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 Eustace@insuremeeg.com, or 718-783-2722.

 

8 Tips To Save Money On Your Auto 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 …

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 auto insurance.

1. 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.

2. 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.

3. 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 10 or so miles away. Why? Many companies offer a “Student Away At School” discount, and depending on the company, you premium will either not increase, or only suffer a small increase.

You child must simply go to school at least 90 miles away from home.

4. 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.

5. Purchase your automobile and home, renter, 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.

6. 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.

7. 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.

8. 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 reach Eustace by sending an  email to Eustace@insuremeeg.com.

 

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 Eustace@insuremeeg.com.

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 eustace@insuremeeg.com. 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

My Homeowners Insurance Policy, Part 2.5 | Brooklyn Covered

Here’s another suggestion. Why not get a whole-house review? I’m honored to refer my friend and client, Mr. Curtis (“Caulk Is Cheap”) Godoy, a NYC licensed and insured General Contractor, Master Carpenter and EPA Certified Painter. You can reach him at 1-347-581-5562, or drop him an email at curtis.godoy1200@gmail.com . If he thinks anything is amiss, he’ll let you know.

(In our last thrilling published post, we learned how failing to maintain our homes can lead to increased and larger claims, causing us to lose our voluntary homeowners insurance policy, and the accompanying threat of the dreaded force-placed policy.)

Okay, Why Should I Care?

Just one word.

Accessibility.

Accessibility to affordable, quality insurance in the voluntary market for you and the community you live in.

Let’s say your community’s claim results spike. Soon, the premiums for homeowners insurance could demonstrate a “similar propensity for growth,” or, go up like crazy. Or, in a worse-case scenario, major companies will choose to neither write nor renew policies in your community, providing fertile ground for the entry of more expensive players.

And, what happens if a homeowner can’t qualify for one of the newer companies due to their checkbook balance, or the credit score from hell?

Well, there’s always force-placed insurance.

Don’t I paint the rosiest pictures?

It’s Time

It’s time to renew your commitment to a disciplined program of home maintenance. With it, you should no longer suffer pipes or roofs leaking with regularity. You’ll replace the flexible hoses behind the washing machine with new, high-pressure hoses designed to resist kinks and sudden breaks. You’ll begin regularly performing a deep cleaning of your clothes dryer to prevent lint fires in either your dryer or dryer vent. (You do have a dryer vent, don’t you?)

You’ll caulk around your windows and doors, saving money on heating and cooling while keeping rain outside. You’ll check to ensure your windows are properly screwed into the frame. You’ll make sure your landscaping draws water away from your foundation, and not towards it. You’ll check and clean gutters and downspouts.

In short, you’ll do what every homeowner should do: Maintain your home.

Here’s another suggestion. Why not get a whole-house review? I’m honored to refer my friend and client, Mr. Curtis (“Caulk Is Cheap”) Godoy,  a NYC licensed and insured General Contractor, Master Carpenter and EPA Certified Painter. You can reach him at 1-347-581-5562, or drop him an email at curtis.godoy1200@gmail.com . If he thinks anything is amiss, he’ll let you know. If he feels you need a new roof, he’ll contact Gus Jean Louis, a.k.a., Gus the Roofer. You can reach him at 1-347-564-3009, or email him at Gusroofing@gmail.com. Pipes leaking? Contact Keith Huggins of Pusky Plumbing at 1-917-531-8385. Mr. Godoy  can put you in touch with qualified professionals who are licensed and insured. Why do I recommend these gentlemen? Because they are the only building professionals I let do any work in my mom’s home. They are true professionals, and have yet to disappoint.

Next time, we’ll see how your home’s location can cause your banishment to the force-placed insurance market.

(Need a plan for home maintenance? Just drop me an email at eustace@brooklyncovered.com, and I’ll email you a copy of the home maintenance schedule provided by Travelers Property and Casualty. And subscribe to BrooklynCovered.com for automatic notification of every new post. No email address? No problem. Just provide me with your address and phone information and I’ll  send you the brochure.)

My Homeowners Insurance Policy, Part 2 | Brooklyn Covered

When the economy was blasting away like a furnace in a steel mill, homeowners actually spent money, copious amounts of money, on the regular maintenance of their homes. This investment, a direct reflection of the pride of homeownership, came with a accompanying benefit: Because of the amount of care and attention paid to keeping their homes in tip-top shape, there were fewer claims impacting, for example, my agencys results. And, the claims which were submitted were smaller in size. Less cost, less frequency.

