Peace of Mind and Additional Protection for Your Home with Umbrella Insurance

Umbrella insurance offers added homeowner liability protection that kicks in after homeowners insurance reaches its coverage limits.

Understand homeowner liability

Liability insurance covers homeowners in the event you get hit with a lawsuit. Some of the liability risks faced by homeowners are more apparent than others. For example, a house guest takes a tumble after slipping on your hardwood floors, or a neighbor’s kid falls off a swing in your backyard. Insurance agents call swimming pools, jungle gyms, and trampolines “attractive nuisances” because they draw children unable to appreciate their dangers.

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Homeowners Hazard Insurance: Time for an Annual Check-Up – Homes For Sale in Northern Virginia, Fairfax County VA, Loudoun County VA, Prince William County VA

An annual check-up on your homeowners insurance can result in a healthier policy and a healthier pocketbook.

What type of coverage do I have?

The most effective type of coverage is known as “replacement cost,” which covers, up to your policy limits, what it would take today to rebuild your house and restore your belongings, says Jerry Oshinsky, a partner at Jenner & Block in Los Angeles who has represented homeowners in litigation against insurers.

“Extended” replacement cost coverage provides protection to your policy limit, say $500,000, and then perhaps another 20% of the cost after that. Percentages vary, but in this example you could recoup up to $600,000 on a $500,000 policy, assuming your losses reach that high. Extended coverage can compensate for any unanticipated expenses like spikes in construction costs between policy renewals. Now harder to find due to the industry shift toward extended replacement coverage, “full” or “guaranteed” replacement coverage covers an entire claim regardless of policy limits.

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A less attractive alternative is “actual cash value” coverage that usually takes into account depreciation, the decrease in value due to age and wear. With this type of policy, the $2,000 flat-screen TV you bought two years ago will be worth hundreds of dollars less today in the eyes of your claims adjuster. Kevin Foley, an independent insurance broker in Milltown, N.J., favors replacement cost coverage unless you can save at least 25% on the premium for going with actual cash value coverage instead.

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Even if you have replacement cost protection for your dwelling and personal property, don’t assume everything is covered. Structures other than your home on your property—such as a detached garage or swimming pool—require separate coverage. So too do luxury items like jewelry, watches, and furs if you want full replacement cost because reimbursement for those items is typically capped.

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How much coverage do I really need?

OK, now that you’re clear on what type of policy you have, you need to figure out how much policy you truly require in dollar terms. Let’s say you purchased your home five years ago and insured it for $200,000. Today, it’s worth $225,000. Simply increasing your coverage to $225,000 may nonetheless leave you underinsured. Here’s why.

The key to determining how much dwelling coverage you need isn’t the value of your home but the money you’d have to pay to rebuild it from scratch, says Carlos Aguirre, an agent for Liberty Mutual Insurance in Arlington, Texas. Call your local contractors’ or homebuilders’ association and inquire about the average per-square-foot construction cost in your area. If it’s $150 and your home is 2,000 square feet, then you should be insured for $300,000.

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There’s no rule of thumb for how much your homeowners insurance should cost. Insurers use numerous factors—age, education level, creditworthiness—to determine pricing, so the same policy could run you more than your neighbor. In recent years the average annual premium was $804. Oshinsky advises against scrimping on insurance because big increases in coverage probably cost less than you’d think. He recently purchased a liability policy that cost $250 for the first $1 million in coverage. Adding another $1 million increased his premiums only $12.50 more.

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How can I lower my premiums?

The higher your deductible, the amount you pay out of pocket before coverage kicks in, the lower your premium. Landing on the appropriate deductible level requires remembering that insurance should cover major calamities, not minor incidents, says Foley, the independent insurance broker. Most homeowners should be able to absorb modest losses like a broken window pane or a hole in the drywall without filing claims. If you can, then you’re wasting money with a $250 deductible.

