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 eustace@brooklyncovered.com  or eustace@insuremeeg.com . 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.