tidal coastline, but within one-half mile of the tip of Brooklyn’s Paerdegat Basin.

A property on the western side of Flatlands Avenue. One which suffered absolutely no wind or flood damage during Hurricane Sandy.

He recently received a cancellation letter letting him because of changes to what the company felt was a coastal risk, his policy was being non-renewed. A policy he’d had for 28 years. Claim-free.

And now, I’m going to write his neighbor a policy, since the same company just sent him his non-renewal letter.

So Anne-Marie looked at me like I had two heads. “So wait a minute,” she asked. “Now we’ve got to know how far a property is from any body of water before we try to market it? When will this madness end?”

“Who knows? Probably when enough disaster-free and thus heavy-claim time passes. ”

She looked at me and said, “Well, that’s not so bad then.”

“Sure”, I said, “Even though when FEMA finishes remapping this region, probably either in late 2014 or by mid-2015,  mandatory Flood Insurance policies with premiums in excess of $2,000 and $3,000 will create new problems for homeowners now remapped into AE and VE zones…”

“Enough!” she yelled. “For that Greaves, I want more pizza! And no more insurance talk!”

And the second pie was even tastier than the first.

You can reach the beleaguered  Anne-Marie Stanislaus at 917-887-7468. She and her team at Reserved Realty will do a fantastic job of  either helping you find your dream home, or marketing your current home and apartment rentals. You can always reach Eustace Greaves Jr., LUTCF  by telephone at 718-783-2722, or send him an email to [email protected].

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.

 

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!

 

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

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