More transparent credit cards,
but problems persist
The Insurance Information Institute (III) says the personal possessions of students who live on campus typically are covered under their parents' homeowners or renters insurance policies -- with certain limitations.
Unauthorized use of this story is a copyright violation -- a federal crime
Deadline Newsroom - When your kid goes off to college, he or she can leave under the protective umbrella of your homeowners insurance policy -- if you properly open the canopy.
The Insurance Information Institute (III) says the personal possessions of students who live on campus typically are covered under their parents' homeowners or renters insurance policies.
Some policies, however, limit the amount of coverage to 10 percent of the total amount of coverage for personal possessions taken to college.
For example, if Mom and Pop have $100,000 worth of homeowners insurance for their belongings, only $10,000 would be applicable for dorm stuff.
All insurers don't impose limits, but check with your insurance company to be sure.
"With electronics and expensive sports equipment showing up on campuses around the country, many college students may be bringing thousands of dollars worth of personal possessions with them to college," said Jeanne M. Salvatore, senior vice president and consumer spokesperson for III.
"And with the cost of tuition rising, the last thing students or their parents want to do is to have to pay to replace costly items due to theft, fire or another disaster," Salvatore added.
You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.
Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.
Chinese drywall, living in coastal areas, lower home prices and credit scores are all impacting the cost of homeowners insurance and your level of coverage. It's to pull our your policy and give it the once over.
Unauthorized use of this story is a copyright violation -- a federal crime
Deadline Newsroom - What does Chinese drywall, living in coastal areas, lower home prices and credit scores have in common?
They are all issues that can cost you more in homeowners insurance, leave you with less coverage or even get your policy canceled.
Among the issues, Consumer Reports (CR) says after Chinese drywall created both property damage and health issues, some homeowners filed insurance claims. Insurers quickly rejected the claims and in some cases dropped policyholders claiming customers and their homes were subject to risks not covered by their policy.
Attorney's are fighting and winning cases against builders and manufacturers, but the issue is under investigation by the Consumer Product Safety Commission where more than 3,000 related complaints have been filed.
Says CR, the drywall case "Highlights an industry trend. Insurers are placing more risk on policyholders by changing policy language, charging more, or interpreting coverage to the detriment of homeowners."
The number of drywall victims are limited, but larger issues loom for a greater number of home owners who may have to adjust their approach to homeowners insurance coverage.
• Coastal states' premiums increase most. Insurance premiums for renters and home owners rose an average 3.2 percent, in 2009, but much more in recent years in coastal states -- 11.4 percent in Louisiana and 10.6 percent in Massachusetts, both from 2006 to 2007.
Residents in coastal states should shop around and consider trading in the "loyal customer" discount (for using one insurance carrier for home, auto, life and other insurance needs) for a better premium from a highly rated insurer. Consumer Report said among subscribers who switched to a new carrier in the four years prior to 2008, more than half paid less for coverage.
• Many homeowners now have two deductibles, one for the main policy and another for a high-risk peril, say a windstorm or a hurricane. Florida, for example, requires a hurricane deductible of 2 percent for homes valued at $100,000 or more. Policyholders can choose a larger deductible of up to 10 percent of the insured value.
CR suggests self-insuring for smaller claims by setting aside savings, as an emergency fund. Also set a higher percentage deductible or switch to a flat-dollar deductible, when possible. The idea is to self-insure for smaller claims, because insurers drop policy holders who file frequent claims in a short period.
• Lower home prices. Depressed property values turn thoughts to less coverage, but insurance coverage isn't based on your home's market value. It's also based on the cost to rebuild -- labor and materials. Ask your insurance agent if you have sufficient coverage. Before home prices fell, many home owners had insufficient coverage.
• Credit scores. While some states are fighting the trend, credit scores are more and more a factor in underwriting. Your credit score is a numerical rendition of your credit risk, your risk of experiencing financial trouble. That's become central to how an insurer determines your premium, says CR.
Pull your credit reports for free at the only federal government-sanctioned source -- AnnualCreditReport.com, pay your bills on time, don't carry too much debt and learn how to keep your score as high as possible.
• Coverage for modern-day concerns. Many major carriers sell identity-theft coverage as a stand-alone policy or endorsement to your homeowner’s policy. The coverage might reimburse you for lost wages, notary fees, and legal fees if your identity is stolen.
Instead of the coverage, monitor your credit reports, regularly change passwords and otherwise take additional cost-free ID-theft precautions, CR advises.
• Click on the keywords below for more stories on this subject.
You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.
Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.
Fifty-eight percent of the 24 million home-based businesses have no business insurance. Almost 40 percent of surveyed home-based business owners thought that their homeowner policy would cover their small company, and more than 10 percent of those without business insurance experienced a loss.
Unauthorized use of this story is a copyright violation -- a federal crime
Deadline Newsroom - Recession refugees who turn to a home-based business to make ends meet threaten their livelihood if they aren't properly insured.
Homeowner policies limit coverage for work-at-home ventures and that can include coverage for buildings where the business is housed; office equipment or business property; and legal liability that may arise out of a lawsuit generated by the home-based job.
The Small Business Administration says nearly half of all U.S. businesses are home-based and more than 20,000 gross more than $1 million annually. Too many have put that income at risk.
Almost 40 percent of surveyed home-based business owners thought that their homeowner policy would cover their small company, and more than 10 percent of those without business insurance experienced a loss.
