Tag: homeowners insurance policy

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 [email protected] . 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 [email protected] . 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 [email protected]. 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 [email protected], 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 [email protected] . 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.

 

Force-Placed Home Insurance | Brooklyn Covered

When you signed your mortgage commitment, one of the requirements you agreed to do was maintain home insurance on your home. This homeowners insurance policy would contain a certain amount of Coverage A – Dwelling Coverage, as well as a mortgagee clause, naming the bank and your loan number.

What Is Force-Placed Home Insurance?

Force-placed home insurance is insurance your mortgage bank places on your home when you fail to maintain contractually required home insurance coverage.

Why Do I Need Home Insurance?

When you signed your mortgage commitment, one of the requirements you agreed to do was maintain home insurance on your home. This homeowners insurance policy would contain a certain amount of Coverage A – Dwelling Coverage, as well as a mortgagee clause, naming the bank and your loan number.

When you think about it, home insurance protects the homeowner against the loss of what is once again, the single largest purchase many families will ever make. Imagine a fire reducing your home to cinders and burned bricks. Without home insurance containing coverages in the proper amounts, you’d probably suffer a total loss of all you’d worked so hard to acquire.

So How Does The Bank Figure Into All Of This?

When a bank makes a home mortgage loan this creates the need for the bank to protect its interest in the collateral supporting the loan, otherwise known as the home. So the bank is fully within its right to require you keep certain coverage on the home.

What Creates The Need For The Force-Placed Home Insurance?

Your mortgage is composed of four (4) basic components:

  1. Principal, or the amount which amortizes or reduces the amount you owe the bank.
  2. Interest, or the cost of the money you’re borrowing. (What, you thought you get a $500,000 loan for free?)
  3. Taxes, or what your local municipality charges you for your home to sit in or on dirt. This amount is usually based on the number of stories, square footage and lot size of the house. That’s right, you’re paying more just to have the huge burned lawn.
  4. Insurance, which is my favorite part.

The portion of the mortgage for the taxes and homeowners insurance are escrowed monthly. That means a part of the quarterly or annual bills for each are collected and held by the bank each month, presumably to make payments when due. The key point to remember is the escrow system works well when your monthly mortgage payments are made on time each and every month. Fall behind by even one payment and you ‘ve developed a shortage in your escrow account.

Now here’s the kicker. Let’s say you bought a home during the period I will always call “The Time of Home Purchase Madness.” First, you paid too much for the house. Second, you someone qualified for a mortgage by being able to fog a mirror. No documentation, lousy credit score, and no down payment? Heck, certain mortgage brokers would knock their mommas out of the way to get you a loan.

Let’s move forward to what I call the “What The Hell Were We Thinking?” or, “What Do We Do Now?” time. That’s when too many people realized they should’ve stayed in their rent-stabilized apartments, kept the affordable home they already had, or kept sleeping on Mom’s couch. Suddenly, you miss first one mortgage payment, then another. Now, banks will move heaven and earth to make sure  the real estate taxes on your home are always paid on time. The last thing they want is to lose a property they’re holding a note on to someone who purchases a tax lien.

Banks Do The Same Thing For The Home Insurance, Right?

Wrong.

Let’s imagine your escrow is now short by two to four months payments. Home insurance bills are usually sent to the bank or mortgage servicing company 30 days before the due date.

In the worse case scenario, you have an escrow shortage when the bill from your homeowners insurance company arrives.

Guess what? Since you failed to keep up your end of the bargain, the bank is not required to go out of pocket to pay your homeowners insurance premium . The policy usually lapses. And then guess what happens? Because your world is collapsing around you, and each day brings more despair, you stop opening the mail or answering the telephone. It’s only months later when you learn your homeowners insurance policy lapsed and the bank placed another, force-placed policy on your home. And what gives you a clue? The sudden increase in the negative balance of your escrow account to the tune of $3000 to $8000.

Why so much? Because they can. It’s stupid, really. Instead of just paying a premium of say, $1800, the bank instead buys a policy for you which will cost at least three times as much. With less coverage. See, that’s the real zinger: Every force-placed policy I’ve ever seen covers only one thing – the outstanding mortgage balance.

