Homeowners Insurance Lowdown

Explaining Umbrella Policies...

What happens when your policy has paid out all you can claim?

There’s no reason to worry if you have an Umbrella policy. When the homeowners policy that you have ends up paying out all that you can claim you will not be minus coverage if you have the Umbrella coverage.

Liability coverage can range from serious injuries resulting from tragic accidents to law suits filed against you and they can often creep up on you unexpectedly. This is also where you may need some extra protection.

Umbrella policies supplement liability coverage offered by your standard homeowners and auto policies. It can also be called an extra shield for you over and above your standard polices.

Let me remind you that most of the risk is still taken by the standard homeowners policy. Also the reason why it’s not expensive - You can buy a $1 million or larger umbrella policy for less than $200 a year.

Insurance providers are happier selling umbrella policies if you already have auto or home policies. Umbrella policies are usually sold with a deductible that might run anywhere from $250 to $1,000. Each additional $1 million of coverage is less than $100. The larger your basic liability limit, the less excess-liability coverage you need and the lower your premium for excess coverage.

Umbrella insurance is sold as a separate policy from your basic policy. Even umbrella polices are not enough sometimes - Keep in mind an umbrella policy won't cover claims arising out of a business endeavor.

The umbrella policy won't cover intentional acts, unless there are extenuating circumstances. However in the kind of society we live in where every one sues at the drop of a hat, having an umbrella policy may be a good idea.

To claim or not to claim...

As strange as it may sound making a claim may not always be a good idea in homeowners insurance. This is because your home is probably the largest investment you make and its equity may be the only thing you’ll have for a rainy day!

Let me explain: Homeowners who make claims run the risk of being forever stamped with a bad mark. This is because a claim represents damage to the house and that means you are actually admitting to a fault in the home. This at the time of selling can come back and haunt you.

Now you may ask who is going to know about the damage claim on your home. The answer is that the insurance company does and they have logged this information in a large repository of insurance related data.

Clueless about CLUE? This database is called the Comprehensive Loss Underwriting Exchange or CLUE and your termite problem is stored there for posterity! Psyched by this little insurance secret? You are not alone and herein - the quandary - to claim or not to claim!

The only good thing to report about the CLUE for the homeowner is that you are entitled to a free copy of your home's CLUE report every year. You can also get a free report when you've been denied insurance by your provider!

Whatever you discuss with your provider is carefully logged here and that is why your home’s prospective buyer may finally decide against your home.

Too many claims also can lead you to being dropped by your insurer and that’s why sometimes claiming may not be a good idea if you plan to sell your home. But then there’s more to this story…

Homeowners who did not claim but discussed with their agent about damage are also not being spared. This is the worst it can get - You don’t get any money and your mould problem is recorded in the CLUE report!

And that brings us back to the profound question – To claim or not to claim? One clue – Keep your problems to yourself before you decide!

Perils of not insuring your home office

Many a big dream has been realized in the humble concept of home office. But what do we know about the trends of this concept in the United States? Even as I sit writing in my home office I know of five others at work at their home office in my street.

Did you know?

1. There are over 43 million home-based businesses in the United States.
2. More than half of this huge number is uninsured.
3. You could lose a claim by not telling your homeowners insurance provider that you work from home.

The third point there is itself the biggest risk you face! It is obvious that most people are not aware of the risks of not insuring their home office.

You need to be covered for at least 80% of the value of your home. If you fall below that number the insurance company can refuse to reimburse you in full for a total loss.

Additional cover for home offices can be purchased as an endorsement on your standard homeowners policy. Insurance providers can also do the following if you have a home office that does not have extra cover and limit losses:

1. Most homeowner’s policies limit loss of business property to $2,500
2. Standard policies don't cover losses away from the home and
3. Exclude liability coverage for business-related activity.

Keeping in mind that basic property insurance does not protect you from liability and property damage let’s look at the possible losses that can happen to a home office.

1. Clients could have a fall in your home office
2. Computer accessories equipment other hardware can be stolen
3. Expensive computer software can be stolen
4. Your service or product could injure somebody

Decide on how much insurance is needed for your home office by taking an inventory of all the things in the office. From furniture to money to goodwill and trademarks all the things in the home office should be accounted for.

Finally, ask your homeowners insurance providers about riders and endorsements for your home office.

Insurance Increases Because Of…

• The way your home is built. Some kinds of construction are more costly than others.
• The age of your home. Very old homes are prone to be given very limited cover or none at all.
• The lack of adequate protection against fire. A family of non-smokers qualify for lower premiums, as do homes that are closer to fire departments and fire-fighting equipment.
• The amount of coverage you purchase for your home, its contents and your personal liability.
• The low deductibles that you pay.
• The discounts you lose when you don’t purchase auto and home insurance from the same agency.
• The lack of safety implements like alarms and dead-bolts in your home.

Windstorm Hits Condos, Apartments Too

Homeowners in Harris County in the Houston can take comfort in the fact that they’re not the only ones affected adversely by the lack of insurance options and the rise in insurance rates. People who live in condos, town houses, and apartments are also being subject to rising prices, limited coverage, and higher fees and rents. The increases are attributed to the windstorms and the rising costs of insurance that insurers purchase for themselves. The Texas Department of Insurance is monitoring the market and considering other surplus lines insurers as alternatives. Chron reports:

Historically, property owners who couldn't find windstorm coverage in counties along the coast, including a small sliver of Harris County, have turned to the Texas Windstorm Insurance Association (TWIA). But inland counties aren't eligible for coverage in the association. Jerry Johns, a spokesman for the association, said adding Harris County to TWIA at current rates isn't something the already-struggling industry would support.

Title Insurer Reports Q2 Losses

The Houston-based title insurance company, Stewart Information Services Corp., announced that it registered a comparative loss in revenue during the second quarter this year. The company’s revenue fell to $645 million in Q2, 2006 from $651.1 million during the same period last year. Reasons cited for the decrease are the slowdown in the sales of homes and refinancing in a few parts of the country, increased expenses incurred for employees, operations and new office buildings, and a drop in the share value of the firm. Chron reports:

California's home sales, which represent 16 percent of Stewart's market, dropped 15 percent from this time last year, according to Ted Jones, director of investor relations at Stewart. He said that the number is indicative of the kind of drop that important states like Florida and New York are seeing as well. Jones said the company hopes to streamline its operation as it moves further into a Web-based system.