"But in the real world, lawsuits don't discriminate. Whether you're big or small, your business suffers," she added.
Most homeowner's policies cover only $1,000 to $2,500 for business equipment and offer no liability protection or loss of income coverage.
Insure your home-based biz
What are the options?
IINC says:
• For as low as $14 a year, business-owners can increase their standard homeowner's policy limits. This can be a good choice for people who don't have exposure to liability, who do not store business inventory and who do not rely solely on their income for survival and have inexpensive business equipment.
• A full home office policy is the next step up. Home office policies cover business liability and replacement of lost income, as well as homeowners coverages such as fire, theft and personal liability.
• You can also buy several individual business insurance policies to provide the various coverages you need, such as business property, general liability and business income insurance.
• You may also need special policies for business use of your car, health insurance, injured workers compensation. An umbrella policy may also be necessary to offer extra liability insurance that pays or a loss when the limits of your underlying policy are reached.
Discuss home-based business insurance with your insurance agent for more details and then shop around for the best deal. A few calls can save you money.
Get proposals for the coverage you need from at least three different agents. Compare the proposals, prices and your impressions of the agents. Don't forget to ask about discounts available to owners of businesses with fire detectors or security systems.
Need a break from doom and gloom in the housing market? Get off the beaten news track and stop by the DeadlineNews Group's Offbeat News Examiner outlet for a few laughs.
Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location!
DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime
The northern California quake followed a swarm of southern California quakes, including a magnitude 4.0 shaker days earlier near Bombay Beach, CA. The fault movements prompted earthquake preparation pundits to sound the alarm.
Unauthorized use of this story is a copyright violation -- a federal crime
Deadline Newsroom - The magnitude 4.3 earthquake that hit the foothills along the fringes of Silicon Valley, March 30, came with the discovery of a new fault and renewed calls for earthquake preparedness.
The trembler hit at 10:40 a.m., about 16 miles east of downtown San Jose, but caused no major damage, according to the U.S. Geological Survey (USGS).
The quake was attributed to a previously unknown fault running parallel and east of the Calaveras Fault, which is part of the greater, master fault system, the San Andreas Fault.
The northern California quake followed a swarm of southern California quakes, including a magnitude 4.0 shaker days earlier near Bombay Beach, CA.
The fault movements prompted earthquake preparation pundits to sound the alarm.
USGS and other scientists conclude that there is a 62 percent probability of at least one magnitude 6.7 or greater quake, capable of causing widespread damage, striking the San Francisco Bay region before 2032.
"With the current swarm of earthquakes hitting the Southland, it's important to know how unprepared California is for a major earthquake. With 88 percent of California homeowners not covered by (earthquake) insurance, who's going to pay the tab when the big one hits?," asked Pete Moraga, a spokesman for the Insurance Information Network of California (IINC).
• Insurance: IINC and theCalifornia Earthquake Authority can help you determine if you need earth quake insurance coverage and help you determine how much it will cost.
Need a break from doom and gloom in the housing market? Get off the beaten news track and stop by the DeadlineNews Group's Offbeat News Examiner outlet for a few laughs.
Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location!
DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime Read more!
Financially strapped homeowners are renting out rooms in their homes and condos to help pay for the mortgage. But they may be violating local law and community rules and have some coverage gaps in homeowners insurance that could lead to bigger financial hardships.
Unauthorized use of this story is a copyright violation -- a federal crime
Deadline Newsroom - If hard times has you renting out that empty room for some fast cash, you could be opening the door to a lot more cost, not less.
The Insurance Information Network of California (IINC) says financially strapped homeowners renting out rooms to help pay the mortgage or other costs may be overlooking key issues that could lead to greater financial hardship.
Renters who sublet, owners who live in communities governed by homeowners associations, zoning violators and others living under certain community rules or regulations could lose their home through either eviction or foreclosure if they violate terms of the contract, community edicts or local law.
That's also true in some single-family detached housing communities.
Tenant from hell.
Homeowner's insurance, taxes
When it comes to homeowners insurance, the rental of rooms may be considered a business. However, limits could be placed on insurance coverage, including coverage for contents, personal liability, medical payments and identity fraud.
Policy add-ons or endorsements similar to those offered for home-based businesses are available to help cover a homeowner's assets in case of a landlord-tenant dispute or suit.
When part of a home becomes a business certain tax laws could be triggered. For example to help foot the bill for the
"Housing and Economic Recovery Act of 2008" the act eliminates a capital gains exclusion for the portion of gain (during a sale) that comes while a home serves as a vacation or rental property.
"The last thing struggling homeowners need are more ways to lose money," said Candysse Miller, IINC executive director.
She says homeowners should carefully review their insurance policies with their agent or company before taking on renters. Likewise, they should know the local rules and not try to surreptitiously circumvent them.
Upstairs neighbor from hell.
Renting concerns
Renters should also be aware that the landlord’s policy may not cover their possessions or provide liability protection in case they are sued.
On the other hand there's always the possibility of the tenant from hell who wreaks havoc and then falls back on legal renters' rights law to over stay their welcome.
Instead of jumping at the prospect of a windfall, first-time landlords should spend ample time researching city and state landlord/tenant laws, tax rules and other related information.
A detailed background check on the prospective tenant can help identify any potential problems that may arise during the tenancy.
Many cities and municipalities as well as apartment and landlord associations also offer landlord/tenant services departments to help with questions and to avert disputes.
Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group -- DeadlineNews.Com, a real estate news and consulting service and Web site and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location! DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime Read more!
Holiday News That Really Hits Home: Holiday house parties can be hazardous to your financial health and your guests' safety. If you are likely to host a holiday party this year, you probably don't know how risky it can be or if your homeowners insurance policy covers that risk.
Unauthorized use of this story is a copyright violation -- a federal crime.
Deadline Newsroom - Eat, drink, but be wary at home during holiday festivities.
Collect car keys at the door, check your insurance policy, skip the oxycontin sales, hire a host, serve no-buzz booze, do whatever it takes to assure that everyone has a good safe time at your holiday house party and that you don't get sued for negligence.
Holiday house parties can be hazardous to your financial health and your guests' safety. A very Brady Christmas or one from hell. If you are likely to host a holiday party this year, you probably don't know how risky it can be or if your homeowners insurance policy covers that risk.
Alexandria, VA-based Independent Insurance Agents and Brokers of America found in a survey of 1,000 party hosts, that more than two thirds of them mistakenly believed they were not liable for alcohol related crimes.
The survey also found that most of those who believed they were not liable were in households with incomes of more than $75,000 a year -- households most likely to host a holiday party. And households with deep pockets ripe for suing.
Party hosts indeed can be liable under local "social host" laws if someone drinks too much and is involved in an auto accident on the way home -- at which time the party is really over.
Nearly three dozen states have laws that hold social alcohol servers liable as a third party to drunken driving crimes and the laws apply. These laws apply to residential party hosts who both own and rent their homes. Holiday parties can range from small family gatherings to larger shindigs and business parties in the boss's home.
The survey also found that 86.8 percent of those surveyed answered "no" or "don't know" when asked whether or not they reviewed their insurance coverage or checked with their agent to ensure they have adequate liability coverage in the event they are sued and found liable for the actions of a guest who drank alcohol at their party. Again, those with household incomes of more than $75,000 overwhelmingly (96 percent) answered "no".
Before you send out holiday party invitations, review both your local social host ordinances and your home insurance policy. Be sure you have sufficient liability coverage in the event you are sued and found liable for the actions of an inebriated guest who had too much wassail with his or her sugar plums.
Here how experts say you can get the party started without decking the halls with boughs of folly.
• Before you send out the invitations, check your homeowners, renters or condo-owners insurance policy and discuss it with your insurance agent. Make sure it specifically provides sufficient personal-liability coverage for events from the negligence of the policy holder.
• If you don't wait for the winter solstice season and party hearty frequently, consider obtaining an umbrella liability policy to supplement your regular coverage at an additional premium cost of several hundred dollars more per year. Make sure there isn't a gap between the existing policy and coverage provided by the home owner's policy. For example, if your home owners insurance limits coverage to $300,000 and your umbrella policy covers costs above $400,000 you would have too make up a $100,000 difference if you file a claim.
• Consider making guests hand over their car keys when they arrive as their ticket fun. They are much more likely to be reasonable about handing over keys before they start partying than they will be after a few good stiff ones. Put the request in the invitation.
• Don't serve alcohol to anyone under the legal age. Your insurance policy likely will not protect you in a suit.
• Don't let guests mix their own drinks. Consider hiring a professional host, caterer or bartender who is better skilled at knowing when to turn off the tap for someone who's had enough to drink. The person you hire should also be insured and you should inquire if your party can be added to me insurance for an extra layer of protection.
• Encourage group activities that focus on fun instead of booze -- spin the bottle beneath the Noble Fir instead of hitting the bottle under the mistletoe.
• Prepare plenty of foods to prevent guests from drinking on empty stomachs but avoid salty or spicy foods which tend to make people thirsty. This is a good time to through out the low-carb diet that's made you pretty cranky anyway.
• Offer a large variety of no-buzz beverages -- juice, soft drinks, sparkling water, tea, etc. Smoothies can be served up with festive edible decorations.
• Cap the tap and stop serving alcohol at least one hour before the party ends. Only time sobers an individual. Serving caffeine-laden drinks like coffee, tea, and colas does not speed sobering, but gives you wide-awake drunks who think they are sober.
• If someone obviously has had too much to drink, drive them home, arrange for alternate transportation, or otherwise do whatever is necessary to keep them from getting behind the wheel. They may hate you through the cloud of their drunken stupor, but when they sober up they will thank you for giving them nothing more than a pounding hang over.
• If an incident does occur, notify your insurer right away so that you are in compliance with any "timely notice" clause.
Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group -- DeadlineNews.Com, a real estate news and consulting service and Web site and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location! DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime
Home owners who want to cash in on deep-pocket, short term renters in town for a big event enter a gray area of housing that's not without risks for both guests and property owners.
Unauthorized use of this story is a copyright violation -- a federal crime
.
Deadline Newsroom - When the Superbowl, U.S. Open, World Series, Olympics, and other major sporting and entertainment events come to town, the community cashes in on an influx of visitors dining, shopping, and looking for shelter.
However, property owners who rent primary residences on a short-term basis enter a gray area of housing that's not without its risks for both guests and property owners.
Property managers recently pitched Pebble Beach, CA home owners the idea of renting their homes when the U.S. Open next visits the Monterey County area -- two years from now. The early pitch came because the potential windfall for renting out homes in the affluent California seaside community could be staggering -- as much as $10,000 a week for a home that's a short drive to the golf course to a whopping $100,000 a week for a posh home with a fairway view, according to property managers with past experience.