(In our last exciting segment of “Dude, Where’s My Homeowners Insurance Policy?”, we learned submitting a claim during the first 60 days after applying for homeowners (and auto) insurance is akin to bringing a vampire out in the daylight. Without the special sunshade.

Today’s installment will continue the study of claims and how they affect your ability to purchase homeowners insurance from preferred companies.)

Where’s My Homeowners Insurance Policy, Part 2

Let me start by saying in all my over 29 years in the insurance business, I’ve never seen claims come across my desk with the frequency and size the like of which I’ve seen in the last 20 years. You can blame Hurricane Irene and Tropical Storm Lee all you want. Truth is, too many people are simply not investing any real money and energy in maintaining their homes.

I blame the sin and disease of deferred maintenance.

Home Maintenance, The Economy, Deferred Home Maintenance

I believe there is a direct correlation between the state of the economy and home maintenance.

When the economy was blasting away like a furnace in a steel mill, homeowners actually spent money, copious amounts of money, on the regular maintenance of their homes. This investment, a direct reflection of the pride of homeownership, came with an accompanying benefit: Because of the amount of care and attention paid to keeping their homes in tip-top shape, there were fewer claims impacting, for example, my agency’s results. And, the claims were smaller. Less cost, less frequency.

Sounds like an old television commercial. The kind I really like.

The Years The Music Died

Then came 2006, 2007, and (why, oh why Lord?), 2008 and 2009, 2010, and 2011.

When once non-existent claims found life, and once-small claims became huge. When diamond rings began to “disappear,’ and water damage claims once averaging $3,000 to $5,000, suddenly ballooned to $10,000, $20,000 and beyond.

In one case, a clients home suffered interior water damage from a heavy rainstorm, caused by a leaky roof, caused by deferred maintenance, caused by reduced family income, further exacerbated by the family purchasing a home which was overpriced and in poor condition, inspected by an appraiser who over-appraised the property, accompanied by an equally unaffordable monthly mortgage committment.

The company I’d insured them with paid the claim. The check they received, less their deductible, should have been used to repair the defective roof, and replace water-damaged furniture, rugs and clothes . This way, when the raindrops fall in the future, no more leaky roof, no interior damage.

Your Homeowners Insurance Policy Is Not A Piggy Bank

Guess what? The next year, after a heavy rain, the same homeowner submitted yet another claim for the same cause of loss! Even the insurance company’s claims department was shocked they’d submit the same claim two years in a row.

I called the client, basically asking “What the hell? Why are you submitting the same claim two (2) years in a row? Why didn’t you repair the roof with the money you received last year?”

Their reply? “We used the money to catch up on the mortgage.”

Oy.

So, the company paid the claim, again. When policy renewal time rolled around, though, they got a different letter from the insurance company. Basically it read, “Your policy is being non-renewed for the following reason: Negative claim history.”

When you receive a letter like this from most voluntary companies, your options are few. You are done. End of story.

Now, this particular story could have had a happy ending, were I able to place them with another preferred company.

No one wanted them. Well, that’s not entirely true. One company did. At a premium of over $9,000 each year. (Don’t get all self-righteous and indignant. You want to dance to the band, you’ve got to pay the man, or in this case, the insurance company.)

So, once the bank learned their voluntary homeowners insurance policy lapsed, they graciously agreed to place a force-placed policy on the home. At a premium of $4,800 each year.

Heck, it was cheaper than the other policy I offered them.

(Our next post will address why home maintenance is important to individual homeowners and the communities they live in. Also, for the first time in the history of BrooklynCovered.com, referrals to home maintenance professionals! And please, take a minute and subscribe to BrooklynCovered.com by entering your name and email address at the top of the column on your right.) 

Dude, Where’s My Homeowners Insurance Policy? | Brooklyn Covered

Her first thought was to call the builder. You know what the builder said? He told her call me to put in a claim with her insurance company. I told her if she did that, with a brand-new house, I could almost guarantee her brand-new policy would be rejected. I reminded her of her homes ten-year warranty, which included the roof. I told her to inform the builder to have a roofer install a brand-new roof on the house, or her next call would be to the New York State Attorney Generals Office, followed by calls to Housing Preservation and Development, the Kings County District Attorneys office, etc.

She had him at the Attorney General of the State of New York.