Reprieve for Texan Homeowners

State Farm Insurance’s plans to raise its insurance rates for homeowners in Texas have bitten the dust as the Texas Department of Insurance (TDI) turned down its proposal. To add insult to injury, the insurer has been ordered by TDI Commissioner Mike Geeslin to procure TDI’s approval before it considers another rate hike. Geeslin termed the rate increases as “unreasonable and meant to produce unjustified profits.” State Farm had intended to increase insurance rates by 21 percent all over the state, and by more than 50 percent in the counties of Harris and Galveston. Chron reports:

Alex Winslow, executive director of the Austin-based consumer group Texas Watch, praised Geeslin for his latest action but cautioned that homeowners will benefit "only if TDI follows through and forces the company to pay back everything they owe their policyholders and reduce their rates."

Political Windstorm Insurance Soundbytes

It’s virtually impossible to procure commercial windstorm insurance at nominal rates in Florida after private insurers found themselves canceling policies that came up for reinsurance.

As a solution to this problem, Governor Jeb Bush suggests a state-run fund that will step in to offer business hurricane coverage, but the Republican candidate for the post of Florida’s chief financial officer, Randy Johnson, begs to differ. Johnson says it’s bad public policy to involve the state in the hurricane insurance business; he suggests that incentives should be created to encourage competition in the windstorm market.

Present chief financial officer Tom Gallagher proposes a commercial Joint Underwriting Association (JUA) that would allow insurance agencies to draw from the state’s hurricane fund when they incur losses greater than $3 billion. The current threshold is $5.2 billion.

Attorney General Charlie Crist also supports the creation of a catastrophe fund, but suggests that the loss threshold should be lowered to between $2 and $3 billion.

All proposals and options are subject to the approval of the Florida Cabinet, which meets next week to discuss the issues presented by Insurance Commissioner Kevin McCarty.

Musings of a prospective waterfront homeowner...

Owning a waterfront home sure doesn’t look so attractive these days, don’t you think? If you look at the news - all you see are warnings – hurricanes, floods and premiums! So, if you were to decide on buying your dream home facing the waters, the decision-making would be a bit of a catch-22!

Firstly, there is the hurricane threat: We are now entering its peak period – in fact, in just under two weeks. The first-year anniversary of Hurricane Katrina is upon us as a reminder!

Then there is that little problem called homeowners insurance! You are “lucky”, if you get a provider and “wealthy” - if you can afford the premium. Each premium hike also reminds you that you are not financially “so good”.

What about the mystery of homeowners who are living in areas that have never seen hurricanes or floods, being asked to pay big bucks for insurance? Now what is that really…does anybody really have a clue?

Let's not forget that if your home is damaged after a hurricane, you have to prove it is “wind and not water” to be able to get your claim.

If it's a Lakeview property that is your dream, you are warned that you could still be flooded because the flood maps are not really accurate. The constructions in the area have changed the levels of the water table.

Finally, you know that you need a mortgage to buy a home and you can't get one without homeowners insurance. So while mortgage providers need insurance for protection; the insurers go to re-insurers for assurance! But, YOU have to have them all - to buy a home!

Now, if all this isn't stopping you - You will need a basic homeowners insurance policy, a wind and hail policy (if your basic homeowners insurance policy does not already cover wind and hail), a flood insurance policy, excess flood coverage, earthquake insurance policy and excess coverage - such as a personal-articles policy!

Three ways to lower your homeowner’s insurance costs

Did you know that the price you pay for your homeowners insurance could vary by hundreds of dollars? Different insurance companies charge differently and that is where the price difference arises. But there are some things you can do to lower your costs. So, before you go out to get yourself a homeowner’s insurance policy, it is best to consider certain things that will help you lower your costs.

• Shop Around: This could take some time, but I’ll guarantee you’ll save a couple of hundred dollars if you shop around for your insurance instead of going in for the first one that comes your way. Ask your friends, check the Yellow Pages or contact your state insurance department. The National Association of Insurance Commissioners has information that can help you choose an insurer in your state, including complaints.
• Disaster resistant: One of the simplest things you can do to reduce your insurance cost is to make your home disaster resistant. Find out from your insurance agent or company representative what steps you can take to make your home more resistant to windstorms and other natural disasters. The simple act of adding storm shutters can actually help you save on your premiums!
• Reinforce: Reinforcing your roof or buying stronger roofing materials, also give the same benefits. Older homes can be retrofitted to make them better able to withstand earthquakes. In addition, consider modernizing your heating, plumbing and electrical systems to reduce the risk of fire and water damage.

Is Your Insurance Checklist Complete?

It is important to review your homeowners insurance every now and then. Have you done it lately? If not, please check these items against your insurance-planning list:

• Review: Know what your policy covers and review your insurance coverage with your insurance agent. If necessary, write down your basic insurance information.
• Know deductible type: This is an important one – you must understand the type of deductible you have. For this, read your insurance policy or call your agent or company. Some companies allow policyholders an opportunity to "buy down" to a flat deductible.
• Make a list: I’ve said this before but since it is important, it requires repeating. Update your household inventory. Make a list, take photographs or videotape your personal belongings and store the inventory in a safe place outside your home.

Democrats slam 'insurer friendly' insurance package

In a recent meeting at Palm Beach, Florida, Democratic lawmakers slammed their Republican counterparts for passing an insurance package in this year's state legislative session they say is far too friendly to insurers. Robert Hunter, the insurance director at the Consumer Federation of America and a former insurance commissioner in Texas, actually said that the Republican legislators had "given away the store" in the legislative session. Palmbeachpost.com reports:

Hunter said the nation's property insurers have reaped record profits in the past three years in spite of record claims. He blamed insurance companies for jacking up rates after vowing that post-Hurricane Andrew reforms would bring stability to homeowners.

Read more: Homeowners rip insurance package

Over 150,000 Texan policyholders to lose their homeowners insurance

Over 150,000 Texas homeowners must now find a new insurance carrier. This is thanks to the decision of regulators to shut down Texas Select Lloyds, the state's sixth-largest home insurer. Ksat.com reports:

Texas Select did not have the ability to protect its policyholders and so their policies will be canceled by Aug. 23, according to the Texas Department of Insurance.