The two year advance notice is just about long enough to sort through what the windfall could really cost.
Generally if you rent out your home for 14 days or less you don't have to report the income.
"You get tax free income," said Leonard Williams a CPA in Sunnyvale, CA.
However, you'll likely need to consult with a tax professional if you plan to rent your home for 15 days or more because, while you can deduct rental expenses and depreciation for the part of the year the property was used or held for rental purposes, you also have to report the rental income. A major income boost could thrust you into a higher tax bracket, trigger the Alternative Minimum Tax and pile on other tax issues, says San Diego, CA CPA Leonard Wright.
Williams said renting out your home for 15 days or more will also cut into your capital gains tax exclusion, if only slightly, depending upon how long you rent your home.
Under current law, married homeowners can exclude from taxation, up to $500,000 in gains from a home sale, provided the property was the primary residence for two out of the previous five years. The maximum exclusion for a single person is $250,000.
Vacation and rental property owners, right now, can legally double dip the exclusion by first selling their primary residence and capturing the tax-free gain. Then, after moving into the second residence for two years to qualify it as their primary residence, they are able to cash in again on the tax-free gain after selling the second home.
However, to foot the bill for the "Housing and Economic Recovery Act of 2008" the act eliminates the capital gains exclusion for the portion of gain that comes while a home serves as a vacation or rental property. The provision is effective Jan. 1, 2009.
Renting out your home for a month or two could mean a relative insignificant nip into the exclusion, but there are other concerns. Unless your property becomes a long term rental, or there is a large short-term windfall, the tax issue is probably the least of your worries.
• Your homeowners insurance policy is underwritten with risk analysis based on the owner, you, occupying the home, not tenants. Effectively turning your home into a business property will likely require some adjustment to your insurance policy which may not otherwise provide benefits for claims arising from certain liabilities or losses. If a short-term tenant damages your property, steals belongings or is injured and you don't have the proper coverage you'll have to foot the bill or, worse, face the possibility of a negligence lawsuit. Always contact your insurance agent before renting your home.
• Zoning could pose a problem. A growing number of communities have an outright ban on short-term rentals, others require that you obtain a license and pay a tax for the privilege. Violate the provisions of local law and you could be fined.
• Likewise, homeowner associations that permit long term rentals may forbid short term tenants and enforce the prohibition with hefty fines, even evictions. Check with your homeowner association's board of directors or management company.
• Local occupancy ordinances may also permit only a limited number of people in a given structure and typically forbid setting up beds in garages, sheds or other facilities not legally designated for human habitation. Check the laws in your community.
• Check federal and local fair housing laws. Fair housing laws forbid you from discriminating based on sex, race, religion and other factors. You are generally exempt from the law if you own the home you rent, but not if you have several other homes. You are also exempt from federal fair housing laws if you rent a room in your home. And you are exempt from federal law if you rent to a minor, but that could open another can of worms. However, don't overlook state and local level fair housing laws. In Palm Beach County, FL for instance, if you use a "broker" (property manager) to rent your personal residence, you must comply with their fair housing law.
• You'll need time to screen renters. You can't rely upon gut feelings. There are few if any consumer and property owner protections in place that specifically cover renting out your home short-term for a local event. You'll either have to hire a property manger or learn the screening process, which could mean many pointed questions, a full application for short term rentals, a credit check, income check, proof of residence check, past rental record check and more checks before you get that fat short term rental check.
• Add real estate attorney to your list of consultants. The American Bar Association says if you open your home to short-term rentals you should do so with a legal contract that defines the terms of your accommodations. An attorney can help you sort through your legal rights and responsibilities and make sure your rental agreement complies with local law.
Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews Group -- DeadlineNews.Com, a real estate news and consulting service and Web site and the new Deadline Newsroom, DeadlineNews.Com's news back shop. In both cases, it's where all the news really hits home. DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime
Are you aware that everyone lives in a flood zone? Do you know floods are the most common U.S. natural disaster? Do you understand that your home is more likely to suffer flood damage than fire damage?
Unauthorized use of this story is a copyright violation -- a federal crime
Deadline Newsroom - Flood insurance is only mandated for properties in high-risk flood zones, but even if you live in a low- or moderate-risk area, you should bone up on the National Flood Insurance Program (NFIP).
To help get you started, here's a quick primer on floods and flood insurance.
• Floods are the most common natural disaster in the U.S. If you live in a flood plain, your home has a 26 percent chance (more than one in four) of being damaged by a flood during the course of a 30-year mortgage, compared to a 9 percent chance (less than one in ten) for fire damage.
• Your regular homeowner insurance policy typically does not provide benefits for losses caused by a flood, yet the NFIP says one in four flood insurance claims come from areas with low-to-moderate flood risk.
If you live in a low- to moderate-risk area made so by a system of levees, dams and dikes -- as Midwestern and Gulf of Mexico area residents have learned -- the risk may be reduced but it is not removed. Levees, dams and dikes are not impervious to nature's worst.
Flooding can be caused by heavy rains, melting snow, inadequate drainage systems, failed flood control structures and tropical storms and hurricanes.
Even if you have a hillside home and you think you are out of harm's way, there's a risk of mudslide or debris flow which is covered by flood insurance.
• The share of claims from low- to moderate-risk homes and the overall risk for flooding could increase. A recent U.S. Climate Change Science Program report "Weather and Climate Extremes in a Changing Climate" said flatly, global warming-spawned climate change is increasing the intensity, duration, frequency, and geographic extent of weather events.