(This post will begin a blog arc of posts surrounding the issues concerning what would cause a homeowner to lose their homeowners insurance policy issued by a preferred insurance company. While we’ll continue to return to the subject of Force-Placed hazard insurance, we’ll also examine issues surrounding claims, and  underwriting changes, just to name two.

If you are a victim of Force-Placed hazard insurance, and want to share your story, please drop me an email at eustace@brooklyncovered.com . Don’t worry, your identity will stay a secret. We just don’t want this shameful practice to remain in the shadows. We just need your stories to bring the dirty little secret out of the closet and into the light.

We’ll also examine some of the ins and outs of filing your income tax return this year, and planning tips for a more successful result on your income taxes next year.

So, while it may seem we’re running along different tangents, ours will , over the life of this blog,  converge. The convergence point? Your fuller understanding of things insurance, taxes and even defensive driving.

Thanks for joining us on the best ride in the carnival, BrooklynCovered.com !)

Where’s My Homeowners Insurance Policy?

Remember the movie “Dude, Where’s My Car?” Yeah, well neither do I. For this blog post the title works well since homeowners all over the downstate area of New York State (The five boroughs, Nassau, Suffolk and Westchester) are asking the question, “Dude, Where’s My Homeowners Insurance Policy?”

I’m thankful for referrals to me by my clients and real estate professionals for the different insurance and income tax preparation services  I offer. Lately though, the homeowners insurance policy conversations usually start with one of three questions:  

  1. “Why did my company cancel my policy?” 
  2. “Why didn’t my insurance company renew my policy?”
  3. And there’s my all-time favorite, “Well, what the heck do I do now?”

There are several reasons why your insurance company would choose to not renew your homeowners policy. We’ll cover this topic over the next two (2) posts. Let’s begin with;

  1. Claims:

Let’s start with the claims you submit to your homeowners insurance company. As an example, if you submit two (2) claims for water damage within five (5) years of each other, you’re cancelled. Why? Multiple plumbing leaks are a sure sign of deferred maintenance. Too many people think it’s the job of the insurance company to make normal repairs. Read your policy. Home maintenance is your job, not the insurance companys.

This also applies to interior water damage caused by old and worn-out roofs, windows which weren’t properly fitted or sealed, and even a next-door neighbor whose boiler explodes, flooding his/her basement, and yours.

Mold, anyone?

Don’t think new homes are immune to these types of problems. New homes usually come with even more problems than homes built before 1970.  Remember when new homes started springing up all over Brooklyn back in the mid-90s to 2007? I watched the last group of three-family homes in Atlantic Center as they were built. They dug a hole on Monday,  erected the concrete form on Tuesday, poured the foundation floor on Wednesday, and poured the foundation walls on Thursday and Friday.

On Saturday and Sunday, they rested.

Come Monday morning, the pre-fab modules would start rolling in. Jump down, turn around, pick a losing Lotto number, and the house was done. Soon the proud, new homeowners would take possession of the brand-new home.

And that’s when the fun began.

I’ll never the forget the conversation I had with a client who just purchased a brand-new home in another development after suffering through her first rainstorm. Her upstairs tenant called her and said, “I hate to bother you, but it’s raining heavier in my apartment than it is outside.” And when my client reached home, she found the leakage was so bad her first floor apartment, with the new rug and furniture, and well everything was ruined. 

Submit A Water Damage Claim In The First 60 Days? For A Defective Roof? Kiss Your Policy Goodbye.

Her first thought was to call the builder. You know what the builder said? He told her call me to put in a claim with her insurance company. I told her if she did that, with a brand-new house, I could almost guarantee her brand-new policy would be rejected. I reminded her of her homes ten-year warranty, which included the roof. I told her to inform the builder to have a roofer install a brand-new roof on the house, or her next call would be to the New York State Attorney Generals Office, followed by calls to Housing Preservation and Development, the Kings County District Attorneys office, etc.

She had him at the Attorney General of the State of New York. A new leak-free roof was installed, and she joyously anticipated the next rainstorm.

Until the walls around the windows leaked.

Let’s just say the builder spent a great deal of time repairing every defect in her home and most of the other homes like hers. Had she submitted a claim during the first 60 days of her new policy, the insurance company could have rejected her application. Why? Remember this: Every homeowners and auto insurance company in New York State, has the right to reject your policy for underwriting reasons during the first 60 days after your coverage goes into effect for underwriting reasons. That’s one reason why top-tier companies want to have your date of birth, social security number, and last address when you apply for a homeowners insurance policy. They run a Comprehensive Loss Underwriting Exchange (C. L. U. E.) report on you and your future home, detailing just  every reported claim you’ve had in the last five (5) years, whether as a renter or a homeowner. They also review your credit report to see exactly which “rating tier” to assign you to.