Read more: Homeowners Insurance For 154,000 Texas Policyholders To Be Canceled

Are New England residents ready for a hurricane?

Weather forecasters believe that this year's hurricane season may not be as drastic as last year's, but does that mean some states can remain unprepared? Research shows that of all the eastern states with Atlantic ocean shoreline exposure, the New England states are the least prepared to deal with a hurricane. Newbritainherald.com reports:

New England residents have taken only about one-third of the necessary steps to protect themselves and their homes. Those steps include not only a review and, if necessary update, of homeowners insurance, but signing up for federal flood insurance coverage, creating a disaster kit and evacuation plan and preparing houses for a hurricane.

Read more: New England least prepared for hurricane

Beating the ‘give me more’ syndrome among insurers

Hurricanes Katrina and Wilma have had repercussions far beyond the physical plane. Yes, houses were damaged and scores of people were rendered homeless or worse. But what has come to fore during this time is the excessive greed of the insurers. In the time that has passed since the hurricanes, insurers have lost no time to shout from rooftops about the scary situation that we are in and that we need to do something drastic. And what would that be? Increase the rates of course. Make the already burdened consumer pay even more so that the insurer doesn’t have to face ‘terrible’ losses.

People buy insurance and pay for it for years to deal with the possibility of future problems, and collect if, and after, they really do happen. And when a calamity does strike, chances are the insurance doesn’t cover everything. So whichever way you look at it, the homeowner is always at risk.

Agreed insurance companies are in the business to make money. But when it is at the cost of the consumer, it does hurt. They maneuver the regulatory process to ensure they are not at risk. They also buy reinsurance to guard against the possibility of risk. All this is acceptable. But then you hear of the Fair Plan, which reported a $25 million profit in fiscal 2005. And all that money came from the homeowners.

And now, the Fair Plan wants to raise insurance rates 25 percent just so they are prepared in the event of a Katrina-like hurricane While such a hurricane is certainly possible, it is also possible that it won’t come, or be anywhere near as devastating. So, what happens to all the money that homeowners invest in the Fair Plan? Any suggestions on how to make the Fair Plan really fair?

Insurance rates to go up for Encompass clients

Some not so good news: Around 15,000 customers of Encompass Insurance, a division of Allstate, will see rate increases on their homeowners insurance starting in September. The 8,586 customers of Encompass Insurance Co. of America and Encompass Property and Casualty Co. will see statewide average rate increases of 18.7 percent. The 5,410 customers of Encompass Indemnity Co. will see a statewide average rate increase of 11.8 percent.

This hike is not uniform. Customers in Northern Louisiana could actually see a decrease. However, customers in the New Orleans area are not so lucky and will see increases of 16 percent to 40 percent. In addition to this, Encompass also plans to pass on to customers a one-time 15 percent assessment. This one is to bail out the Louisiana Citizens Property Insurance Corp. Nola.com reports:

Kevin Conlee, senior actuary for Encompass, an Allstate brand that is sold through independent insurance agents rather than through Allstate agents, noted that the bulk of those increases are to cover the cost of buying reinsurance.

Read more: Encompass raising insurance rates

It’s time we called the insurers’ bluff

Agreed Florida suffers from an overdose of natural fury what with escalating storm cycles ensuring that a large part of the population has to live from one day to the next, hoping that their roof won’t be blown off or their home uprooted. And to compound problems, we have these heartless insurers who keep raising the rates making insurance more of a luxury for many homeowners. Is there a way out? News-journalonline.com reports:

The first step is to pierce the illusion that major insurance names are going "bankrupt" in Florida. What too often happens is this: A nationally known insurance company creates a Florida-only subsidiary -- one that uses the same name, the same ad campaigns and the same slogans, but which isn't backed by national assets. In essence, many Floridians are being deceived, while insurance companies have the leeway to report big profits to stockholders while pleading poverty to state insurance regulators.

Read more: Homeowners' insurance can be affordable

Florida couple find a unique insurance fix

What would you do when your homeowners insurance bill triples? Well, you could pay up your mortgage instead! At least that's what a Florida couple did.

Rather than paying $12,000 for coverage that cost only $4,000 as recently as 2004, Baxter and her husband decided to pay off their mortgage. The Loxahatchee Groves couple tried to buy insurance to cover fire and theft but not hurricane damage, but they couldn't find a carrier that offered such a bare bones policy.

In west Palm Beach, Florida, homeowners are feeling cheated by the insurance industry. Robert Hunter, the insurance director at the Consumer Federation of America said the nation's property insurers have reaped record profits in the past three years in spite of record claims. He blamed insurance companies for jacking up rates after vowing that post-Hurricane Andrew reforms would bring stability to homeowners.

Did you know that for the past three decades, you have also been sending tax money, both indirectly and directly, to property insurance companies? And that too, not so that that these companies can keep their own premiums low, but to ensure those companies' profits.

This Palm Beach Post article brought out this angle to the insurance story.

1. As a taxpayer, you or the state has been offering tax-subsidized reinsurance to insurance companies at a lower cost than they can get it elsewhere.

2. The state also pays some private companies incentives to take over high-risk policies in addition to the premiums they receive from those policies.

3. The state assists private insurance companies by providing windstorm insurance for those properties most at risk, allowing the private insurance companies to pick the low-risk, high-profit policies.

4. These subsidies are part of the reason why, despite record hurricane damage last year, the nation's major insurance companies even so posted record profits.

I don’t know about you, but doesn’t the whole property insurance scene seem a little fishy looking at all these points. The hurricane season has not peaked yet and forecasts are grim, but totally understandable what this couple did, don’t you think?

Bringing Down the Roof on Insurance Rates

Did you know that your roof may allow you to become eligible for reductions in your home insurance premiums? If you use impact-resistant roofing materials that qualify, you will most likely get a discounted insurance rate.

Each state has its own discount rates and certification processes as to which materials qualify for the reduction. Learn more about roofing materials, and which of them are eligible for insurance discounts.