For example, 15 years ago, after the Midwest was previously inundated by what was pronounced a "100-year" or a "500-year" flood, some residents believed they'd seen the worse and dropped coverage.
This summer, uninsured homeowners got soaked.
• The term "100-year" flood doesn't mean there's a major flood every 100 years. It means a 100-year flood would have a 1 percent chance of occurring again in any given year and a 500-year flood a 0.2 percent chance.
• In non high-risk areas you could qualify for the Preferred Risk Policy that provides contents coverage beginning at $39 per year and building plus contents coverage beginning at $119 a year, according to the NFIP.
• If the relatively small premium doesn't get you to at least learn more about flood insurance, keep in mind, if you don't move fast you could lose. Once you decide to buy flood insurance, there's a standard 30-day waiting period, from the date of purchase, before a new flood policy goes into effect.
There is no waiting period provided:
The initial purchase of flood insurance is in connection with the making, increasing, extension, or renewal of a loan in a high-risk zone by a regulated lender.
The initial purchase of flood insurance occurs within one year of a flood zone map change.
• You could have to wait even longer for related coverage. Insurers in the Midwest currently have moratoriums on sewer and drainage coverage, which is part of your homeowner's policy, but can protect you from flood induced sewer and drainage problems. Moratoriums on selling disaster-related insurance coverage are common following a disaster.
• If you aren't required to have flood insurance and choose not to buy it, it's a good idea to have as much as $20,000 socked away for self-insurance. For just one inch of water in your home, expect an estimated $8,000 in damages, according to the NFIP's "Cost of Flooding" estimator. A foot of water -12 inches -- will cost you nearly $19,000.
• Residential NFIP coverage provides up to $250,000 of insurance to protect your owner-occupied home and up to $100,000 to protect your belongings. In a high-risk area, federally insured or regulated lenders will require you to have flood insurance for the amount remaining on your mortgage, or $250,000, whichever is lower. Renters can get up to $100,000 coverage for the contents of their home.
For more information, visit the consumer-friendly NFIP web site at FloodSmart.gov.
Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews Group -- DeadlineNews.Com, a real estate news and consulting service and Web site and the new Deadline Newsroom, DeadlineNews.Com's news back shop. In both cases, it's where all the news really hits home. DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime
Vacant homes are more vulnerable to damage and blight, they can affect the value of nearby homes and they are an extra insurance risk. Cut the risk and save a few bucks.
Deadline Newsroom - Here's a market twist you probably overlooked: It may be cheaper -- and safer -- to keep a home for sale occupied, especially if it doesn't sell soon enough.
With swelling inventories of vacant homes on the market, more and more home sellers are learning the hard way -- your home owner's insurance policy can expire if the home is vacant for more than 30 days.
The nation's supply of empty homes rose to a record 18.6 million in the first quarter 2008, according to the U.S. Census Bureau.
The vacancy rate, the share of unoccupied homes for sale, also hit a record of 2.3 million, up nearly 3 percent from a year ago. Some of that higher vacancy rate is due to the estimated more than 1 million foreclosed and repossessed homes on the market right now, according to the Mortgage Brokers Association. Other vacant homes have been abandoned by those yet to reach foreclosure, but who are no longer able to make the payment.
Insurers put a higher risk (and cost) on insuring vacant homes for the same reasons some owners are discovering -- theft, vandalism, fires and water damage are more likely to happen in an empty home.
The damage is also likely to be worse because there's no one around to report it or stop it.
"You also have a liability problem because the word goes out, 'Nobody lives there. Let's go play in that yard'," said Tully Lehman spokesman for the Insurance Information Network of California.
Lehman says before your home is vacant, take a look at your policy and talk with your insurance agent for guidance.
He also said vacant homeowners insurance is available to cover the property and liability. Coverage varies from state to state and policies vary from company to company and the policies can be costly.
The typical policy has a 24-month term for vacant homes for sale or not, homes in the name of an estate, or homes under renovation.
Comparison shop several insurers. You could get the best deal from your current insurer. You can raise the deductible to lower costs. Coverage may also be available through some state-run insurance plans, such as Fair Access to Insurance Requirements (FAIR) Plan.
But you also have some options to help you avoid the cost of vacant home insurance.
• Find a savvy real estate agent who has a proven track record of moving homes in a slow market, including the current slow market.
• Don't move out until you've sold the home. If you are one of a couple, consider staying behind, or living there occasionally until the home is sold.
• Rent out the home. Not only will the home be lived in, the rent will help cover your carrying costs. You may still have to change your homeowners insurance policy to reflect the property's new rental status -- say to reduce your contents coverage -- but it'll be cheaper than vacant home insurance. Otherwise, hire a house-sitter or let someone you trust live there until it's sold.
• Make the home look lived in. No matter what you do, you still have to keep the home maintained by cleaning the yard and gutters, trimming trees, clearing the gutters, checking for leaks, shoveling the sidewalks and driveway, and winterizing or summer-izing as necessary.
• You also have to protect your property. Install and keep operable a monitored home security system and make sure the smoke detectors have fresh batteries. If your home has a sprinkler system, monitored central alarm for fire, smoke and theft and deadbolt locks, your home is safer and the features can lower the premium on your existing home owner's insurance policy.
