Make sure you have adequate home owners insurance on your property
My recent posts about the Station Fire and home buyers not being able to get home insurance have reminded me of the importance of keeping yourself adequately protected should disaster strike. I'm not talking about 50 gallon drums of drinking water and being ready for "the big" one. I'm referring to hazard insurance coverage on your home and other property you may own.
When was the last time you check your homeowners' insurance policy? Most likely you got your policy when you bought your home and never looked back. Are you sure that you have adequate coverage? Like any other insurance, if you wait until you have to make a claim, you could be in for a big shock to find that your coverage may not be what you actually thought it was.
When you buy a home, your lender requires you to carry enough insurance to cover the cost of rebuilding your home. But what about your possessions? Have you made any additions to the property that would not be covered under your existing policy Your home and belongings need to be protected against possible disaster and liability to third parties should they be injured on your property.
Pull out your insurance policy and see what is actually covered. Do you live in a flood zone? What about near an earthquake fault? The type and amount of insurance required will depend on the particulars of your location.
All homes are not created equal. Are you living in a home with original hardwood floors and historic architectural details? Are you walls made of lathe and plaster or drywall? These are important details. Make sure you talk to your insurance agent about the TRUE replacement cost of your home. Should the unthinkable happen, you don't want to find out that the TRUE replacement cost for your home is miles above what it would cost to build a basic house to the same size and configuration without the actual finishes currently in your home.
If you have made any additions to the property, I hope they were done with the benefit of building permits. If not, get down to the city and have the work permitted after the fact. You now have more house to insure, but you don't want to risk your insurance company coming to you later refusing to cover damage due to unpermitted work. If you can't prove that the electrical upgrades were done with the benefit of city inspections, you could have a fight ahead of you should you have an electrical fire down the line. Make sure your insurance agent is aware of any additions or improvements you've made to the property and increase your coverage accordingly.
Have you lived in your current home a long time? I bet you have a lot more personal property now than when you moved in. Put together a list of your valuable possessions. Do you own antiques, jewelry, computers, and electronics now that you didn't own when you bought the house? Even better than a list- make a video record of your belongs by walking through the house and describing the items as you tape them. Whether you make a video or a simple check list with estimated values, make sure you store it safely somewhere other than in your house! Keep a copy in a safe deposit box; give one to a friend or relative, or both!
Writing this post got me to dig out my various policies for review. Dusty, one of our three cats, decided to give me a hand (paw?) and go through it all.
We all know we need an annual physical and semi annual visit with our dentist. Make sure you have an annual insurance check up as well for your house, your car and even an umbrella policy if your financial situation dictates it. We all hope we never have to make a claim against our insurance, but should the need arise you'll be happy you've kept your policy in tune with your actual needs.
Dusty is pleased to be done getting everything organized!
If you're in need of great insurance agent, it would be my pleasure to refer you. For information on buying and selling real estate in Silver Lake, Los Feliz, Echo Park and surrounding areas contact me directly at 213-215-4758 or check out LApropertySolutions.com
Broker Associate
Keller Williams Realty, Los Feliz
213-215-4758
http://www.LApropertySolutions.com
Jenny,
Thanks for sharing this info that is important for all homeowners and realtors. Funny you should address this because I have that on my own personal "to do" list to check our coverage on my own home.
You are right. This should be checked on just like a doctor's exam.
Mmmmm. With the decline in property values, I suspect that many folks are over insured for replacement.
Think I'll check mine.
If you have cats, I suggest your enlist their assistance! Seriously, since I have my insurance with two different companies I just scanned eveything to send to my favorite Farmer's agent for his opinion. I KNOW we don't have enough coverage for our personal belongings!
Lenn- you've definitely got a good point there! That's another reason for people to review their policies more often. As with all things real estate- it depends on the location of the property. I do think there's a tendency for people to under insure just to keep their bills down. For me personally, I would rather have more insurance and pay a higher dectible in the event of disaster.
Yet another thing to do when I set the clocks ahead and change the batteries. I doo things in the spring so I am ahead of everything instead of the fall when I am usually behind. Enjoy the holiday.
Dave- not a bad idea at all! It's not something I enjoyed doing today but I'm really glad I did. I'll feel much better after a talk with my insurance agent this week.
Hi Jenny -- This is one of those sobering posts that can never be stressed enough, as life is truly unpredictable.
Jenny - Good points for both new home owners and those of us who let the years pass without giving insurance a second thought.
Chris- isn't that the truth?!
John- I'm afraid until recently I have fallen into that category myself. I may even get out the video camera and tour the place to have a better record of everything we have here.
Thanks Jenny for the reminder. I am going to pull out our policy and check it out. I just realized I have no idea how much my policy covers me for. It is been a while since I checked it.
It is one of those things that needs to be done yet is often overlooked until it is too late.
Jenny, this is a great post and a subject that is often overlooked until there is a problem. Thanks for the reminder...
Jenny: Great informations here.. I recall going through a house fire years ago and this was not a fun process. At the time we raised exotic birds. Our insurance man knew this and many times I asked to ensure we were covered in the event of the unexpected. His responce was always.. YES. (Now a little additional note) I was a your Realtor working for his wifes real estate company, and took insurance photos on the side while I was getting started... Now you would think he would have understood the opperation we had going on as we spoke of this many times. Then that dreadful Sunday morning before Thanksgiven.... Fire!!!! As he stood in my front yard I said to him.. It's a good thing we were covered for the business.. His reply was.. Oh.. I thought that was in the storage building.... WHAT ??? Well needless to say, we were NOT covered after all for the Exotic bird business that was inside of converted garage.