Insurer Faces Public Hearing

Following the request of the First Floridian Auto and Home Insurance Company to be allowed to increase insurance rates by 24 percent, the company will be subject to a public hearing on August 3. The hearing will feature questions thrown at the insurer by the Office of Insurance Regulation (OIR), consumer advocates, and consumer group representatives. OIR’s website will show streaming videos of the hearings throughout the day besides televising the proceedings for stake and policy holders, with the help of statewide cable network Florida Channel. Biz Journals reports:

The hearing is scheduled in Tallahassee, which offers convenience for the Florida Consumer Advocate, whose actuary has not always been present for the hearings in other locations around the state, along with OIR staff whose assistance is needed at the Capitol during hurricane season. The public will be able to comment on the hearings by phone, mail, e-mail or in person, according to OIR.

Let’s Talk Deductibles

What are deductibles? They are the amounts you have to shell out before your insurance company will pay your claim. Each policy has different terms to spell out the amount of deductibles in the particular claim.

You can pay a less amount as premium if you have a higher deductible amount. Deductibles may be charged separately for certain types of destruction depending on the geographical area you live in, which means you may have a windstorm deductible or earthquake deductible if you live near the East coast or in a quake-prone area respectively.

While most insurance companies charge $500 as the deductible amount, if you raise the amount to $1,000, you may save up to 25 percent on premiums.

Commissioner Proposes Rate Reduction

California’s Insurance Commissioner John Garamendi is continuing with his line of attack against the insurance industry. The latest salvo comes in the form of a proposal to reduce title insurance rates for home purchases by as much as 23 percent, cut back on the cost of title insurance for home refinancing by 16 percent, and slash the cost of escrow services from escrow companies that are run by title insurers by 27 percent.

The Commissioner said that the price of title insurance had shot through the roof over the past years because of the lack of competition and the rise in the price of houses. Over 80 percent of the title insurance market in California is controlled by only three companies – First American, Fidelity, and Land America.

Garamendi has already hit the headlines for his investigations into high homeowner insurance rates and his subsequent imposition of a 16 percent reduction in workers’ compensation rates. He has also proposed new regulations that will allow the Insurance Department fix a ceiling on future title insurance rates.

The insurance industry is up in arms against the Commissioner’s tactics. It argues that if this crackdown continues, more insurers will be forced to down shutters being unable to stay competitive.

Citizens Hikes Premiums for Florida’s Citizens

Residents of Florida are being tossed from the frying pan into the fire. It’s not enough that they were battered by hurricanes last year, losing home and hearth, now they are at the mercy of insurance companies.

Following the closure of many private insurers owning to high losses, Florida’s citizens were forced to knock the doors of the state-owned insurance firm, Citizens Property Insurance Inc. As is that was not bad enough, they are now being subject to premium increases, and worse, also face the possibility of being left without insurance as the company looks to consolidate losses by dropping policies that are up for renewal.

Citizens was formed in 2002 when the government combined the Florida Residential Property and Casualty Joint Underwriting Association with the Florida Windstorm Underwriting Association to form one state-run unit. The second-largest property insurer in Florida, it caters to the insurance needs of 3,176 commercial property owners and 510,825 residential policyholders all over the State.

Premiums are expected to rise by 15 percent to an annual average of $1,610, with a minimum of $240 during the time of renewal. The insurer has stopped covering buildings under construction as of July 15, and will issue no new High-Risk Account Wind-Only Commercial builder’s risk insurance policies. Existing policies will also be valid only till November 1, after which they will not be renewed.
Even though Citizens was granted $715 million this May and $3 billion in June by the State to cope with its losses incurred during the hurricane season of 2005 and to tide over for future storms respectively, the amount is expected to cover costs over two hurricane-filled years only.

Did your agent mislead you? Katrina Insurance Trial Update!

Like I pointed out in an earlier post about the Katrina insurance trial, the things that the insurance agent tells you while you buy your homeowners policy, is being raised. The case leans heavily on the agent who allegedly told the Leonards that they do not require a separate flood policy.

Insurance agent Jay Fletcher is feeling the heat as several other Nationwide policyholders testified that he either told them they didn't need flood insurance or convinced them that their policies covered all forms of hurricane damage.

Trial highlights:

1. Paul Leonard testified that, after Hurricane Georges hit the Gulf Coast in 1998, he asked Fletcher if he needed flood insurance and the agent allegedly told him that he does not need flood cover.

2. Pascagoula chiropractor, Munson Hinman, said he walked into Fletcher's office with a check to purchase flood insurance months before Katrina, but the agent talked him out of it. 

3. After Katrina, Nationwide paid Hinman more than $136,000 for the damage to his home, including damage from storm surge, even though he didn't have flood insurance.

4. The agent has denied saying anything like that to Leonard or others.

5.  Nationwide said that the flood exclusion in its policies extends to "storm surge" even though that term wasn't written into the Leonards' policy until after Katrina's wind-driven water inundated thousands of homes far from flood zones.

6. Leonard’s attorney, Scruggs argued that Fletcher's alleged assurances about the scope of coverage make Nationwide liable for all the damage, be it wind or water.

A clear case of misleading the insured is what it looks like to me and the case also calls for insurance companies to have better monitoring of their agents doings. Looks like if the Fletcher part is proved, Nationwide could end up paying the Leonards and many more.

However, if this case actually looks into the “Wind vs. Water” issue and makes a ruling – then it will be a landmark ruling for homeowners affected by hurricane Katrina. The case is approaching closing arguments.

Wealthy beach home/condo owners feel the premium pinch

What do you do when you are wealthy homeowner with some hurricane damage to your home?  You would probably do the repairs and expect an increase in premiums from your insurer, right? But, what do you do if what happens next is a shocking zoom in premium rate?

Alabama’s wealthy beach house/condo owners are realizing that homeowners insurance premium have skyrocketed! The hurricanes last year have given most of the boost to the rates here but there are other factors too…

After the hurricanes wealthier homeowners promptly repaired their homes and condos and expected an increase in premium. But, no one expected the rates being demanded now. Reason - some properties have more than doubled in value after repairs from Hurricane Ivan. With home values doubled there’s more premium to be paid!

Therefore, here hurricanes alone did not contribute in the zooming premium rates and this is now making even the wealthy feel the insurance pinch.

