admin answers:

You may have the HO-5 policy which is a good policy if you live in an area where the temperature drops way below freezing. It covers things like frozen pipes and damage from weight of snow or ice. The basic policy, HO-1, is for people who live in warmer climates. It’s the best value in a policy if minimum premiums are your goal. So get out your homeowner’s policy so that you can check coverages and make any possible changes.

Also, see what your deductible is. You can save money by raising your deductible to $500 or $1000. But be sure you check with your morgage company for the minimum required coverages.

Check to see if you have replacement value coverage, not market value coverage. Replacement value coverage will pay whatever it cost to replace your home. Make sure your fire insurance is also replacement value coverage. You can also ask for an appreciation clause in your policy that will automatically raise your coverage limits each year for inflation.

And, check your policy for gimmick insurance that may be attached to your policy. Examples are:

Credit Life Insurance
Credit Disability Insurance
Morgage Life Insurance
Automobile Service Contracts
Extended Waranties on Appliances and Electronics
Chargegard

And finally, check all options to your homeowners’s policy. None of these are a good value.

1)Removal of debris
2)Damaged-property removal
3)Fire department surcharges
4)Temporary repairs to prevent further damage to property
5)Trees, shrubs, and plants – since windstorms are excluded, this insurance is of little value
6)Stolen credit cards

admin answers:

Who is your car insurance with? Most reputible insurance agencies handle all kinds of insurance: property, casualty, auto, life, etc. Try Allstate, Statefarm, Farm Bureau, Cotton State. You could also look at your local insurance companies in your phone book … Get some quotes, and go with the one that is the cheapest.

admin answers:

You definitely need to notify your insurance company. The property will no longer be owner occupied & they can deny a claim. You will need to get a DP3/landlord policy. Your rates WILL NOT go down because the risk is higher. No one will take care of you home the way you do. Tenants increase the risk.

Also, you would Never be liable for the personal property of a tenant (except if you were completely negligent). However, as a landlord I would require your tenants to carry a renters policy simply for the Liability portion of the policy. Liability is the coverage that protects you from you tenants or your negligence. Like, if you were at your property one day to do some yard work & left the hose out on the sidewalk & the postman trips over it. He would probably sue you. Liability covers that. I would suggest no less than $300,000 per occurance. It’s usually pretty inexpensive (around $40.00 a year) to bump it up from $100,000.00 to $300,000.00.

FYI: The insurance company probably would not deny the claim but after the claim was closed they would most definitely set you up for non-renewal. That looks very bad when shopping for a new company. One of the questions will be: Have you ever been non-renewed & why?

Hope this helps

admin answers:

Different insurance companies use different estimators – Marshall and Swift is one popular one, Boeck is another. You will have to rely on the agent who’s seen your house. To calculate the proper amount of coverage for your policy type.

Smart people insure for 100% of the house, and here’s why: As you so correctly pointed out, most losses are PARTIAL losses. Most, as a matter of fact, are well under 75% of the cost to rebuild the entire house – total losses are rare (outside of hurricanes or wildfires). Because insurance companies ALSO know that most losses are partial losses, they’ve reacted to it, in two major ways:

1. Rating. Homeowners insurance rates are NOT a flat 1% of the total value. They are scaled. They are HEAVILY scaled, so that the lower the value of the house, the higher the actual rate per $1,000 costs the owner – so much so, that when you get down to VERY low value houses – $40,000, $50,000, etc, the rates are astronomically higher. Most areas of the country, you can insure a house for $200,000 cheaper than you can insure it for $50,000 – and MOST insurers flat out won’t insure a house with a value under (insert number here – usually around $80,000).

2. Coinsurance. Every homeowners policy has a coinsurance clause, and the actual number varies. What this means, is that the policy has a condition in it, that says if you underinsure the house, they underpay the claim, by the same amount that you insured the house. Confusing, but here’s an example with real numbers: You think the cost to replace your house is $150,000, but you realize that you probably won’t have a claim more than $50,000, and you decide to save money, by insuring the house for $100,000 – MORE than enough coverage, right? Well, let’s say you have a $50,000 kitchen fire (average kitchen fire loss). When the adjuster gets out there to see your claim, he realizes you understated the square footage of your home. He calculates that the actual cost to rebuild your home (averages $200 per square foot over most of the USA) is $200,000. Moreover, your policy has a 100% coinsurance clause (common, for replacement cost coverage on the building).

So you’ve got a $100,000 policy, on a $200,000 home, with a $50,000 loss, and a 100% coinsurance clause. You insured the house for HALF the cost to rebuild. According to the policy terms, the insurance company pays HALF the claim. Minus your deductible.

You need to be honest with your agent, about what you’re trying to accomplish. Policies can be market value, replacement value, actual cash value, functional replacement cost value, or flat value (rare). Coinsurance penalties start at 80% for actual cash value policies, but are usually 90% or 100%, for replacement cost policies.

You need to ask your agent, know up front, what the valuation is, what the coinsurance is, and review the calculations on how they came to the replacement cost of the house.

I’ve seen this happen lots of times – people who try to be “clever” to save insurance money, will get penalized come claims time because they didn’t fully understand everything in their policy, and THEN they’ll get mad at the insurance company for it.

admin answers:

LOL you can’t.

BUT. You can go to the state insurance department website, for the state where the house is located, and get a list of all carriers that write in that state. Then, you can call each of them, and ask if they write directly.

Off the top of my head, I can think of a few carriers that write directly – USAA, Amica, and Hartford used to but I’m not sure if they still do. But you can make the thousands of calls, to see if any of the rest write directly. It’s NOT a common business model.

admin answers:

Depends on the house you buy. There’s no “one price”. You have to get quotes.