There’s no coverage for your personal belongings in case of fire or theft. No coverage for liability should someone injure themselves on your property. No coverage to help you with the added expenses of renting an apartment while your home is being rebuilt.

Not even the full replacement cost of your home.

Just the outstanding mortgage balance.

And you’re paying at least three times as much for the privilege to get less coverage.

In my next post about force-placed home insurance, I’ll talk about how it will continue to drag down the economy, how to avoid having it happen to you, and what to do if it does happens to you. Also, I’ll include a link to a radio interview I did back in 2009, about the force-placed home insurance problem.

Eustace L. Greaves, Jr., LUTCF is a Brooklyn-based independent insurance agent and broker. Contact him today to make an appointment to review your home, life, disability, flood, renters, condo, coop, and auto insurance program. You can also reach him by email at [email protected]. And please take a moment to subscribe to BrooklynCovered.com.

Save Money on Homeowners Insurance|Brooklyn Covered

The most important part of purchasing homeowners insurance is not the price of the policy, it’s the replacement / reconstruction cost estimate. This becomes your policys Coverage A or Dwelling Coverage amount. Without the proper Dwelling Coverage, you put yourself in the position of having to self-fund part of the reconstruction cost of a damaged home at 140% on the dollar. Why 140%?…

How Do I Save Money On My Homeowners Insurance Policy?

A homeowners insurance policy is just worthless sheets of paper unless it gives you the dollars and coverages you’ll need to rebuild your home and your life when a covered loss occurs. 

What’s Most Important When Buying Homeowners Insurance?

The most important part of purchasing homeowners insurance is not the policy premium. What matters most is determining the replacement, or reconstruction cost estimate. This becomes your policys Coverage A or Dwelling Coverage amount. This is the amount of coverage your policy will generate for covered causes of loss.

 Without the proper Coverage A – Dwelling Coverage, you put yourself in the position of having to self-fund part of the reconstruction cost of a damaged home at 140% on the dollar. Why 140%? Well you have to pay taxes on your  gross income before you realize the net income. Also, all the other coverages in Section I of the Homeowners policy represent a percentage of the Coverage A – Dwelling Coverage amount. So a competent replacement estimate is the essential component necessary for building a sound Homeowners Insurance policy.

So, Any Insurance Broker Or Agent Will Do?

No, you should seek to work with an insurance professional who will invest the time necessary for gathering information about you and either your future or existing home. This is key. I have clients who chose me because after talking to me during the initial phone call, they had to go back and find out more information about their home than they thought necessary. Information, in many cases, other so-called professionals either didn’t take the time to ask, or simply didn’t care.  In most cases, you’ll prefer working with a “Mr. Nosey” than someone who simply wants to know what you paid for the house, or how much coverage you now carry. Another way to find a trusted insurance representative is by contacting local housing organizations. They work with many homeowners and are good sources of information and referrals for all the professionals you’ll need as a homeowner. 

Once the information is gathered, a true insurance professional will use either a computer or paper-based system to determine your future or existing homes replacement cost. The  brick for brick, nail for nail, pipe for pipe, wire for wire, and board for board amount necessary to put your home back together again. Then you’ll truly have a sense of how much insurance is really necessary to properly cover your home.

Here’s a small sample of the types of information you should be prepared to provide your insurance representative:

  • The square footage measured using the outside walls.
  • The types of flooring materials used in the house and the percentage of each.
  • Whether the walls are plaster, drywall, or some other material and the percentage of each.
  • The number of kitchens and bathrooms, and whether they are builders grade, or have some form of customization.
  • What kind of roofing material you use.
  • What type of heating system you use.
  • Maintenance and upgrade information about your roof, plumbing, heating, and electrical systems. A good insurance representative will want to know maintenance or upgrade dates, and whether a licensed professional performed the work. (Note: few, if any insurance companies will insure any home which doesn’t have circuit breakers. Fuses will result in the automatic non-renewal or rejection of your policy.)
  • Whether you have any pets, especially any of the no-no breeds, (Dobermans, Akitas, Pit Bulls and Wolf Hybrids to name just a few). Also, if any of your pets have a bite history, even that lovable little Yorkie which loves to nip strangers, you might want to seek out a company which is more forgiving about that type of risk exposure.