• Give the lived-in look some redundancy. Have an acquaintance bring in mail (Security experts say to stop mail and other deliveries when you are away). Ask a neighbor to park their car in the driveway. Install timers on lights and leave window coverings and some furniture in the home.
• Don't commit fraud. If leave your home vacant longer than your current policy permits before expiring due to vacancy, you could save a bundle. However, if the place is damaged or destroyed while vacant, after the policy should have expired due to vacancy, the insurer can challenge the claim.
Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home. DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime
Deadline Newsroom - What does the housing slump, home builders and Garth Brooks have in common?
They've all provided benefits for Southern California's 2007 wildfire victims.
Since last year's wildfires in Southern California killed 10 people, charred 800 square miles and destroyed 2,200 homes, home owners have found relief from some unexpected places.
With Southern Californian's slumping housing market sending builders back to the drawing board, homeowners have found subdivision builders willing to take on single-site projects.
Mick Pattison, head of Barratt American said the slow down in home building has freed up builders to help wildfire victims quickly rebuild lost homes. He also said the misfortune of others was also creating jobs for construction workers.
The Associated Press reported homeowners have accepted offers from developers offering new custom homes at a discount. Home owners are also using insurance money to buy existing tract homes in locations other than original home sites.
California law, enacted after wildfires in 2003, allows fire victims to use their full policy coverage amount to build or buy elsewhere.
Insurance companies have moved quickly too, already paying out $1.27 billion for wildfire damage. That's more than half the $2.26 billion in total claims filed.
The Northridge, CA-based Community Assisting Recovery nonprofit reported insurance claims processing speed was the fastest ever following a wildfire in the Golden State's southern region.
Insurance company complaints are few with less than two dozen related to underpayment by insurers. That's far fewer than complaints filed after the 2003 fires.
Reconstruction is fastest in hardest hit San Diego County where losses from wildfires reached nearly $1.2 billion. Some $1.1 billion in claims have been paid, according to California's Department of Insurance.
Putting songs in the hearts of wildfire victims, country-western giant Garth Brooks recently put his retirement on hold and performed a series of concerts in Los Angeles' Staples Center. He pledged more than $3 million to the wildfire relief effort.
Brooks, from Oklahoma, said he's experienced grass fires and was familiar with the devastating effects of wind and fire but was moved to perform the benefit because he'd never witnessed anything like the Southern California Fires.
San Bernardino County suffered $276 million in losses; Los Angeles County, more than $101 million; Orange County, more than $29 million; Riverside County, $9.2 million and Ventura nearly $3 million.
The wildfires resulted in 37,117 insurance claims filed.
Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.
DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime
Deadline Newsroom - There's some good news on the home insurance front.
After disaster hits, you expect homeowners insurance policy rates to rise, but that's not what's happening in California.
Southern California's devastating wildfires damaged or destroyed more than 2,000 homes. But analysts say there's little if any chance homeowner policy costs will rise.
How's that possible?
Industry preparedness and strong consumer protection laws are sheltering homeowners from higher insurance rates following the Southern California wildfires.
California insurers understand the risk of California wildfires and plan for the danger. Insurers reserve premiums and invest in reinsurance to give them the ability to pay claims after wildfires and other disasters, according to Insurance & Technology, an analyst for the insurance and technology industries.
And credit rater, Moody's Investor Service agrees that the insurance industry's financial stability will remain sound after the claims are paid.
California also enforces strong consumer protection law which forbids insurers from refusing policy renewals after a declared state of emergency.
Insurers are often seen as the bad guys, but Insurance & Technology reports technology helped California's insurers quickly respond in the field to wildfire claims.
After the California wildfires, several insurance companies imposed a freeze on cancellations of policies held by delinquent home owners. Others processed claims for homeowners whose policies had lapsed.
And still another company offered to rebuild some homes according to stronger "green" building code standards -- at no additional costs to the policyholder.
Southern California's wildfires scorched some 500,000 acres, resulting in nearly 23,000 insurance claims -- for auto and commercial policies, as well as homeowners policies.
Some of the losses were devastating. But, for the most part, homeowners suffering losses needn't worry about extra insurance costs.
Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.
DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime
The Deadline Newsroom - Insurance fraud investigators say they are bracing for an outbreak of home arsons set by cash-strapped homeowners looking for insurance money to escape from foreclosure.
Homeowners who resort to such tactics face felony charges including arson, conspiracy and fraud. The charges could be much greater if someone is harmed. If the charges stick, homeowners who set their homes ablaze likely will be jailed. Coalition Against Insurance Fraud says the illegal tactic is not new, but the coalition fears current market conditions could trigger a home-based arson outbreak beyond normal levels.
Falling home values and tighter lending rules are making it difficult for many people to refinance their way out of trouble, get loan work outs or otherwise escape foreclosure.
The number of alleged mortgage-related arsons remain small, but this year the number jumped 50 percent above the 2006 rate in California, according to the coalition.
"I don't believe that it's had time to ripple through the market yet to the point that many people have reached the point of desperation, but I absolutely think it's coming" says Alex Ahart, a fire investigator with EFI Global, an insurance claims investigator.
The coalition has recorded a few home torching incidents, including a Houston, TX home owner who allegedly set his home ablaze after allegedly spray-painting racial slurs on the exterior to disguise his actions as a hate crime.
A Google News search turns up a host of home arson-for-insurance reports.
Fire officials suspect arson in a vacant home fire that killed an unidentified male in recentLathrop, CA. The house was in the early stages of foreclosure.
