Thursday, July 29, 2010

Moving up? What about the house you are leaving?

In today's real estate market there are some good deals. Interest rates are still low. Many people are moving up to a bigger house or a better neighborhood or both. Some are downsizing, choosing to live in a smaller home with less stuff.  Either way you want to go, it can be a good time to buy depending on your situation.

So what about the home I have now? Should I sell it or keep it and become a landlord?

There are good arguments either way you want to go. I recommend you consult a real estate professional or property mangment firm in your area to help you decide. Every local market is different and a full time real estate agent or broker who knows the market is essential.

From an insurance standpoint, you need to tell your agent what you are up to, particularly if your insurance is with in  3 or 4 months of renewing. Why?

First, if you are selling your home, some carriers will not insure a home that is for sale. More people coming on to the property means more risk of a claim for injury, theft or whatever. Real estate agents are going to be showing the property to potential clients and their families, inspectors and tradespeople like plumbers and carpenters are going to have to have access to the property. For some carriers this is a problem. Remember that whenever you renew your insurance the insurance carrier sends out their inspector to verify the condition of the property. A for sale sign in the front yard might scare your carrier. Check with your insurance agent to make sure this will not be a problem if your home does not sell by the policy renewal date.

Second, if you decide to rent out your home, your homeowners policy will need to be changed to a landlords policy. Homeowners insurance is meant to cover owner occupied homes. Landlords policies are designed to cover properties that are rented or leased to others. Landlords policies offer different coverages which can vary some by carrier. For example, some carriers exclude theft coverage from landlords policies since the property that will probably be stolen will be the Tenant's, not the landlords. Also, personal property can be excluded entirely from the policy if you choose. Some landlords do not provide any furnishings for Tenant use. Some landlords feel that since all they are really providing is a stove and a dishwasher, they will just spend $600 at Home Depot should anything happen to them and forgo the claim.

You might also want to look at an umbrella policy. An umbrella policy is an excess liability policy that  kicks in should you exceed your other policy limits for liability coverage.

Remember to keep your insurance agent in the loop whenever you have a change like a marriage, birth, get a dog or your home loan changes. You should review your policies at once a year with your agent and look at changing carriers about every 3 years or at least have your policy re quoted to see if you can save.

Friday, July 16, 2010

Is It Raining? Do I Really Need An Umbrella?

With it being July you probably are not thinking too much about your umbrella that is in the back of the closet or someplace in your car. Once the first showers start though, you will probably dig through the closet or open the glove box and dig it out, preferably before you are soaked.

The same goes for an umbrella policy. You think you don't need the additional insurance because your homeowners / auto / renters / landlords policy already gives me liability coverage. I'm protected. It's summer, it won't rain.

Perhaps you are right. All will be dry, if you have a claim your policy might have enough liability coverage to take care of you.

All the sudden, the first real storm clouds show up. You are in a bad car accident or a guest at your home was seriously injured when they fell and they are coming after you for medical bills and loss of income. Is there enough liability coverage on your homeowners insurance to cover you? Are you sure?

Umbrella policies are liability policies that sit on top of your other policies like homeowners, auto, etc. and provide additional liability if the limits of a policy are exceeded.

Lets say the guest that fell at your home is suing you for $800,000 for lost wages and medical bills. Your homeowners insurance has $300,000 liability coverage. If they win in court, you now have a judgment of $800,000 you have to pay. Your homeowners insurance will only pay $300,000. You would have to come up with the remaining $500,000 out of your own pocket. 

Now lets say you have a $1 million umbrella policy. The injured guest wins and you have an $800,000 judgment against you. Your homeowners will pay $300,000. Your umbrella policy drops down and covers the remaining $500,000.  The judgment is paid.

You have paid out of your pocket your deductibles and legal fees. The insurance company has taken care of the rest. You can get on with your life with out having to take out a second mortgage or have your wages garnished for years to pay off this judgment.


You may be wondering what the cost for such coverage is. While the cost does vary from carrier to carrier, in many cases the cost of a million or two million dollar umbrella policy is less than $500.00 a year. Think about that. You can have access to a million dollars for less than 500 dollars a year. Why so cheap? Because an umbrella policy is only for liability. It does not cover any structures, property damage, loss of use, etc. The coverage is only activated if you exceed the coverage limit on an underlying policy, like homeowners insurance.

What's even better is that it can provide this protection for all of your policies. Your home, auto, landlords, RV and other policies all would enjoy this same additional protection.

If you own a business this same protection may be available to you under a commercial umbrella policy.

It can't hurt to locate your umbrella now and have it ready for a rainy day. Thunderstorms happen even in summer.

Thursday, July 1, 2010

Flood Program is Back....Until September.

The Senate late last night reauthorized the funding for the National Flood Insurance Program. The authorization expires on September 30Th.

 If you have flood insurance that is up for renewal, your carrier should contact you shortly. If you have and an application in, it will be processed as soon as possible, but don't look for immediate results. The 4Th of July holiday and the back log of applications waiting to be submitted will add some processing time. Please be patient.

I can't help but notice that with a hurricane hitting Texas that the Senate finally quit the bickering and party politics and did something. I guess it takes and act of God to get an act of Congress!

Have a safe and happy 4Th of July!