When It Comes To The Basic Coverages, Are Any Companies Really Cheaper? 

When you compare most Homeowners Insurance policies using an apples-to-apples comparison, (Same dwelling amount, same policy form, same state), you’ll find most companies homeowners insurance premiums for policies with the same coverages are usually within $50.00 to $100.00 of each other. So here are a few tips to really impact the premium amount you’ll pay for your Homeowners Insurance coverage:

  • An excellent credit score and history. If you have repossessions, collection items, judgements, late payments, and bankruptcies in the last five (5) years of your credit history, you will pay more for insurance. In extreme cases, you may even be denied. For example, I recently insured two (2) homes in Brooklyn. Both were in the same neighborhood, of similar construction, and had the same replacement cost. One familys premium was $1650.00, while the other familys premium was $2550.00. The difference? The first family owned a credit score you’d kill for. The second family owned a credit score which was killing them.
     
  •  Many companies will give you a first-year credit of 10-14% if you are a first-time homebuyer. Great, right? Just one thing: This credit decreases over a period averaging 10 years. Still, a great way to save money when you first purchase your home.
     
  • Along with number 2, purchasing a brand-new home  generates an additional discount.
  •  Installing a central-station monitored burglar and/or fire alarm system in your home will qualify you for policy discounts of 10-15% with most companies. Keep in mind insurance companies will not give you credit for the system without the proof of installation letter from the alarm company.
     
  • If an alarm system is not financially feasible, buy fire extinguishers. Along with the installation of deadbolt locks, you can realize a premium discount of 5%.
     
  • You should consider bundling your auto insurance with your home insurer. Some companies give up to a total of 30% in discounts, and this will be a nice piece of the savings “pie.” And, you also qualify for a similar discount on your auto insurance.
     
  • For more protection, you should considering purchasing a Personal Umbrella Liability policy. This policy provides added liability coverage starting in increments of $1,000,000.00. This generates more discounts and provides an extra layer of protection against third-party claims, whether or not they’re justified.
     
  • Choose a higher deductible. You’ll save about $200.00 annually by choosing a $1,000.00 deductible over a $500.00 deductible. If you bank the savings each year in what I call your “Deductible Account,” you’ll have your deductible in five (5), and have earned interest in the interim. Remember, “The higher the deductible, the lower the premium.”
     
  • Last but not least, consider your home’s construction. Brick homes usually cost less to insure than brick. Why? Remember, bricks get damaged, but wood burns.

So, What’s My Next Step?

Want more information, or your own up-to-date replacement / reconstruction cost estimate of your home? Well,  just drop me an email to [email protected]  or [email protected] . Please include your name and a daytime contact telephone number. Or go to my website, https://insuremeeg.com and download a copy of my Property Insurance Worksheet.

Thanks for reading, and please, tell a friend.

Wind vs. Water: Like Floods, A Debate Rages|Brooklyn Covered

You are literally better off having the 80-foot tree in your front yard fall into and cause part of the front wall of your home to collapse. Then, as the rainwater pours into and further destroys your home, you can rest easy in the knowledge it is a covered loss. Why? Because the covered cause of loss (the falling tree), preceded the additional loss from an outside source of water. If, however, a flood surged through your neighborhood and ripped the front wall away from your home first, you wouldn’t be covered, unless you owned a flood insurance policy with adequate coverage.

 

Wind vs. Water Equals Hurricanes vs. Floods

 

By my estimation, at least 50% of the losses faced by those who lost property in Hurricane Irene’s aftermath are not insured. Why? The losses they faced are directly attributable to flooding, not the hurricane-force winds. And many people in the Northeast don’t own a flood insurance policy.