Also, most companies arrange for a company home inspector to come to your home during those first 60 days to guarantee the house meets their requirements. I’ll never forget the first time the New York Property Insurance Underwriting Association (N.Y.P.I.U.A., a.k.a. “The Fair Plan”), rejected an application because the house had outstanding violations and was in lousy condition.

And when the Fair Plan refuses to cover you, you’ve got it bad. Force-placed insurance, anyone? 

Think about it: Why go to all the trouble and cost to issue a policy, only to reject it for underwriting reasons.? Better to underwrite before issue and before a claim.

Our next post will expose other reasons why you lost, or could lose, your homeowners insurance policy with a preferred company. 

Bundle Insurance Coverages, Or Else | Brooklyn Covered

According to a recent article in The Insurance Journal, a major insurance company announced plans to drop their North Carolina homeowers insurance clients who didn’t bundle, or combine, their automobile insurance policy with the same company. As many as 45,000 homeowners insurance customers were due to be non-renewed unless they bundled insurance coverages for their home and automobile insurance from this carrier by December 15, 2011.

Bundle Insurance Coverages, Or Else

According to a recent article in The Insurance Journal, a major insurance company announced plans to drop their North Carolina homeowners insurance clients who didn’t bundle, or combine, their automobile insurance policy with the same company. As many as 45,000 homeowners insurance customers were due to be non-renewed unless they bundled insurance coverages for their home and automobile insurance from this carrier by December 15, 2011.

The company doesn’t plan to simply let these former policyholders fend for themselves. They’ve already made arrangements with other companies to provide these former policyholders with coverage.

Let’s look at the positives of bundling insurance coverages.

  1. Bundling insurance coverages saves money. When you place one or more policies with the same company, you can qualify for what’s known as a multi-policy discount. This discount, depending on the company, can range from 5% to 15% on each policy you have with the same company.
  2. Bundling makes it easier to keep up with all your coverages. Now you won’t have to call two (2) or more agent or servicing companies to stay on top of your insurance. 
  3. Purchasing Umbrella Insurance. Adding an Umbrella Liability policy to your insurance portfolio is a cost-effective method of protecting your property from loss in case of a liability claim against you. To qualify to buy this coverage, many companies now require you to have both your auto and homeowners coverage with them. One reason for this is to guarantee the insured continually carries certain minimum personal liability amounts on each policy. And, the company knows immediately if either policy lapses, which could invalidate the umbrella policy coverage.

While there are positives, this “Forced-Bundling,” (sounds a bit like force-placed homeowners insurance doesn’t it?) does raise several critical questions. 

  1. What is their financial relationship with these other companies? Are they truly separate entities, or will they be some type of wholly owned subsidiary?
  2. How will this company compensate its agents for the loss of income they stand to face? Imagine an agent losing 50 – 250 clients in one fell swoop. This will create a huge loss of income during difficult economic times.
  3. Will they allow their agents to become licensed agents for these other insurance companies, or will that ability only be offered to  preferred agencies? Even if they allow all of their agents to seek agency contracts with the new companies, will those companies only offer agency contracts to the best and/or largest agencies?
  4. How will these same agents deal with the loss of community confidence and good will? People tend not to like being dictated to, and the easiest person to whom they can voice their displeasure is their local agent. And, they’ll vote with their feet, wallets and pocketbooks.
  5. How does the underwriting and claims handling ability of the  new companies compare with that of the original company?
  6. What if you’re paying less for your automobile insurance at another company, even while taking the multi-policy discount into effect? Why should you be forced to pay more than what you’re paying now with another carrier?
  7. Let’s suppose you have terrible credit and/or a lousy driving record. You may not even meet the basic underwriting criteria for any of this company’s auto insurance companies. What will happen then?

This situation will anger many, and that’s understandable. One of my clients claimed it was akin to being held up at gunpoint in a dark alley with the criminal telling you, “You’d better give me some money or I’m going to shoot you.”

And just your luck, you’re wearing your jogging shorts.

The ones without the pockets.

 I’ll let you know how this works out for all parties concerned.