Dan- I'll definitely be raising limits on some things. Luckily the Station Fire is just looks close and we're not in any danger here.
Leslie- agreed- I think we all sort of just "forget about it"-
Roland- How AWFUL! That's absolutely tragic and a perfect example of why we need to sure we carry the right coverage in the right amounts. Did you start your business over again after the fire?
I was notified of a $500 increase last week. I read the whole policy cover to cover when I purchased it. Reading it makes you feel like nothing is covered.
Upon the increase I shopped around again. Saved $300 by paying attention to the fact that they had my home price over valued. This is important in our declining marketplace.
Great reminder, we should check our policies every year. It also doesn't hurt to bid them out every year or so to see if you could get a better rate somewhere else.
Check with your agent and get a guaranteed replacement cost policy. What you paid for the home often has little relationship to what it would cost to rebuild. Do not lie to your insurance agent to try and keep the premium down. If you have a loss that misrepresentation could cost you.
A FORMER INSURANCE ADJUSTER.
Jenny: This is a fantastic post ... and a important reminder and bit of information for us all! Thanks for bringing it to light.
So many times (even after repeated requests and reminders), new homeowners wait until the last minute to purchase and provide a homeowner's insurance policy for their transaction. This is such an important element of homeownership and definitely one that should not be accomplished in haste or without real thought. The costs of doing so can just be too great.
Thank you again for placing this important topic up for thought, discussion, and action.
Gene
Jenny,
Something else to keep in mind:
Typically, the insurer asks, "how much did you pay for the property?", to which you would respond, "$100,000".
Thus, the insurer writes a $100,000 policy.
Only, the house is valued at $80,000, and the land at $20,000.
In the event of a claim, you want to repair, rebuild, the house. You don't need, insurance won't, repair the land.
Andrew's point is well taken, and land should be taken into consideration when deciding on a replacement value. Lenn said with declining values many homes might be overvalued. However, replacement value may come in higher than current assessed value in some areas, due to the high cost of building (still). Not an easy "formula" decision anymore.
I wouldn't rely on my insurance agent to tell me the replacement value of my house. Case in point - re-build costs in San Diego are $250-350 / sq. ft. My agent had us covered for $175 with no coverage for debris hauling or demolition. From my experience I have found with several agencies that the software used to calculate re-build costs is not that reliable as it is too general and sometimes outdated.
You would be better off IMO calling a general contractor and having him give you a re-build estimate. Some contractors will offer this information for free as a square footage re-build cost, others will offer a service that is more comprehensive - they will visit the property, take photos and measurements and identify the specific materials used in the house. This estimate is usually more accurate and might cost a few hundred dollars but it's well worth it.
Also keep in mind that if the home is very old, it may require engineering upgrades to re-build the structure to current building codes. Some policies will not cover engineering fees so be sure to check this as well.
Wow- thanks for all of the comments. I've finally gotten my first featured post!
The recent fires near my home is what brought this to mind. It truly is something we need to spend more time and energy on regularly.
Joy and Jeff- sounds like Lenn was right in your case. Declining value= lower insurance cost. Good for you!
Kevin and Monica- shopping around to check for better pricing makes so much sense. I don't know why we don't all do that regularly.
Gene- I absolutely agree with you! Actual replacement cost of the property is hugely important, as is being entirely honest when ordering the policy.
Andrew, Pat, Darin- All extremely good points. Knowing what it would truly cost to rebuild the property is paramount. I like the idea of having a contractor actually writing something up.
Jenny - this is a great point! Everyone should be doing this (including me) to make sure we are adequately covered. It's so easy to put off, but a disaster strikes without warning, so important to be prepared and avoid serious surprises. Thanks for the reminder!
Hi Jenny: As a result of the Station fire, my husband and I reviewed our coverage and found that we are adequately covered with our home owners policy. Its a small thing, but it does help me sleep better at night. We're also creating a single important papers file so everything is in one place if we need to grab it and dash in the event of an emergency.
Thanks for the reminders.
Hi Jenny, Thank you for the reminder. We will have to check on our homeowners ins. Love the cat!
Too many people only look at cost when purchasing home owners insurance....never thinking about coverage. Once there is a claim then they find out how little they saved.
Very good reminder Jenny. I think that over 95% of people are Underinsured (if not more)
I'm with Lenn on this one, overinsured now with values declining and overtaxed with property values. Better get on it and check and get it corrected. My parents had some sort of wierd policy where it escalated on it's own and then said the house was worth way ..... too much. Have to be careful about that also.
I am in the process of reviewing my policies now. I'm actually getting proposals to see if I'm getting the best deal as well. Thanks to all for your comments
With all the fires of the past few years, I'm guessing there are a lot of people that owned their homes that are finding out the hard way that they didn't have enough insurance. Really is sad, because most insurance agents I know are on commission based on the policy they sell, you think they would be trying to upgrade their customers all the time.
Hi Todd- I'm quite surprised insurance agents wouldn't follow up regularly with their client base. It's a foolish as Reatlors not following up with their's!