Former Hurricane and Tropical Storm Lee will bring similar financial pain to Louisiana, Mississippi, Alabama and other Southern states. For insurance purposes, the damage suffered by most will be considered  caused by water, not wind, and thus not insurable.

The wind vs. water rages on.

 

What’s The Difference?

 

Most people will ask, “What’s the difference?” or “I have a homeowners policy and I suffered a loss to my home, so this should also be covered.” Unfortunately, damage by flood is not covered by your typical homeowners insurance policy.

Many communities in New York, Pennsylvania, Vermont, and New Jersey are monitoring the rivers, streams and levees with trepidation. Many home and property owners will face the double whammy of losing everything, and not having the means to rebuild.

Insurance Policies Make Good Reading. Seriously.

Most people don’t really read their homeowner or auto insurance policies until they suffer a loss, whether the loss is insured or not. Take a moment, find your homeowners policy, and give it a good read. While most people feel they know what’s covered under their policy, they really don’t.

You are literally better off having the 80-foot tree in your front yard fall into and cause part of the front wall of your home to collapse. Then, as the rainwater pours into and further destroys your home, you can rest easy in the knowledge it is a covered loss. Why? Because the covered cause of loss (the falling tree), preceded the additional loss from an outside source of  water. If, however, a flood surged through your neighborhood and ripped the front wall away from your home first, you wouldn’t be covered, unless you owned a flood insurance policy with adequate coverage.

Your homeowners policy specifically excludes coverage when damage to your home results from a source of water from outside your home.  This is why every homeowner should own a flood insurance policy, with limits equal to at least 80% of the homes Replacement Cost Value. (I’ll be discussing just what Replacement Cost Value is in a future post.) Renters, and co-op and condominium owners whose units are below the third floor in an apartment building should also own a flood policy, as well as those who rent or own townhouses.

So, before the next hurricane comes a-calling, this is a great time to purchase flood insurance equal to at least 80% of your homes Replacement Cost Value. Also, arrange an annual homeowners insurance policy annual review with  your insurance representative to guarantee you own, at minimum, 100% of the Replacement Cost Value of your home in your Homeowners Insurance policy.

“Four Doorbells for a Two-Family House?”|BrooklynCovered

So, I received a telephone call the other day from a two of my favorite clients, let’s call them The Searchings, Desperately and his lovely wife, Really. Both are long-suffering participants in the house-hunting and purchasing madness merry-go-round. (I told them to call the real estate brokers I know, but N-n-n-n-o-o-o-o.)

“One ringy-dingy. Two ringy-dingies…”

So, I received a telephone call the other day from two of my favorite clients, let’s call them The Searchings, Desperately and his lovely wife, Really.  Both are long-suffering participants in the house-hunting and purchasing madness merry-go-round. (I told them to call the real estate brokers I know, but n-n-n-n-o-o-o-o. They had it covered. Right. Two years later and they are finally seeing the type of houses they wanted to see two years ago).

Thankfully they found a house with everything the wanted: An easy walk to public transportation, good schools, nearby supermarket, healthy trees, and no empty lots on the entire block.

Just one little itsy-bitsy problem. They think the house listed in city records and the real estate brokers’ (again, they didn’t use any of my real estate professionals) listing as a legal two-family brownstone had a previous life as  a rooming house, or SRO.

What Clues Should We Look For?

Here’s the first tip. As you approach the front door to the house, count the number of doorbells and mailboxes.

Two families in one building don’t each require two doorbells or mailboxes.

Two families, two mailboxes, two doorbells. Total.

Once inside, look for electrical piping running to outlets attached to the wall, and the same for plumbing and gas lines. These are major components of any home, and should be located inside the walls. If they’re not, you’re probably looking at a handyman special which could lead to disastrous results such as fires and explosions.

What Else Should I Look For?

Two family house? There should only be two (2) kitchens. Please laugh in their faces when the current owner tells you the have a kitchen in the basement “for convenience.”

Want convenience? Make reservations or call for take out.