One condo property in Orange Beach saw it's annual insurance premium soar from $40,000 to more than $1.1-million. When the Gulf-front complex renewed its casualty insurance policy, which covers wind damage from hurricanes, owners were stunned to see their annual premium soar from about $40,000 to nearly $1.1 million. The increase means additional expenses of nearly $15,000 a year for owners of each of the 71 condos.

Another reason: Heavily in debts, traditional insurers are leaving the area and only re-insurers and state-backed insurers remain. Re-insurers and state-backed ones are in a hurry to re-fill their reserves and are demanding higher premiums to get there. Did you know that re-insurers do not answer to Insurance Regulators unlike the traditional insurers?

Conclusion: When the re-insurers’ coffers will be re-filled, hopefully lower premiums will be back. What we probably need is some healthy competition and let the laws of economics do the rest. However, till then wealthy beach condos/home owners will have to dish out huge sums as premiums.

Don't you think, in some parts the insurance-hurricane seems to be unleashing more havoc than any hurricane with a human name? 

Have you captured your home yet?

No I haven’t made a mistake up there. All I was trying to do is ask you if you have photographed your home with all the essentials in it. It is important to keep a record of all that you have in your home so that in the case of an eventuality, you have a proper record of all the things in your home. This makes it easier for you to claim your home insurance. One of the first things you need to do is check your homeowners insurance policy. And don’t think I’m trying to spoon feed you guys. Actually quite a few people do take out a policy but have no idea about what it covers. According to a recent survey of over 1000 US homeowners, nearly 90 percent don’t understand their policy or the areas of insurance coverage they need to have!

• If you live in an area that is affected by floods, you must get flood insurance cover. Try to get the maximum insurance coverage, which is about $250,000.
• If you have expensive jewelry, art, antiques, collectibles, guns, etc call your insurance agent & get them listed on your homeowners policy. Don’t forget to document them separately.
• Take pictures of every area of your home including the furniture. This will help ensure the legitimacy of your claim.
• Keep receipts or proof of the new or upgraded appliances and furniture in your home.
• Never keep important records like insurance policies, an inventory of your home contents, pictures of your home (exterior & interior), financial documents, and receipts in your home. A bank safety deposit box is always safer.
• Finally, NEVER do business with an insurance company you have never heard of before.

Extra Aspects of Home Insurance

Here are a few additions you can make to your home insurance amount that will save you a lot of dollars in the long run, even if your premiums are high.

• Include the inflation factor in future construction costs into your policy.
• Factor in the purchase ordinance and law coverage, or in other words, the building code upgrades and construction regulations in your residential area. 
• Get flood insurance even if you do not reside in a flood-prone area.
• Include sewage backup insurance with your regular policy.
• Check if your policy covers your living expenses if your house is beyond occupation. If so, find out the amount that can be claimed or the length of time this perk lasts.
• Update your policy to include any renovations and extra additions to your home.

Fire Those Fire Fears Away

Whoever coined the phrase “Keep those home fires burning bright” most certainly did not mean that you should let your home sweet home go up in flames. Did you know that the most common causes of home fires are from the kitchen? Other contributors are cigarettes and smoking-related items, heaters, fireplaces, chimneys, short circuits, and candles and lanterns.

Though these effects start the fire, the main culprit is human carelessness. Sensible homeowners will take appropriate steps to protect their homes from being ravaged by fire.  So what can you do to ensure your house is protected from fire damage?

• Invest in a home alarm system that includes central fire monitoring and alerts the closest fire station when a fire breaks out.
• Make sure your smoke detectors and hydrants are in working condition and in locations that are easily accessible in case of a fire.
• Insure your house against fire-related damage. Photograph or make a video recording of all the rooms in your house so that claiming insurance after the destruction is a relatively painless process.

The Singapore Home Insurance Scenario

Let’s take a peek into the home insurance industry in Singapore. The country’s banks that offer home loans mandate all its customers to buy basic insurance protection against domestic and household-induced fires. While the Monetary Authority of Singapore asserts that customers are not legally obliged to purchase a fire insurance coverage along with their home loan, homeowners are not too worried about the detail. They are just happy that their housing loans have been approved.

While the banks are under fire for this practice, the Association of Banks in Singapore justifies the procedure. Lenders are protecting themselves from the possibility of damage by fire and lightning, and water from burst pipes and overflowing tanks, and use the premiums collected to restore the damaged property to its original condition, should the unthinkable happen.

The Association further states that the premiums are low, and that customers who opt for insurance coverage from insurance agencies will end up paying more for the same service. At the same time, it advises banks to offer a more comprehensive coverage policy that will insure the house and its contents too.

Federal Hurricane Relief for Louisiana

There’s good news for the hurricane-battered residents of Louisiana, Mississippi, Texas, Alabama, and Florida. While the federal government has announced a $4.2 billion fund that will help citizens of Louisiana rebuild or sell houses that were shattered by the Hurricanes Rita and Katrina, the Department of Housing and Urban Development is setting aside $1 billion for hurricane-related housing needs in Texas, Mississippi, Alabama, and Florida.

The $4.2 billion will go to the $9 billion “Road Home” federal program for hurricane recovery that is already being implemented in the state. Road Home was set up to help the 123,000 who were affected by the hurricanes to rebuild or sell their battered homes.

Each eligible person was allocated up to $150,000 in the form of grants to cover repair expenses that went beyond insurance amounts and FEMA grants. If a resident sells his property and also proves that he/she will continue to permanently reside in the state, the grant will provide an amount equal to the difference between the home’s market value before the storm hit and the post-storm insurance claim amounts and FEMA grants. If he/she sells and chooses to move out of the state, then 60 percent of the house’s pre-storm value is granted.

The Louisiana Recovery Authority is in charge of the program for which over 90,000 have already sent in applications. The checks will start going out later this year.   

Road Home is a blessing for the residents of Louisiana who are reeling from numerous problems such as high insurance premiums, shortage of housing, and rising rents following the hurricane catastrophe.

Home Insurance in the UK

I’m sure you’ll find this hard to believe, but it is true. The cost of home insurance in the UK is nearly the same as it was 12 years ago, an amazing actuality when you consider the effect of inflation.

AA, an organization that provides insurance and arranges finances, reports some astonishing figures - Building insurance cost £206 in 1994; today it is £207. Contents insurance was priced at £144 twelve years ago; it costs £152 today.

