What are my options with Home Owners Insurance and how do I figure out what I need?
Homeowners insurance is provided with a basic package that covers most things like dwelling, personal property, liability, loss of use, and separate structures already included. Variations of this basic package are available depending on how your home fits the criteria insurance companies look for, such as owner occupied, multi-unit, or owner occupied with renters. These same variations are available for the different types of ownership as well; that is homeowners, condo owner, or landlord.
Essentially, to begin to answer this question you first need to see what boxes your home and needs fit in. Do you live in your home but have roommates? Do you have multiple units? Are you a landlord? Then you need to see what the basic package of insurance offers you in terms of coverage and assess your own personal property and expenses and see if extra coverage will be needed to cover your needs. If so your insurance agent will know how to adjust your homeowners insurance to cover the extra.
How do you assess what is needed? Take a realistic look at what you are trying to protect. Find the local cost per square foot (This information can be found by calling some of your local builders and asking them if a house burnt to the ground what would it cost (per square foot) to rebuild it?) and take that and multiply it by the square feet of your home to get your appropriate dwelling coverage amount. You should also account for any Extended Replacement Coverage in that calculation. Add up all your personal property to make sure you have enough coverage to replace it.
Don’t worry– a good insurance agent can help you to figure all of this out as well, but having an idea of where you stand when you go to speak with them can help the process and make sure you have everything you need.
Also, with homeowners insurance you should consider flood and earthquake insurance as these do not come standard with homeowners insurance policies. Even when the risk of flood or earthquake may be rare, not having the appropriate insurance to cover these occurrences can be costly.
If you have any questions on this please feel free to contact me at ctrowbridge@farmersagent..com or 1-650-Farmers.
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=03d95ef0-db5e-4989-a3a5-1611741ab161)
Who Pays What — A Guide to Closing Costs
A lot of people find the cost of selling or buying a home confusing. It is in a lot of ways since a lot of what you can pay as a buyer or seller is contract related. Below is a list of things as a seller and a buyer that you may be expected to pay for. Take these to your agents and make sure you understand what your part of the transaction is going to be paying for!
The SELLER can generally be expected to pay for:
- Real Estate Commission
- Document preparation fee for Deed
- Document transfer tax ($1.10 per $1,000.00 of sales price)
- Any City Transfer/Conveyance Tax (according to contract)
- Any loan fees required by buyer’s lender
- Payoff of all loans in seller’s name (or existing loan balance if being assumed by buyer)
- Interest accrued to lender being paid off, Statement Fees, Re-conveyance Fees and any Prepayment Penalties
- Termite Inspection (according to contract)
- Termite Work (according to contract)
- Home Warranty (according to contract)
- Any judgments, tax liens, etc. against the seller
- Recording charges to clear all documents of record against seller
- Tax pro-ration (for any taxes unpaid at time of transfer of title)
- Any unpaid Homeowner’s dues
- Any bonds or assessments (according to contract)
- Any and all delinquent taxes
- Notary Fees
The BUYER can generally be expected to pay for:
- Title insurance premiums
- Escrow Fee
- Document preparation (if applicable)
- Notary Fees
- Recording charges for all documents in buyer’s names
- Termite Inspection (according to contract)
- Tax pro-ration (from date of acquisition)
- Homeowner’s transfer fee
- All new loan charges (except those required by lender for seller to pay)
- Interest on new loan from date of funding to 30 days prior to first payment date
- Assumption/Change of Records fees for takeover of existing loan
- Beneficiary Statement Fee for assumption of existing loan
- Inspection Fees (roofing, property inspection, geological, etc.)
- Home Warranty (according to contract)
- City Transfer/Conveyance Tax (according to contract)
- Fire Insurance Premium for first year
It’s important to know what to look for when you’re on either side of the transaction!
This information is provided by North American Title Company. Check out www.nat.com for more.
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=8d48376e-024c-43ac-a6c8-5fcc63efd2df)
Homeowners vs. Condo Insurance
The two different types of home ownership are reflected in the differences found between Single Family homeowner’s insurance policies and Condominium homeowners Insurance. Single Family homes are owned entirely by the Homeowner, including the dwelling structure as well as its contents. Condominium homeowners own their property from the Walls in, with the exterior Walls, and Roof, being owned by the Condominium Homeowners Association.