Foley’s rule: If you’re a first-time homeowner and don’t have a lot of savings, moving up to a $500 deductible will probably stretch your budget. However, if you live in a ritzy home and drive an expensive car, then you should be able to afford a $1,000 deductible. In Milltown, N.J., for example, the premium for a $200,000 home with a $500 deductible would be $736, according to Foley; moving up to a $1,000 deductible drops the annual premium to $672. That’s $64 in savings.

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Every major insurer offers discounts to various groups, such as university employees or firefighters. Figure about 5%. Ask which affiliations would entitle you to a discount and how much. If an AARP membership would result in a $50 savings, pay the $16 dues and pocket the $36 difference. Many insurers also offer discounts ranging from 1% to 10% or more for installing protective devices like alarms and deadbolt locks, for going claim-free for an extended period, or for insuring both your car and your home with the same carrier.

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More about Homeowners Hazard Insurance: http://en.wikipedia.org/wiki/Home_insurance

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SOURCE: HouseLogic, REALTOR Magazine

Real Estate and Homes For Sale in Northern Virginia, Fairfax County VA, Loudoun County VA, Prince William County VA, Northern Virginia Realtors real estate agents, REALTOR Vivianne Rutkowski

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Always Read the Fine Print and Watch Wording on Homeowners (Hazard) Property Insurance Policies According to a Study by University of Chicago Law Review – Homes for Sale and Home Hazard Insurance in Arlington County VA, Fairfax County VA, Fauquier County VA, Loudoun County VA, and Prince William County in Virginia

 

Homeowner hazard home insurance policies can vary greatly, and if home owners aren’t careful, they may find their claims denied when disaster strikes, according to a study to be published early in 2012 by the University of Chicago Law Review.

While home insurers once used standard policy forms by the Insurance Services Office, now some are coming up with their own policies and a few tweaks in the wording can mean trouble for some home owners, according to the study.

Home owners should read the fine-print and carefully review their policies to examine what’s covered and what’s not, the study notes. For example, some policies provide $1,000 per item damaged by a sudden electrical current, and others pay an aggregate of $1,000; some policies include mold and lead coverage; other policies do not.

According to United Policyholders, here are a few questions home owners can ask insurance agents when shopping around for a home owner’s insurance policy

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demand that the insurance agent highlights those coverage areas on the copy of the insurance policy provided to the homeowner – some insurance agents do NOT know their company policies in detail or may confuse the policies; therefore, merely oral statement by the insurance agent is NOT sufficient.

The questions to ask are:

• What is the coverage for water damage from sewer or pipe problems?
• What is the coverage for any damage to the foundation — is it completely covered, limited, or excluded completely?
• Will items be paid at “replacement value” or “actual cash value”?

Study author Daniel Schwarcz, a University of Minnesota Law School associate professor, told The Wall Street Journal that he is urging state insurance departments to post their insurance policies online so they can be reviewed closer by consumer groups and home owners. In October, Nevada began posting policy forms for its largest home and auto insurers, according to The Wall Street Journal.

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Read more: A Home-Insurance Trap?

To read another blog on deceitful Insurance coverage: https://viviannerutkowski.wordpress.com/2009/06/01/state-farm-auto-insurance-eye-opener-welcome-to-the-insurance-world/

For other Insurance related posts visit Property Insurance: https://viviannerutkowski.wordpress.com/category/2-home-buyer-resources/property-insurance/

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SOURCE: The Wall Street Journal

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Arlington County VA homes for sale and homeowners hazard property insurance, Fairfax County VA homes for sale and homeowners hazard property insurance, Loudoun County VA homes for sale and homeowners hazard property insurance, Prince William County VA homes for sale and homeowners hazard property insurance.  

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The ABC of Buying Homeowners Insurance – Real Estate and Homes in Arlington County VA, Fairfax County VA, Fauquier County VA, Loudoun County VA, and Prince William County in Virginia

Here is an interesting article from NASDAQ.com about basics of purchasing a home insurance.

