Homeowners Insurance

Homeowners Insurance and Wildfire Coverage

If your home burned in last fall’s wildfires, you may be interested in the following bills going through the state legislature right now.

AB 1797Replacement cost coverage

With a few minor exemptions, this bill would require an insurer that provides replacement cost coverage to provide an estimate of the cost to rebuild or replace the insured structure that complies with specified existing regulations. This estimate would need to be updated every other year or when it’s time to renew the policy.

It’s still up to policyholders to select the coverage limits for their homeowners insurance. This change would go into effect July 1, 2019.

AB 1875Online insurance finder

This bill would require the California Department of Insurance (CDI) to establish an online tool called the California Home Insurance Finder to help homeowners find and compare residential insurance options. To do this, the CDI would gather information via an annual survey of insurance brokers. It would then promote the online tool and make it available in various languages starting no later than July 1, 2020.

In addition, if an insurance agent does not offer extended replacement cost coverage that meets certain criteria, that agent has to let the homeowner know that other providers may offer this type of coverage.

AB 1923: Wildfire debris removal

When the governor declares a state of emergency after wildfires like those we faced last year, authorities can activate consolidated debris removal programs for large-scale clean up. This new bill would allow local governments to pay for the clean up by collecting money from the insurance companies of covered homes in the area, as long as the homeowner grants access to their property through a right of entry form.

AB 2611Appealing wildfire insurance decisions

Right now, insurance companies cannot cancel policies or fail to renew them just because a property sustained fire damage. Assembly Bill 2611 would create an appeal process for disagreements between homeowners and insurers about whether a policy is issued and/or the premium for that policy based on a wildfire risk model.

The insurer has 30 calendar days to respond to the homeowner’s appeal, during which the insurer can’t cancel, increase the premium, fail to renew or make any other adverse underwriting decisions toward the homeowner.

If the insurer denies the appeal, the insurer must provide factual evidence for the decision and let the homeowners know they can appeal again, this time to the Department of Insurance.

AB 3166: FAIR Insurance plans

The Fair Access to Insurance Requirements (FAIR) Plan Association assures that basic home insurance plans are available for homeowners who don’t qualify or can’t afford more comprehensive homeowners insurance. Although mainstream insurers have these basic plans, they don’t always publicize them. This bill would require insurers to inform homeowners about these FAIR Plan Association policies so homeowners know their full range of insurance options.

AB 1772: Extending insurance collection times

Insurance companies limit the time homeowners can apply for benefits after fire-related loss or damage. This bill would extend the minimum time limit during which a homeowner may collect the full replacement cost of a loss relating to a state of emergency from the current 24 months to 36 months—that is, from two years to three years—with additional extensions of 6 months for good cause.

If you’re interested in local fire recovery efforts, visit www.mendocinocounty.org/community/fire-recovery.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

 

Homeowner’s Insurance: Don’t Let It Lapse

A couple years ago, I wrote about homeowners and renters insurance and I strongly recommend investing in it. I sure hope those who live in Lake County happened to read and heed that advice. If you live in an area that has not been devastated by fire recently, and you don’t have insurance, this is a great time to sign up for it, if you can.

During and immediately after natural disasters—like the Valley Fire—insurance companies will sometimes put a moratorium (stop) on new policies in and around the disaster zone. They also tend to increase premiums, particularly in remote areas, once they realize the cost of paying those insurance claims, and they get quite particular about who they will insure. For example, if you have a house on Cobb that was not reduced to ash and you would like to purchase homeowners insurance, you will likely have to prove you have an adequate source of water—at the very least, a well with decent pressure and a storage tank. If you are lucky enough to have a house still standing in Cobb and you have insurance, DO NOT LET IT LAPSE. Once a policy lapses, insurance companies are under no obligation to renew the policy at any price.

Homeowners insurance and renters insurance are pretty much the same, except renters insurance does not include the structure—only the belongings. A standard policy covers loss from fire damage, as well as things like having a computer stolen out of your car or the health care bills for the UPS delivery guy who slips on your driveway. It will often cover acts of vandalism and even worker’s compensation for a handyman who is injured on the job while at your house.