In Putnam County, IN the prosecutor says a home owner offered a neighbor $5,000 in a home arson-for-insurance scam. Instead of participating, the neighbor told police of the scheme. And court records reveal a bank had filed for a mortgage foreclosure on the rural home.
In related news, Central Florida law enforcement officials have tied an unusual crime spree of auto arsons to the housing market as homeowners try to "burn off" excess debt in order to make the mortgage payment.
The right way to approach an impending default on a mortgage payment or foreclosure isn't with a box of matches. At the first sign of trouble, work closely with the lender for a workout or refinance or seek other assistance, consumer experts advise.
Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.
DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime
Deadline Newsroom – Refugees from home ownership now forced to rent could be setting themselves up for another financial disaster if they avoid renter's insurance to pinch pennies in order to quickly save up and return to home ownership.
All renters should have an insurance policy to cover their possessions because, should a disaster hit home, the cost to replace those items will put home ownership that much further out of reach.
But that's not all.
If you are held responsible for an injury to someone in your home or someone's property in your home, without the liability coverage provision of a renter's policy, your current and future earnings could be at risk. You'll also have to foot the bill for any legal defense you could need.
A renter's policy can also put a temporary roof over your head while damage to your rental home is corrected. Policies come with some limits but typically cover the difference between your additional living expenses and your normal living expenses. Unfortunately, most renters, 58 percent, don't bother to buy renters insurance, according to an Apartments.com survey.
Most of them, more than 70 percent, know better and believe the insurance is important to piece of mind when renting, but say cost is a big reason they forego the coverage.
Apartments.com said 40 percent of those responding to the survey said cost is the reason they decide not to buy the coverage. However, an additional 24 percent of respondents said they were unaware that renters insurance exists.
The Insurance Information Institute reminds renters that because the property owner's policy covers the structure and common area and renters insurance covers only the value of the renter's belongings, renters insurance premiums are relatively cheap. Shop around.
Apartment.com also found that an additional 18 percent of renters said the value of their personal belongings wasn't enough to warrant coverage.
That's an oversight because renters insurance doesn't just replace property but provides protection from liability claims, loss of use and in some cases, involuntary unemployment insurance in the event of a job loss.
Apartments.com says some management companies and property owners mandate the coverage because of the value provided those covered. Twenty percent of renters said they are required to have a renters policy to live in their current home.
Also, 36 percent of those responding to the survey said they'd be more inclined to rent an apartment with an insurance requirement.
There's a certain value to a community that can retain residents even after events that trigger insurance benefits.
Renters insurance typically provides coverage for possessions lost to fire or smoke, lightning, vandalism, theft, explosion, windstorm and water damage (not including floods). Liability covers your responsibility to other people injured at your home or elsewhere by you, a family member or your pet and it pays legal defense costs if you are taken to court. Renters can choose between two basic types of policies:
• Actual Cash Value pays to replace possessions minus a deduction for depreciation up to the limit of your policy.
• Replacement Cost pays the actual cost of replacing your possessions (no deduction for depreciation) up to the limit of your policy.
Floaters are also available to boost limited standard policy coverage, especially for items such as jewelry, silver, furs, collectibles, and some computer equipment and work-at-home related items. Floaters also cover perils not included in your policy such as accidental loss, according to the insurance institute.
Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.
DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime
Deadline Newsroom – As silly as it sounds, if your home has a reputation for ectoplasmic activity, you should disclose it.
Disclosing things that go bump in the night, as well as more tangible stigmas could certainly cause your home's value to drop, but failing to disclose them could cost you a much scarier liability suit.
Most states' disclosure laws don't deal with the forms the deceased take in the afterlife, but they do address death as a stigma.
In California, for example, the law says you don't have to disclose a death that occurred more than three years before the sale.
Real estate attorneys interpret that to mean agents should disclose any deaths that occur within three years of the sale, and the California Association of Realtors advises agents to do so. The association also advises agents to disclose any death, no matter how long ago it occurred, if the seller asks.
The one exception is death caused by AIDS.
Federal law defines AIDS as a disability and such a disclosure could be deemed discriminatory. Randall Bell, founder of Laguna Beach, CA-based Bell Consulting, which analyzes the impact of detrimental conditions on property values, says secrecy about specters and other conditions only adds to the fear.
Public disclosure has a cathartic effect that helps remove any shroud of secrecy, says Bell, who was called in for consultations after the 1997 Heaven's Gate murders in San Diego -- the largest mass suicide on U.S. soil.
Rancho Santa Fe Groves Inc. led by developer William L. Strong Jr. purchased the property two years after the event for $668,000, less than half the $1.6 million list price before the cultists' deaths. At the time of the purchase, the 9,000 square foot home on 3.1 acres was slated for demolition, but the assessor valued the land at $1.5 million.
Bell says he would open any such heavily stigmatized home to the media to keep a forbidden property from becoming "haunted".
There is case law that sets legal precedent, but it doesn't totally support Bell's assertions.
In 1989, naive out-of-towners Jeffrey and Patrice Stambovsky, purchased an 18-room rambling riverfront Victorian mansion on the Hudson River in scenic Nyack, N.Y.
Unbeknown to them at the time, the $650,000 home was haunted. Owner Helen Ackley, however, had actively promoted her home as a haunt for apparitions in the attic, poltergeists in the pantry and ghosts in the garage.