The reasons cited for the static behavior of insurance premiums are fierce competition, better understanding and identification of flood and theft risks, and a more streamlined claims-handling process.

Insurance rates are still dropping, if you go by the indications of the past three months – building insurance costs fell 0.49 percent, says AA.   

Being between policies in thunderstorms...

Being between insurance policies for your home is the worst thing that can happen to a homeowner and that’s what a Florida couple discovered.

This story is a reminder of what lightning can do! The Downs were vacationing out of state 10th of July when a bolt of lightning ripped into the roof of their Lansing Island home. What ensued was lightning sparked fires, which lead to their multi-million-dollar home to total destruction.

There are 2 important points to this story: Lightning and being between home policies. This only means that the couple will have to pay for the reconstruction of their home at least in part. The loss of the home $2 million and added to this the cost of their belonging a total of $4 million!

Did you know? Lightning is second only to flooding as a deadly natural disaster. The National Oceanic and Atmospheric Administration puts the number of lightning strikes each year at 40 million. The United States alone receives up to 20 million cloud-to-ground lightning strikes per year from as many as 100,000 thunderstorms.

A basic homeowners policy covers you for damage from storms, lightning, fire and smoke. It is estimated that electrical storms ignite about $100 million dollars in losses each year. In fact, lightning, fire and debris removal accounted for more than 35 percent of all homeowner’s claims in 2000 and cost insurers more than $8,500 per claim

To reduce your premiums make sure to take the following steps:

1. Install sprinklers systems
2. Install smoke detectors
3. Burglar alarm that ring an outside service
4. Stock up fire extinguishers
5. Use fire resistant material to construct homes

Understand the magnitude of a lightining spark: A spark of lightning can reach more than five miles, reach temperatures of about 50,000 degrees Fahrenheit, and contain 100 million electrical volts! Sizzling right?

During a thunderstorm unplug phones and electrical equipments; draw blinds to prevent windowpanes from shattering inside your homes! By the way, are you between policies for your home?

Katrina insurance trial - Questions to ask yourself

Don’t you think that homeowners insurance providers have a unilateral decision on the wind vs. water question on insurance coverage for homes?

The agents selling home insurance policies however sometimes sing a different tune till an application for a claim crops up. Then it is an about-turn on their earlier stance of -“you are covered for hurricanes and that will be all you need!” Did this happen to you?

We now have a trailblazing trial on to decide on just this question and hopefully the decision will help the home insurance crisis to make some important decisions on the following.

1. Should insurance agents be allowed a free reign to interpret the policies for their customers.
2. Clear-cut criterion for the “wind vs. water” question

The trial is on to discuss the case of Lt. Paul Leonard of Mississippi, who says - he was promised before the storm by his insurance agent that his homeowner’s policy would cover everything. However, his insurance provider, Nationwide Mutual concluded that flooding caused most of the damage, USA Today reports.

Leonard did not have a separate flood insurance policy, as his agent seems to have reassured him that he is covered for everything. Then Katrina happened. The insurer denied most of his claim for the ground floor of his home that was damaged by water. He has paid $30,000 from his own pocket to fix it.

Time to jog your memory on your policy and what the agent said while you bought it.

1. Did your agent tell you that you are covered for hurricanes and that is all the insurance you will need?

2. Did your agent warn you that you need separate flood cover?

Watch out for the Leonard case proceedings here, I'll keep you posted.

Leonard’s attorney, Zach Scruggs in his opening statements said that the agent in this case did not want to write a flood policy “because he didn’t make much money off of it.” This case could be it for thousands of hapless homeowners who were denied claims by providers stating, “flooding” the reason for damage.  What is your verdict on this trial?

Insurance heartburn continues for residents

It isn’t the best of times to be a homeowner – I think I can boldly claim that things have rarely gotten so bad as it is now. After Nationwide Insurance Co. of Florida filed a request with the state to increase homeowners' insurance rates by an average of 71 percent, the Martin County Commission is mulling a $58 hike in property taxes for residents with median-priced homes and a homestead exemption. Tcpalm.com reports:

In May, State Farm — Florida's second-largest insurer — requested a 79 percent increase in homeowners insurance rates. Last week, the company withdrew its petition. Why? State Farm officials said the proposed increase isn't enough.

Read more: Steep increases in insurance rates will place added financial burden on homeowners

Flood Vs. homeowners insurance

You have heard the information by now that a standard homeowners insurance policy does not provide flood cover for your home. You need a separate flood policy and you need to check if you are in the flood zone and what your chances are for flooding even if you have not had floods for donkeys years.

However, standard homeowners insurance policy can provide coverage for many types of water damage to your home. As an active hurricane season is being predicted you need to know about all the insurance protection you can claim if your home gets flooded.

Examples: If torrential rain soaks the roof and thereby allow water to drip through your ceiling or attic is something that is covered by a standard homeowners policy. Similarly broken water pipes that flood your home are also covered and so do damaged windows that let in rain, which happened because of a hailstorm, cause flooding.

Homeowners can still buy flood insurance before the hurricane season gets into full swing - from late August through mid-September. But that still may not be enough time as federally sponsored flood insurance doesn’t go into effect until 30 days after it’s purchased. 

It is generally believed by insurance experts that even if you’re not in a federally designated high-risk area, it’s worth considering flood insurance. If a property is in a high-risk flood zone, where there is a 1 percent annual chance of flooding, mortgage lenders typically require homebuyers to get flood insurance. 

However, not everyone needs to buy flood insurance if you go about the check properly. Your need depends on several factors, including elevation of your home and how close you are to a body of water. You can find out whether your home is in a low-, moderate- or high-risk area by entering your property’s address at the Web site of the National Flood Insurance Program, www.floodsmart.gov.

South Korean Insurers to Offer Mortgage Insurance Products

The Financial Supervisory Service of South Korea announced that insurance companies will soon be adding mortgage insurance products to their offerings. This move will permit those who hold policies to borrow housing loans larger than currently allowed as per regulations. The present mortgage ceiling is fixed at 60 percent of the value of homes in speculative zones. According to the new rules coming into effect, policyholders can mortgage their homes up to 80 percent of their values. There is a catch though – only those with houses in restricted, non-speculative zones, with floor spaces less than or equal to 84.81 square meters are eligible foe these mortgage insurance products. The products are expected to catch the interest of those who are looking to buy homes but are unable to do so because of the government’s stringent housing loan regulations that were designed to prevent speculative real estate purchases. Hankooki Times reports:

Genworth Financial, a U.S. financial services group, is planning to start a mortgage insurance business in Korea and is preparing to submit an application for a business license to the nation’s financial regulator. Domestic non-life insurers are also considering selling the products.