A home’s insurance value is based on the cost to rebuild, not the market value, so in determining how much insurance is enough, you’ll need a policy that covers the cost of rebuilding your house to comply with current building standards. If your insurance policy only includes enough coverage to rebuild your home exactly as it was, then you get to pay cost of bringing your house up to code out of your own pocket. You can pay for less coverage or a higher deductible, but it’s a risk.

As with any policy, it’s best if you actually read and understand it. This way, you won’t be surprised to find out that flood and earthquake insurance are separate and cost more. If your home is in a flood plain—even a 100-year flood plain that hasn’t flooded in anyone’s memory—your lender will require flood insurance. With an El Nino winter approaching, flood insurance is an extra good idea.

Earthquake insurance is often very costly, and honestly, hard for me to recommend. Typically, there is a 15 percent deductible. This means, if your house is insured for $300,000, you’ll pay for the first $45,000 worth of damage. That’s a lot. If the earth opens up and swallows everything you own, then you’ll wish you had earthquake insurance. Otherwise, you’ll be paying expensive premiums and still be on the hook for tens of thousands of dollars if an earthquake hits.

We have some excellent insurance brokers in Ukiah. If you’re new to homeowner’s insurance, you can ask for a quote from the company that insures your car. If you want to do a little independent research, go to https://eapps.naic.org/cis/ to see if people have filed complaints about the insurance company. As always, your Realtor is a great resource for this type of information.

By the way, don’t forget to submit your ideas on how to make Mendocino County safer; the contest (and chance to win $500) ends November 15. To learn more, visit http://realtyworldselzer.com/safe-mendo.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 35 years.

Getting Homeowner’s Insurance in Rural California is Getting Tougher in 2015

Recently, rural properties in California have had a harder time qualifying for homeowner’s insurance. After the big fires in 2014 (and the not-so-big Black Bart Fire locally), many insurance companies have declined new requests for coverage and even opted not to renew existing policies.

Why? Because the Department of Insurance disallowed a rate increase for insurance companies hit by claims resulting from those fires. So the insurance companies responded by reducing risk—choosing not to offer insurance in areas deemed more likely to suffer a loss. Consequently, if your current home is in a rural setting with a moderate fire risk and your homeowner’s insurance renewal is coming up, you should check well in advance of the deadline to make sure a nasty surprise isn’t headed your way. If you are buying a home, check on insurance as soon as you decide on a property. You’ll gain two useful pieces of information: 1. Whether you can get insurance and 2. Whether you’ll have to sell your firstborn to pay for it.

By the way, if flood insurance is required and you didn’t get a flood certificate when you bought the property, now might be a good time to verify that you are, in fact, in a flood zone and therefore need flood insurance. You might just be leaving money on the table and not know it.

Whether you’re a homeowner or renter, I strongly recommend investing in homeowner’s insurance. Why? Because it can help prevent a natural disaster or other crisis from also becoming a personal financial crisis. A standard policy typically covers loss from fire damage, which is what most people think of when they think of homeowner’s insurance. It also covers things like having a computer stolen out of your car or the hospital bills for the Girl Scout slipping on your driveway when selling cookies or the UPS guy getting bitten by your dog. It will often cover acts of vandalism and even worker’s compensation for a landscaper who is injured on the job at your house. The only difference between a homeowner’s policy and a renter’s policy (both are called a homeowner policy) is that the structure is included in the coverage if you own your home.

A home’s insurance value is based on the cost to rebuild the house, not the market value. If you under insure the property, the insurance company will only pay a portion of your loss even though the loss is less than the stated amount of insurance. (Otherwise we would all insure our property for less than full value because the odds of a total loss are very small.) You can pay less for insurance if you have less coverage or a higher deductible, but you’re taking a risk.

Be sure you understand what’s covered under your policy. Flood and earthquake insurance are separate and cost more. If your home is in a flood plain (even a 100-year flood plain that hasn’t flooded in anyone’s memory), the law will require your lender to require flood insurance.

