Thursday, December 29, 2011

What do I do if the house I rented catches fire?

Get renters insurance ahead of time!

The landlord really does not have an obligation under insurance purposes.

The tenant may not be able to occupy the property and would need to find someplace else to live. If it is a lease, the tenant could be allowed to move back in once the property is repaired, but that would depend upon how the lease is structured. They may still have to pay rent. In a month to month, it would be up to the landlord. Under a landlords policy, the landlord is covered for structure, loss of rents while being repaired, liability, medical payments to others,  and any personal property named in the policy. The tenant on the other hand would need to have renters insurance which would cover the tenants personal property, liability, loss of use (which would help them rent a hotel room or get them set up in a new place) and medical payments to others. If the tenant does not have renters insurance, they are out of luck. I have heard in some instances where a landlord had another vacant property nearby and offered it to the tenant, or where they put them up in  a motel for a short time, but that is up to the landlord.
Another issue is what was the cause of the damage. Was there a wiring problem? Did the tenant BBQ under the patio and it caught fire? This can have an impact on the decision process. For these reasons and others many landlords are now requiring their tenants to have renters insurance and name the landlord as a loss payee or additional insured.

If you are renting, getting renters insurance is a great way to protect yourself. Read your lease or rental agreement and if you have questions, contact your property manager, leasing agent, or legal counsel. The landlord has protection, you should too.

Friday, December 16, 2011

Refinancing? Check the lay of the land first.

If you are looking at refinancing, you may want to check with your insurance first.

The flood maps in my area and many areas of California took effect in August 2008 and are causing some people to think twice before diving in to todays low mortgage rates. The problem is that when you bought your home and got your current mortgage, you may not have been in a FEMA designated flood zone.

In August 2008 the new maps were finalized and put into use. In many areas the maps had not been updated in decades. Changes to the topography caused by construction, erosion, new roads and other changes in the landscape have changed the way water and debris will run if you get enough rain or a large pipe break water and who knows what could end up in your living room.

How does all this affect your loan? If you are in a FEMA designated flood zone A or V, the lender usually will require you to purchase flood insurance. Flood insurance can cost thousands of dollars a year in addition to your homeowners insurance and mortgage payment. For some people, the cost vs. the change in loan payment does not make sense.

If  you got your loan prior to August of 2008 and are now in a FEMA designated high risk flood zone, contact your insurance agent to see what a flood insurance policy may cost. You can also check here to see if your home is in a high risk flood zone. You could also contact your county flood control to challenge the determination or FEMA, but you could be tied up in that process for a long time. A survey by a public surveyor may be required.