And pay close attention to the number of full versus half bathrooms. Look at the doors and door frames. If there are screw holes, whether open or repaired, (Plastic Wood does wonders with holes), it could indicate the bedrooms were actually rented as rooms or sleeping areas.

Or, they keep a Bengal tiger in the apartment.

Inspect the walls which separate each “room.” Do they appear legitimate, or hollow “Home Depot” specials?

What’s a Home Depot Special?

To make additional rentable “rooms”, i.e., sleeping sections, the owner or even the tenant will go to Home Depot for some sheet rock, 2 x 4’s, nails, and the other materials necessary for building a wall. With each “special”, another rentable space.

Make sure you inspect the floors in each room. Why? Again, look for recently patched holes which could suggest these types of walls were recently removed so the house could sell a bit faster. And without the homeowner having to lower the price when a home inspector like Colin Albert, P. E., the owner of ACES Home Inspections, comes to give the house an ASHI-certified inspection.                                                                                                

There’s Got to Be An Easier Way!

Sure. Just ask the current owner if they’re renting out to more than the legal number of families.

No, seriously. Stop laughing.

Ask them. Let’s see if you get an honest answer.

Come On Now – No One Really Lives Like That, Do They?

Oh, yes they do. A surprise visit to a random apartment in many parts of Brooklyn would surprise the heck out of you. A friend of mine recently went to write a life policy for a gentleman he met while handing out business cards on the street. When he went to the apartment, a two-bedroom apartment, there were 19 men sleeping in sleeping slots attached to the walls!

Lucky dog wrote twelve  (12) life insurance policies in one sitting. Got a bunch of referrals, too.

The legal tenant, in many of these cases, is collecting so much ‘space rent’ they really don’t even have to go to work. One lady had the audacity to tell me she works only to keep her health benefits and accumulated vacation time. And to make an extra mortgage payment each month on her fabulous home in Pennsylvania.

So, What’s the Solution?

Know what you’re buying. You might be forced do a great deal of repairing to make your home “insurance legal.”

Great. What do you mean, “Insurance Legal?”

Simple. A two family is only inhabited by two, (2, duo, deux, more than one, less than three) families. A three family, three. Not four or five.

In my agency, I refuse to insure any property not being used for it’s intended, legal purpose. I am not in the business of “writing claims.” I only write sound risks.

And, just so you know, most insurance companies now inspect every house they insure. Both at the inception of the policy and at renewal.

And yes, I’ve had new clients’ policies rejected when the inspector saw four doorbells, and four mailboxes on the front of a two family house. Don’t forget, for a new policy, the insurance company has the legal right to cancel any new policy within the first 60 days of it’s inception for the property’s failure to meet the company’s underwriting requirements.

And believe me, everything we’ve talked about and more is enough reason for cancellation for cause.

You can’t make this stuff up.

Oh, almost forgot. They’re in contract. They are purchasing the house. And the seller is making major concessions on the price and the amount to be held in escrow. Just in case more problems rear their ugly heads.

A Look Into the Crystal Ball…

Dorothy Adonolfi. Remember her name.

Once income tax preparation season, (Puh-leeeeze keep those W-2′ s coming, folks), is over I will begin a series about the tragic costs of illegal conversions in Brooklyn and its surrounding counties. We’ll look at every aspect of how those “Home Depot Specials” affect us now, will affect our ability to secure insurance in certain communities in the future, as well as the other horrible costs we could face.

A Death In The Family | Brooklyn Covered

A Death in The Family

It finally happened.

My toaster, the first toaster I ever owned, died last week.

Requiem For A Toaster

“Old Toasty” was a black and silver Hamilton Beach / Proctor Silex Model 22208. Series B1699. Type T16. I purchased it back in 1980. Oh yes, 1980. And believe me, we enjoyed good toast. Man, could “Old Toasty” toast.

At least I’ll always have those happy memories of toast so perfectly tanned, all the beautiful people in South Beach cried with shame and jealously.

With no fear of skin cancer.

After all of those years, however, the electric cord and an interior filament finally gave out.  The resulting spitting sparks produced a sound and light show lasting about ten seconds, the likes of which I never want to witness again.