Single family Homeowners need protection for the whole dwelling in their policy, whereas condo owners generally need to only protect their personal property and any internal improvements that might not be covered by their Homeowners Association insurance policy. Condo Homeowners need to read the governing CC&R (Codes, Codicils and Restrictions) of their Homeowners Association to see for themselves just what is covered by the Associations policy and what is their responsibility. Hopefully the following will generally simplify this question: (X means applicable)
| Single Family | Homeowners Insurance |
Condominium Homeowners Insurance |
|---|---|---|
| Dwelling | X | - |
| Personal Property | X | X |
| Loss of Use | X | X |
| Separate Structures | X | - |
| Liability | X | X |
| Medical | X | X |
| Building Improvements | - | X |
Since many Condo Association policies cover only the exterior of the building, if the Condo Homeowner wants to have protection for the investment they may have made in interior upgrades, or improvements, they should make sure to add this coverage to their condo policy. But, because they don’t need the Dwelling or Separate Structure coverage’s found in Single Family policies, Condo policies tend to be a little less expensive that Single Family Homeowners.
All the other similar coverages (Persona Property, Loss of Use & Liability) require the same consideration in both the Singe Family and Condo Homowners policy. However, your Liability coverage, in a Condo policy, also has the possibility of your neighbors suffering a loss from a fire caused by your unit, more so than in a Single Family Home fire.
If you have any questions feel free to email them to me (ctrowbridge@farmersagent.com) or call me at 650-FARMERS!
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=7b761813-f141-4956-97e6-a2f9f6f2fd4f)
The Difference between Homeowners and Landlord Insurance
For the average Homeowner, who is moving out of their home and wants to maintain ownership, at first blush there may not seem like a big difference in what kind of Property Insurance you need. But Homeowners Insurance is priced on, and includes coverage’s for, the owner of that residence. This can be quite different from the protections a Landlord will need when renting out the residence to others.
The assumptions, and in most cases requirements, of the insurance carrier is that the homeowner will exhibit a pride of ownership, and will maintain the property in the condition they would want to live in. While many tenants respect the properties they live in, not all do, and the very fact that they renting instead of being in a position to own means they will not have the means or motivation to maintain the property as well as the owner. But, before we can discuss the difference’s, let’s look at the various coverage’s involved.
Good coverage’s for Homeowners Insurance are:
Dwelling coverage:
Enough coverage to replace your home if it were to burn to the ground (local construction $ p.s.f. X sq. ft. of property).
Liability coverage:
Enough coverage to protect your assets at risk (Real Estate Equity, Investments & Income) from being liquidated, or attached, in a judgment against you if you were sued for monetary damages. But, it is much less expensive for the Homeowner as the chances of them inviting someone over who would sue them if they slipped and fell, are not very high.
Personal Property:
Enough coverage to replace your personal property (that which would fall out of the house if it we turned upside-down).
Loss of Use: enough coverage to rent a similar residence until your home was rebuilt (max time limit is 2 years)
Separate Structures: enough coverage to rebuild your detached garage, or work shed
Now let’s look at what a Landlord might need:
Dwelling Coverage:
again enough to replace the property, but in most Landlord properties the workmanship and quality of the fixtures are not as high as those found in personal residences. Thus the dwelling coverage could be adjuster to a lower cost per square foot.
Liability coverage:
This is the major difference with Homeowners because the Landlords exposure is so much greater. Tenants, in today’s litigious society, are more likely to go after the Landlord if they suffer a loss on the property, through no perceived fault of their own. And if they, or another stranger they invite on the property suffers an injury caused by the physical property (slip & fall), they also are likely to sue! For this reason, it is also a more expensive coverage then Homeowners Liability.
Personal Property; The Landlord, by the very fact that they are not living there, has a very limited need for this coverage. This is much less than a Homeowner would require.
Side note: it is important for the Tenant to carry Renters Insurance as it’s generally their Personal Property at risk, as well as they have a Liability exposure also. It is very inexpensive, and cross line discounts from their auto insurers can pay for most, if not all, of it!
Loss of Use:
For a Landlord this is called “Loss of Income”. If the property is damaged by a fire (for example) the Landlord needs this to pay the mortgage as the rent will not be being collected while the house is being rebuilt.
Separate Structures:
Again, a slightly higher risk for the Landlord, but generally the same coverage is needed as for the Homeowner.
Note: In the Homeowners and Landlord policies: the Personal Property, Loss of Use, and Separate Structure coverage’s can be simply a percentage of the Dwelling amount, and are not priced separately, but included in the Dwelling coverage premium. They are usually adequate, but if not, can and should be adjusted.
One would think that because the Dwelling coverage need not be as high for a Landlord as a Homeowner that the Landlord policy would be less expensive. But do not be surprised if the Landlord policy is as much, or even higher than a Homeowners policy would be, because the increased exposure and need for higher Liability limits.