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QUESTION: We are about to settle on our first home, and we don’t know the first thing about buying homeowners insurance. How do we get started, and what do we need to know?

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ANSWER: Congratulations on buying your first home! Start by getting a price quote from the company that handles your auto insurance — you generally get a  discount on your auto and home insurance if you have both policies with the same company. If you have an auto insurance agent, find out whether he or she works for one company or is an independent agent who works with several companies. An independent agent can give you price quotes from several insurers. You may also want to contact a few big insurers separately, such as Allstate, Liberty Mutual, State Farm and others. And if you have any military connection in your family, it’s worthwhile to contact USAA, too (see USAA’s page for a list of who is eligible ). If you don’t have an independent agent, you can find one in your area through the Independent Agents and Brokers of America agent search.

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But before you start comparing quotes, you’ll need to decide how much coverage to get. 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. You can get an estimate of the home’s rebuilding cost at AccuCoverage.com , which asks a lot of questions about the size of the house and the building materials and details, then uses the same building-cost database that insurers use. Or you can work with the agent or the insurer to come up with an estimate.

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Homeowners insurance automatically provides coverage for your possessions based on a certain percentage of your home’s insurance value — 75% is typical. So if your home is insured for $200,000, you’ll also have up to $150,000 of coverage for your possessions. But homeowners insurance policies usually have lower limits for certain kinds of items — such as $2,000 or $3,000 for all of your jewelry, for example. If you have any particularly valuable possessions — such as jewelry, artwork or special collections — you may want to get extra coverage for those items. See What Does Homeowners Insurance Really Cover? for more  information about special coverage for valuables.

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You’ll also need to choose the deductible amount. One good way to lower premium costs is to choose a deductible of at least $1,000. That will reduce your premium and discourage you from filing small claims that could get you dropped by the insurer or cost you a claims-free discount. Then be sure to keep enough money in your emergency fund to cover the deductible, in case you need to file a claim.

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Before you settle on an insurance company, check out the insurer’s complaint record through the National Association of Insurance Commissioners Consumer Information Source . Saving a few dollars in premiums can backfire if your insurer ends up hassling you about claims.

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If you’re concerned about flooding, which isn’t covered by homeowners insurance, go to www.floodsmart.gov to see the home’s risk of flooding and get prices for flood coverage through the National Flood Insurance Program. You can buy flood insurance through most homeowners insurance agents. Your mortgage company may require flood coverage if you live in a high-risk area, but it can be worthwhile to get the coverage even if it’s not required. See Protect Your Home and Finances Against Floods for more information.

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When you move into your new home, it’s the perfect time to conduct an inventory, which will streamline the claims process if you have to file a claim in the future. Take photos or a video of every room, keep receipts for valuable items, and keep a copy of the file somewhere away from home so it’s easy to access if needed. See How to Prepare for an Emergency for details.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Read more: http://community.nasdaq.com/News/2011-07/the-basics-of-buying-homeowners-insurance.aspx?storyid=83694#ixzz1SIQDvJ6B

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SOURCE: The NASDAQ, KIPLINGER

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NOTE from Vivianne: Most insurance companies have their own policies as to coverage for water damage: they might cover a water damage caused by rain, but not water damage caused by ground water.  Now what IF the rain was the source of the ground water that caused the damage ….. Talk to your insurer about it and, most of all, hire a buyer agent who understands those issues and helps you purchase a property that is not located in the area prone to ground water damage.

NOTE from Vivianne: Shop for a home insurance the same way you would shop for mortgage loan, a car, etc. by contacting many providers, asking detailed questions, and reading the fine print. Here is an eye opener about State Farm auto insurance that nevertheless applies to home insurance as well:  https://viviannerutkowski.wordpress.com/2009/06/01/state-farm-auto-insurance-eye-opener-welcome-to-the-insurance-world/

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Auto insurance, home insurance, homeowners insurance in Arlington County Virginia, Fairfax County Virginia, Fauquier County Virginia, Loudoun County Virginia, and Prince William County Virginia.

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