Your toaster died. Who cares?

You may think I’m being overly sentimental about a 30 year-old toaster going to the big scrap metal yard in the sky. Well, if you own a Brooklyn home, condo, or co-op, think again. Just like “Old Toasty,” every appliance and component in your home or building has an expected useful life. And, if you’re not careful, you could find yourself replacing them before their time. Which will result in unexpected costs for repairs, or  an increased monthly maintenance bill.

Think about this: Unless you’ve just purchased a brand-new home, everything in the home you own is already into it’s life expectancy. And if your home is over 80 years old (hello, Brooklyn) the time to plan for component replacement may be sooner than you care to think about.

I recently read  “Study of Life Expectancy of Home Components”,  produced in February, 2007 by the National Association of Home Builders (NAHB) and Bank of America. The results of this study were based on telephone surveys of people in the trades, home manufacturers, and researchers to learn how long parts of houses should  last. (You’ll find the full study on the National Association of Home Builders website, http://nahb.com)

Now, remember climate, quality of installation and other factors play a huge role in how long and well home components last. In my opinion, the most important facet in keeping a home in tip-top shape is to do just that – keep it in tip-top shape. Owning a home is not just about watching your big-screen TV’s, entertaining in your home theatres, and backyard barbeques. It’s also painting the house, making sure the landscaping continues to draw water away from the house, checking the roof for damage, and cleaning your gutters and leaders, just to name a few regular chores.

Take the Kink Out Of Your Hoses Before You Spring A Leak

It’s caulking around windows and door frames to create a greater level of energy efficiency in your home, thus saving valuable cooling and heating dollars. Making sure you clean lint filters in clothes dryers, and replacing the metal vent hose. Running the washing machine with just detergent and bleach to clean and disinfect it. Changing the old hoses with new metal-reinforced, high pressure hoses to decrease the risk of blown hoses and the floods which follow.

So, How Long Should Things Last?

Here’s a sample of the expected life of common home components:

  • Countertops:  Natural stone countertops should last about 20 years.
  • Faucets and fixtures have an average life expectancy of 15 years
  • A bathroom shower enclosure should last about 50 years.
  • Different roofing materials will vary greatly in expected life expectancy. Slate copper and clay or concrete roofs last longest – over 50 years. Asphalt shingles about 20 years and wood shakes about 30 years.
  • Aluminum windows should last about 15 to 20 years. I found it a bit shocking to learn wooden windows should last for upwards of 30 years!

Of course, without the proper maintenance like painting window frames and trimming trees so heavy branches don’t land on and crack roofs (yes, I’ve paid several claims for Spanish Tile roofs cracked by falling branches), any component will fail to live up to its expected useful life.

There’s Another Reason To Care

Take a moment and take out the homeowners insurance policy for your Brooklyn brownstone, brick, or frame home. When you look under exclusions, you’ll see losses caused by your failure to properly maintain your insured premises are excluded. This means the only way to repair the damage will depend on you taking money out of your own pocket.

So, if the brownstone or limestone on your exterior wall is chipped, call a company which specializes in this type of restoration. Water from the ruptured pipe in the wall creating a pool in the basement? Call the plumber.

And don’t wait. Do it right away.

You can also enroll in the Neighborhood Housing Services Home Maintenance course conducted at the Bedford-Stuyvesant office on Gates Avenue. There, you’ll learn how to do everything from fixing a leaky faucet to rebuilding a bathroom.* 

So, if you want your appliances and other home components to last as well and as long as “Old Toasty”, it’s time to really pay attention to their care and maintenance.

And don’t worry, we have another toaster. And yes, it’s another Proctor Silex.

Always have a backup.

“Old Toasty” is dead. Long live “Old Toasty.”

* To learn more about NHS’s Home Maintenance Course, call the Bedford-Stuyvesant NHS office at 718-919-2100, or go to their website, http://nhsnyc.org/en/find-an-nhs-near-you/bedford-stuyvesant .

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