Florida Homeowners’ Survey

A survey of 1,000 homeowners in Florida conducted by the Attorneys’ Title Insurance Fund, title insurance underwriter and title information provider, has thrown up the following statistics:

• As much as 58 percent of those surveyed felt that their homes will become more valuable over the course of the next 12 months.
• Around 70 percent felt that if people did not own homes, it was mostly because they could not afford the expense.
• Nearly 45 percent thought that the present period was a good time to buy real estate in Broward County (39 percent) and Tampa (42 percent).
• At least 78 percent say they have no short-term plans to buy a house or condo.
• Hurricane worries were lurking in the minds of 43 percent of those surveyed.
• Among the other concerns regarding living arrangements were the impact of the housing bubble (16 percent), high mortgage interest rates (13 percent), depreciating values of homes (5 percent), and falling prey to real estate scams (1 percent).

State Takes Over Ailing Insurer

Another insurance company has been taken over by the state insurance commissioner following its parent company’s inability to handle its financial woes. The Hawaiian Insurance & Guaranty Co. Ltd. (HIG), which has the insurance accounts of 26,000 homeowners in Hawaii, has gone the state’s way after Vesta Fire Insurance Corp. in Alabama found it difficult to hold its head above water. Home and auto insurance provider HIG is the fourth largest home insurer in the island, and is based in Honolulu. Biz Journals reports:

Commissioner J.P. Schmidt said he took the action to protect policyholders and that he expected the takeover to be temporary. He said he and insurance regulators in other states are looking at options to shore up Vesta, which may include selling some subsidiaries like HIG. HIG will continue with day-to-day operations and said it has enough money to cover claims.

Mobile Worries for Homeowners

Mobile or manufactured homeowners in Florida have nowhere to go, literally. They are the objects of a three-pronged attack from which they have no recourse. For starters, they are more susceptible to being left homeless when hurricanes hit. Following the recent spate of destruction by hurricanes, they have to pay higher insurance rates after most agencies pulled down shutters. And last but certainly not the least, they are forced to move to new locations when the owners of the parks they live in decide to sell out to real estate developers in the pursuit of higher profits.

The problem is compounded by the fact that most mobile home residents are poor, disabled, veterans or elderly people who either have no steady income or are dependent on a fixed pension for their livelihood. While the exact numbers are not known, it is estimated that between 532,000 and 1.2 million people live in manufactured homes. A 2000 census puts the figure at 10 percent of the population of Florida, which would amount to around 1 million.

Following Hurricane Andrew in 2004, more stringent guidelines were formulated to force mobile homes to built so that they can withstand gales of up to 100 mph. But more than 83 percent of the homes in existence were built before 2004. Hit in all directions with eviction notices, sky-rocketing insurance rates, and the threat of hurricanes looming large, is there any silver lining on the cloud for Florida’s mobile home owners? Only time will tell.

Swindlers Take Advantage of Foreclosure Fears

The knights in shining armor are proving to have tarnished coats of armor. Homeowners in Southern Florida who are beset by high insurance premiums, heavy interest rates and large mortgages, are being cheated out of their homes by unscrupulous agents who arrive on the scene promising to rescue their houses from foreclosures. But they only end up digging them a deeper hole by taking advantage of their gullibility.

The modus operandi of these fraudsters is to bombard those who are in danger of foreclosure due to mortgage debt with emails, phone calls and notices that promise to bail them out of their financial troubles. Once the bait is taken, they are asked to sign an agreement which runs into a stack of papers with legalese. Hidden in the voluminous paperwork is a clause that effectively transfers control and ownership of the property to the agent or organization in question. Some documents include signing over the power of attorney or a trust agreement.

The conmen promise homeowners that they will either refinance or reinstate their mortgage, and then take over the property on a lease basis. People generally agree as they do not want to lose their homes or end up with the bad credit rating that comes in tandem with a foreclosure. They are then bound to pay an equal or higher rent for the entire lease period, at the end of which they will have to buy back the property, usually at exorbitant sums. If they are unable to do so, they end up losing the roof over their heads.

Typical targets include the elderly, women living alone, and members of minority communities. Only time will tell if the law passed earlier this year by the Florida Legislature, illegitimating the use of unfair or deceptive trade practices to victimize homeowners in foreclosure, will clamp down on the underhand tactics used to cheat people out of home and hearth.

Check out if your house is underinsured!

Here is a startling revelation - according to a survey by Marshall & Swift / Boeckh, at least two out of three American houses are under insured. The survey also revealed that a typical homeowner is underinsured by at least 27%. This means that should a catastrophe strike, the out of pocket expenses for this two third population would be very high.

There are several factors at play here. The Construction costs are on the rise and the insurance cover is definitely not in pace with it. Also noteworthy is the observation that more and more homeowners are remodeling their houses without actually revisiting or changing their homeowners insurance. But the most noteworthy is the change in how the policies are drafted today. Today Insurance policies cover less than what they used to in the past. Earlier the home insurance company would rebuild the victim’s home no matter what it cost them. But today most insurers cap how much they pay to 120% of your policy’s stated coverage amount.

Flood info - causes, news & insurance

All over the world news reports on flooding caused by rains these days and it's there from New York to Bangkok, form New Zealand to Mumbai. We can safely say that is probably the most common natural calamity in the world. So, what causes floods?

Al Gore may want you to believe global warming can harm you and that all natural disasters are caused by this phenomenon but one thing we can be sure of is that it can cause floods. Global warming theory states that the earth’s atmosphere traps heat near the earth, which slowly warms the earth. Called the greenhouse effect this can heat the seas causing it to evaporate faster. Water vapor in the lower atmosphere causes small storms, which can escalate into large ones plumped with lots of moisture. These storms come ashore and release torrential rains which can lead to massive flooding.