Both the local and national media reported the story. The most notable version was a 1997 Reader's Digest story, "Our Haunted House on the Hudson."
According to Ackley's Digest account, there were at least three ghosts thought to date back to the Revolutionary War, a red-cloaked woman often seen demurely descending the staircase, a wandering sailor with a powdered wig and an elderly gentleman sitting in the living room suspended four feet above the floor.
"Our ghosts have continued to delight us" Ackley told Reader's Digest.
The spooks were always "gracious, thoughtful - only occasionally frightening - and thoroughly entertaining," she said.
At their worst, the spirits almost knocked her daughter out of bed and shook her four-poster bed in the mornings just before the alarm clock went off.
Jeffrey Stambovsky insisted he didn't believe in ghosts, but the possibility of living with them spooked his wife.
The Stambovskys demanded that Ackley return their $32,500 binder and ax the deal. Ackley refused to return the money, claiming that the Stambovskys had agreed to purchase the home "as is."
Instead of taking metaphysical law into their own hands, the Stambovskys took it to court.
"We were the victims of ectoplasmic fraud," Stambovsky moaned.
A lower court ruled in favor of Ackley, but later Justice Israel Rubin of the Appellate Division of the New York State Supreme Court reversed the decision with a devilish tongue-in-cheek ruling. "(A) very practical problem arises with respect to the discovery of a paranormal phenomenon: 'Who you gonna call?' as a title song to the movie Ghostbusters asks. Applying the strict rule of caveat emptor to a contract involving a house possessed by poltergeists conjures up visions of a psychic or medium routinely accompanying the structural engineers and Terminix man on an inspection of every home subject to a contract of sale," Rubin said.
"Whether the source of the spectral apparitions seen by defendant seller are parapsychic or psychogenic, having reported their presence in both a national publication and the local press, defendant is estopped to deny their existence, and, as a matter of law, the house is haunted," he finished with a flourish.
Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.
DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime
Deadline Newsroom – California home prices fell year-to-year for the first time in 10 years in September. The fall came with a record month-to-month sales slump, accompanied by double-digit home price plunges largely in the south but also in the state's capital city.
Some of the state's softest markets are also areas devastated by wild fires this week and the impact could show up in the months ahead as, well, a fire sale.
When the smoke is clear, the area's population will turn to recovery and rebuilding activities more so than home buying and selling.
Another major disaster, the Loma Prieta earthquake in 1989 in Northern California, likewise came at a time when other factors were already putting downward pressure on the state's housing market in the north.
The median price of an existing single-family detached home in the Golden State in September slipped 4.7 percent to $530,830, down from the $557,150 median a year earlier, according to the California Association of Realtors (CAR). Meanwhile, sales tanked by 38.9 percent year-to-year, falling 14.9 percent just from August to September, the largest month-to-month decline on record.
The association said while seasonal factors typically impact the market right about now, the mortgage market crunch was largely to blame. California's high cost of housing in a tight money market and soft economy also come into play.
Areas scorched by wildfires were among those hit hardest by year-to-year sales and home price declines. With sales declines first, followed by price declines, the Riverside/San Bernardino area's numbers were down 47. 7 percent and 12.5 percent; Orange County, 32.9 percent and 4.6 percent; San Diego, 36.4 and 5.6 percent: and the Los Angeles metro area down 38.4 and 2.8 percent.
The greatest sales and price declines, however, were in the High Desert region further east of the scorched earth where sales crashed by 62.7 percent and prices dove by 17.4 percent.
A double-digit home price decline also hit Sacramento, one of the state's first metro areas to feel the downturn. Sacramento home prices were down nearly 12 percent as sales tanked by 38.9 percent.
Sales were down by at least 27 percent in every major metro in the state. Prices fell in 14 of the 19 areas tracked.
However, even as sales slumped by 39.3 percent in Santa Clara County (Silicon Valley) the median price of homes moved ahead of last year's prices by 10.4 percent buoyed largely by sales in the upper end of the market.
Other than the posh Santa Barbara South Coast where the statistically insignificant number of homes sold pushed prices up 55 percent over the year, only Santa Barbara County, Palm Springs/Lower Desert and Monterey County, in addition to Silicon Valley, enjoyed home prices increases -- but not by more than 1.5 percent. Even less expensive, but still often unaffordable condos were hit. For the year ending in September, condo sales were down 38.9 percent and prices dropped 4.6 percent.
The falling sales and prices don't yet reflect the impact of the ring of fire in Southern California which had not flared up when the numbers were tallied.
The coming months are likely to tell a different story as current residents rebuild and those thinking about buying in the area, already put off by the high cost of housing and finance hurdles, will think twice about buying in the drought-stricken, fire-prone region -- at least for a while.
The post-disaster potential of higher homeowners insurance premiums, scarcer coverage or both, the potential for tougher, more fire-resistant building codes even possible limitations on further development in certain remote, arid locales are among other concerns that could plague home buying in some California areas.
Right now, the fundamentals apply.
"California’s sales fell more steeply than those of the U.S. as a whole because of its heavy reliance on jumbo loans – those above the conforming loan limit of $417,000," said CAR president Colleen Badagliacco.
Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.
DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime
Open House Deadline Newsroom
Get the inside on the news that really hits home. If you don't get it here, well, you just don't get it...and neither do your clients.
DeadlineNews.Com's editorial content is available for purchase, but it remains our intellectual property. Unauthorized use is a federal crime.