A Note on the New FHA Rules
The Federal Housing Administration has announced major changes to its program. The agency will increase the amount of upfront cash paid by new borrowers and require higher down payments from those with the poorest credit.
Upfront insurance premiums paid at the closing table will increase to 2.25% of the loan value, but buyers will be able to finance the premiums. Borrowers with credit scores below 580 will be required to put at least 10% down. Home buyers with higher scores will still be allowed to put down as little as 3.5%. FHA also plans to reduce seller concessions from 6 to 3% of the home’s value.
These policy changes come on the heels of FHA’s announcement in Oct. 2009 that its capital reserve fund had fallen below the congressionally mandated level of 2%. Lawmakers believe these changes will help ensure the agency’s financial soundness and fulfill its mission of serving borrowers not adequately served by the private sector.
Since August 2008 equity lines used as second mortgages and traditional second mortgages have become almost non-existent. Buyers without at least 20% down have turned to FHA financing as their only choice. The upfront costs at closing are high and private mortgage insurance is required. But, a large percentage of buyers are thrilled with this option providing financing to purchase at an optimum time.
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=604c65df-6bdb-43c7-a0f0-b8ec770c6e54)
10 Reasons a Landlord should require their Tenants to have Renters Insurance!
1. If your property catches fire, through no fault of the tenant, the owners insurance does not cover the tenants personal property or expenses they may incur while the property is being repaired. Who might they come after if they have no other protection?
2. If your tenants cause their neighbors to suffer a loss, through bodiy injury or property damage, their Renters Insurance will provide protection that would compensate the injured party. This protection can prevent arguments over liability between you and your tenant, and who might the neighbors come after if they have no other protection?
3. If someone sues your Renter for monetary damages for some other reason, and they haven’t done anything illegal, their Renters Insurance puts Insurance carrier money on the table and as the landlord you don’t need to be involved.
4. Your tenant’s personal property is protected (less the deductible) while they are away from home, like in their car, or when traveling. If they loose something that is of value to them they may have less resources to pay your rent.
5. They can get cross line discounts on their auto insurance, which will save them money while protecting more of their stuff. Depending on how expensive their auto insurance is, their Renters Insurance might even be FREE! And, they might not even know that! That certainly wouldn’t hurt your standing with them!
6. It gives you peace of mind to know that should a loss occur, you won’t have to deal with the Renter’s loss, and you can concentrate on repairing any damage to your property!
7. Having the funds readily available to replace lost items will reduce the strain on your relationships with your tenants.
8. You will have less problems than other Landlords, assuming everything else is equal, so you will have more free time!
9. As the landlord you can make this a mandatory condition of renting the property, which means you never have to worry about your tenants not being covered, and most importantly…
10. It’s very inexpensive, and easy to sign up for!
Corrin can assist you in informing your renters about the benefits of renters insurance and has other materials you can give to inform your renters such as ‘Top Ten Reasons you NEED Renters Insurance’. Contact him at 650-Farmers or ctrowbridge@farmersagent.com.
Earthquake Preparedness is Important! How are you protecting you home?
Recently, California has been hit by a number of Earthquakes that remind us of the reality of where we live. Yet 86% of Californians do not carry earthquake insurance. This is particularly ironic considering our home, for most or us, is our largest asset. Buying auto, homeowners and life insurance is considered a normal part of our insurance portfolio, yet most of us consider it an acceptable risk to leave our largest asset unprotected from this inevitable peril. The USGS has predicted an 80% chance of a 6.0 or larger earthquake will hit northern California within the next 30 years, or for most of us, sometime in our lifetime. There is a 60% chance of that Earthquake happening in the Bay Area. It’s not IF, but WHEN the big one will happen!
What would happen if a major earthquake occurs and you do not have earthquake coverage? Many believe the government will assist those devastated by this eventuality. But federal disaster relief has historically been to offer low-interest SBA loans to eligible homeowner’s and businesses, to repair or replace damaged property. This is additional debt that you will be adding to your current mortgage, which you are still be responsible for. The maximum SBA personal property loan is $40,000 and the maximum SBA real property loan for primary home repair is $200,000. FEMA disaster grants are available to those who do not qualify for a loan, but the average grant is less than $15,000, and the maximum is $26,200. Would that rebuild your home in the Bay Area? It can be argued that it is even more important for those with fewer resources to invest in earthquake insurance.
Along with your earthquake kit, (which should include camping gear, water, food and cash, all of which may be difficult to access if the big one hits); you should give strong consideration to adding an earthquake policy to your insurance portfolio. As recent events have served to remind us, we live in an area that has seen, and will see again, this type of calamity. It’s a wise investment in your peace of mind.