Rivers and streams swell with excess water and rising water flows over or breaks the banks to the waterways causing the surrounding land to be flooded. Different causes of floods can also come from masses of snow melting. The type of land that is prone to flooding is broad and flat usually situated on the banks of a river or main waterway. The most common causes of floods - heavy rains that come with tropical storms.

Coastal flooding usually occurs as a result of severe storms, either tropical or winter storms. Coastal flooding can also be caused by tsunamis caused by volcanoes, landslides, earthquakes, or explosions.

If this has shocked you enough to buy flood insurance, remember there's a 30-day waiting period once you sign up, so you have to plan ahead! National Flood Insurance is sold through insurance companies or agents, typically as a supplement to a home or business policy. For information and a list of agents in your area, call 1-800-427-4661 or go to www.floodsmart.gov.

Flood insurance, FEMA flood maps - News

Reading about flooding and home insurance lately the first thought I had was - "Do I need homeowners insurance or just flood insurance for my home?" The article points out that Ninety percent of all natural disasters in the U.S. involve flooding. Ninety-nine percent of the homeowners policies do not cover flood damage to the home or the contents.

Flood insurance numbers: The maximum amount per home of flood insurance that a homeowner can buy under the N.F.I.P. is $250,000 but $250,000 is not always enough. The owner of the larger homes can buy an excess flood policy to cover the full amount. The average cost of policies countrywide as of June 2005 was $446.00. The cost of the cheapest type of flood policy is $112.

FEMA has posted new satellite-generated flood maps post Katrina for Jefferson, Orleans, upper Plaquemines and St. Bernard parishes online. Diana Herrera, a FEMA natural hazards program specialist, said the maps were hand-delivered to the four parishes before being posted online. FEMA planned no public notice of the new resource on its Web site.

Maps appeared online without any publicity but why was this so? Maybe because it’s not going to be very helpful for regular homeowners - "They're useful for land surveyors and city planners and code enforcement agencies, but the average person isn't going to know what to make of it," said Michael Centineo, New Orleans' safety and permits director. "It's hard to explain to them that unless they get a survey, there's no way to know how high they need to build."

Now moving on to California - The Federal Emergency Management Agency is slated to release a new set of flood maps in early October that could force Central Valley cities to spend millions on repairing local levees to keep every homeowner in town from having to spend roughly $1,200 a year on mandatory flood insurance. This is making things uncomfortable for lawmakers here as they are facing elections and they have promptly asked FEMA to delay the release as it could influence the election result.

What you need to know about Texas Homeowners insurance

If you own a home in Texas, here are a couple of things that you should know. For starters, the Texas law does not require you to purchase homeowners insurance. However you may be required to purchase insurance if you are financing your home.

Homeowner Insurance companies in Texas generally base your premium on factors such as replacement cost of your home, its construction materials, the area where you live and the likes. What may also be of importance is information pertaining to your claims history, your credit score, and local fire protection.

Do remember that Homeowners Insurance Companies in Texas are required by law to disclose their rates to the Texas Department of Insurance. This ensures that the homeowner does not end up paying more than he actually has to. In addition to this, he is assured that the company is offering rates that are adequate and are not excessive to the risks for which they apply. At no point can the charges be unfairly discriminatory.

Save on Insurance Costs

There are some factors more than others that affect your insurance costs:

• Get a multi-policy discount by buying your home and auto policies from the same insurance provider.
• Save time and unnecessary worry when you file claims by maintaining a correct inventory of all your belongings and a file of photographs or a video recording of all the rooms in your house. Retain receipts for expensive purchases. Store this documentation outside your home; a safe deposit box is a good storage idea.
• Most basic homeowners’ policies do not cover jewelry or other valuables like art and antiques. You will have to buy an added endorsement with your policy.
• In case you renovate or build additions to your home, be sure to update your home insurance policy accordingly.
• If you are senior citizens, find out if you are eligible for any discounts.
• If you use your mortgage company to pay your homeowner’s insurance, once you pay off your mortgage, make sure that you inform your insurance company so that future premium bills are sent to you. If not, you will not be able to pay on time and your policy is likely to lapse.

Justification Sought for High Premiums

While most insurance agencies are following the trend of increasing premiums, The Hartford Insurance Co. is not following the herd mentality. The insurer has filed to decrease its homeowner and renter premium rates by as much as 18 percent. The reduction has been achieved after working with the Department of Insurance. This decision, coming in the wake of four other major insurance companies being asked to explain why they have hiked their premiums, has found approval with John Garamendi, insurance commissioner of California. 

The Commissioner has sought justification from insurers State Farm, Allstate, Farmers, and Safeco for their high premiums, of which 60 to 75 percent goes to the company, leaving only 25 to 40 percent to pay for the claims. If they are unable to provide adequate proof that the rate increases are necessary, immediate reductions are likely to be ordered. The four companies between them have 4.1 million customers.

A CDI report lists the percentage of premium dollars paid per claim by each of the four firms in 2005 – 37.6 by State Farm, 41 by Allstate, 37.7 by Farmers, and 26.31 by Safeco. A few insurance companies rationalize this low payment on claims with the statement that insurers need the large premium to consolidate their financial reserves and surpluses.

Commissioner Garamendi disagrees with this view; he maintains that these insurers have strong financial reserves and that consumers should not be taken for a ride. The California Insurance Code empowers the Commissioner to lower extremely high premium rates.

Sam Sorich, president of the Association of California Insurance Companies, says that all insurance rates are approved by the Department of Insurance before they can be introduced. He justifies the high premiums as anticipations against losses based on past events such as the wildfire that swept through Southern California in 2003. Companies want to be able to pay up after disaster strikes, he adds.

Home Insurance Options

Do you know that there are two ways in which you can insure your home?

The first option is to insure it for the replacement cost. The replacement cost of your home is the total cost you will incur in repairing or rebuilding your house with the same type and quality of materials it is built of now. The cost also includes the price you will have to pay to replace your damaged or lost possessions. Replacement cost does not take into account the depreciation value. Though this option is the more expensive of the two, it is worth it if you can afford to pay larger premiums.

The other option is to insure it for the actual cash value. This is the amount that will have be shelled out in order to repair or rebuild your home and replace your possessions, after deducting the depreciation amount.