Earthquake insurance is often very costly, and honestly, hard for me to recommend. Typically, there is a 15 percent deductible. This means if your house is worth $300,000, you’ll pay for the first $45,000 worth of damage. That will cover a lot of damage. If the earth opens up and swallows everything you own, then you’ll wish you had earthquake insurance. Otherwise, you’ll be paying expensive premiums and still be on the hook for tens of thousands of dollars if an earthquake hits.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 35 years.

 

Prepare for the Unexpected – Homeowner’s Insurance

Sometimes life goes in a direction you don’t expect—either positive or negative. So this week, I thought I’d write about one way to prepare for surprises of the unpleasant variety. (Most of us can handle the happy surprises without too much preparation.)

Whether you’re a homeowner or renter, I strongly recommend investing in homeowner’s or renter’s insurance. Why? Because it can help prevent a natural disaster or other crisis from also becoming a personal financial crisis. The standard policy will cover loss from fire damage, which is what most people think of when they think of homeowner’s insurance. However, it will also cover things like having a camera stolen out of your car or the health care bills for the paperboy slipping on your driveway or the UPS guy getting bitten by your dog. It will often cover acts of vandalism and even worker’s compensation for a landscaper who is injured on the job (at your house). The only difference between a homeowner’s policy and a renter’s policy is that the structure is included in the coverage if you own your home.

A home’s insurance value is based on the cost to rebuild the house, not the market value. And even though market values are still down in many areas, rebuilding costs are on the rise. There’s a Guaranteed Replacement Cost endorsement, which is relatively new in the insurance industry and started as a result of the Oakland Hills fire in California several years back. This endorsement is generally 125 percent, 150 percent and up to 200 percent of the dwelling coverage on the homeowner policy.  The purpose of the endorsement is to protect the homeowner against a sudden increase in replacement cost caused by shortage of labor or materials (e.g., a large disaster that causes sudden overcharging due to demand). The coinsurance clause in a policy is generally 80 percent, 90 percent and 100 percent — it requires the homeowner to insure the structure for those amounts in order to be eligible for “replacement cost” protection (no depreciation).

So, your policy will cover part of the cost of replacemeent, and you are responsible for the rest. It’s typically a decent gamble because usually in a disaster, let’s say you’ve got a policy that covers 80 percent. You can probably salvage 20 percent of your home and/or its contents. However, this is also why the insurance company only pays 80 percent of the damage, if only part of your home is damaged. You can pay less for insurance if you have less coverage or a higher deductible, but it’s a risk.

Even more important than getting insurance is reading your policy (even though no one does). The rule is simple, “The large print giveth, and the small print taketh away.” It really is worth knowing not only that your policy will cover worker’s compensation, but the crucial detail that the worker in question must be a licensed contractor for the type of work being done. Your brother’s friend may not be covered to replace your deck, for example.

It’s also important to know exactly what is included. Flood and earthquake insurance are separate and cost more. If your home is in a flood plain (even a 100 year flood plain that hasn’t flooded in anyone’s memory), your lender will likely require flood insurance. For more information, go to www.floodsmart.gov/floodsmart.

Earthquake insurance is often very costly, and honestly, hard for me to recommend. Typically, there is a 15 percent deductible. This means, if your house is worth $300,000, you’ll pay for the first $45,000 worth of damage. That’s a lot of dough. If the earth opens up and swallows everything you own, then you’ll wish you had earthquake insurance. Otherwise, you’ll be paying expensive premiums and still be on the hook for tens of thousands of dollars if an earthquake hits. (I do feel a little quiver of fear from Murphy’s Law right now – hoping my home will not be shaken to the ground any time soon.)

We have some excellent insurance brokers in Ukiah. If you’re new to homeowner’s insurance, you can ask for a quote from the company that insures your car. If you want to do a little independent research, go to https://eapps.naic.org/cis/ to see if people have filed complaints about the insurance company. If you’d like a recommendation, ask your realtor to provide one.

Next time I’ll write about mediation and arbitration. If there’s something you’d like me to write about or if you have questions about real estate or property management, feel free to contact me at rselzer@selzerrealty.com or visit our website at www.realtyworldselzer.com. Dick Selzer is a real estate broker who’s been in the business for more than 30 years.

 

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