Your Homeowners Insurance May Burn You

In California we live with wildfires and reluctantly accept them as a part of life. That is one of the reasons why fire coverage is taken as an integral part of homeowners’ insurance in many parts of the state. However, with the continuing drought and the widespread fires this year, getting coverage is going to become a lot more difficult. Insurance companies are starting to inform some policy holders that their policies will not be renewed on the grounds of “unacceptable risk of wildfire.”

No Protection From Non-Renewal In California

The drought and wildfire situation this year has become so bad that many insurers want to protect themselves from the high risk of costly claims, even if it means a short term loss of business. No commercial entity wants to losecustomers but when the risk of incurring losses is so high that the potential loss is greater than the income from policy sales, hard decisions have to be made. There are no laws in the state, as of now, that prohibit an insurance company from not renewing a homeowners insurance policy.  The State Insurance Commissioner recently stated that a large number of policy holders can expect to be dropped from fire coverage unless the situation take a major turn for the better.

A case in point is that of a homeowner whose house is surrounded by a concrete driveway, the wild grass is controlled and cut short and located about one mile from a fire station. For many, this will appear to be reasonably safe. He received a letter recently from his insurance company saying that this policy will not be renewed in view of the high wildfire risk. The number of people who are receiving these notices is growing steadily.

How Bad Is The Wildfire Problem?

The number tell it all. There are now over 32,000 firefighters at work in California and the Pacific Northwest, but this is not enough. Firefighting costs are already $700 million over appropriation and the U.S. Fire Service has till now had to transfer funds totaling over $250 million from other accounts to pay for the continuing battle against wildfires. These are the figures as of now. What the final cost will be is a matter of conjecture.

What Are The Options?

Agents, who are often caught between the requirement to act in accordance with insurance company policy and the needs of their clients are looking for ways to offer clients alternative coverage. One of the most common options is to place accounts with the non-admittedmarket. This trend has been growing rapidly over the last few years and the Surplus Line Association of California says that its estimates show that over 90% more homeowners policies were written in 2014 as compared to 2011. The wildfire issue is the driving factor in this growth spurt.

What Should You Do?

 

If you live in an area with a high wildfire risk, you could be one of those whose policies may not be renewed. Obviously, the grounds on which the non-renewal decision has been taken are the same ones that make coverage essential for you. The best thing you can do is to talk to an insurance professional about the situation you are in and work with him or her to find the best and most cost effective solution – it could be in the non-admitted market or with another insurance company that may be willing to cover the risk. In fact, it makes sense to anticipate the possibility of non-renewal and contact an insurance agent now, so that you are prepared to act to protect your home if your current policy is not renewed.

You May be insured, But Where is Your Pre-Loss List?

Every homeowner knows about the importance of homeowner’s insurance. But how many know about the importance of having an inventory of their possessions? According to available statistics, while over 90% of homeowners are concerned about having the right insurance coverage, just about 40% have ever documented the contents of their homes. And how current those lists are is anyone’s guess.

Ask an insurance broker and he will tell you that a policy holder making a claim along with a pre-loss list of items that have been destroyed or stolen is very rare.

‘No Inventory’ Means Problems and Delays

Not having an inventory makes it difficult, and often impossible, for a homeowner to be sure that nothing has been left out when a claim is filed. In addition, the absence of an inventory can cause the settling of claims to take longer than they normally would. How much longer could it take? According to a survey of insurance professionals, about 80% think that a claim accompanied by an inventory is settled, in most cases, 50 to 100% faster. Think of what that time difference could mean when disaster strikes. Your whole focus is on repairing the damage, making good the loss and returning to your normal life as quickly as possible. The delay is going to hurt.

A Mere List is Not Enough

A problem that insurance companies often face is that the inventory, if it is available, is lacking in two key elements.

The first is proof of ownership. Keeping documentary proof of ownership of valuable items in a safe place is very important.

The second is that the lists do not have value driven descriptors. Simply listing a desk or chair is not enough. Is it a small school desk that costs about $200 or is it a valuable antique that is valued at $200,000? Or is it something in between? And not everything old is automatically a valuable antique.

Evaluating the extent of the financial loss without this kind of information is a long and cumbersome process. Besides proof of purchase, the value drivers for furniture are the brand, the condition, the material used in making it and the condition at the time of the loss.

Reconstructing Damage and Loss

The insurance company will typically go through a home room by room with the policy holder to determine what has been lost. The process is often a wall by wall, floor to ceiling exercise with the policy holder being asked to list out everything in the room. It is difficult enough to do in normal circumstances. When battling the trauma of major loss, it can be almost impossible to do it accurately and ensure that nothing is left out.

And what about the worst rooms to reconstruct – the attic and basement? These are where items that are not in use are stored. A lot may be junk, but there could also be valuable things. Can you list out everything in your attic right now and be sure that nothing important has been left out?

Make an Inventory

Making an inventory takes time. You need to go room by room and closet by closet to cover everything. And then you have to find all the documentation that is available to establish the values. Do it in a rush, and important things could be overlooked. Ideally the best way to do it is the spare a few hours each weekend to create a detailed list of all your possessions. This list will not only help you with insurance claims. It will tell you about all the things you own so you can decide what you need to keep, what has to be repaired, what can go and what needs to be added to.

If you have questions about your homeowners’ insurance policy, or insurance in general, contact Allied Brokers at 650-328-1000 or visit us at http://www.alliedbrokers.com/. We have over 50 years of experience in the industry, and our team of experts is always happy to assist you.

Know Your Insurance before Remodeling

Homeowner’s insurance is not the most exciting of subjects. Home renovation is much more interesting. The home is a focal point in our lives and anything that makes it better is fascinating. But remodeling and insurance are very closely linked and to ignore the insurance issues involved with home remodeling is to court disaster. With every good thing that a remodeling can achieve, there is also the potential for things to go bad. Insurance is your protection when things go wrong. Normal homeowner’s insurance will not provide the coverage needed when major remodeling is underway. For example, if 50% of your home is destroyed because of a remodel going bad, the homeowner’s policy will only cover the part that is intact. You should have a builder’s risk policy to cover the cost of what needs to be rebuilt.

Are Your Contractors Insured?

The contractor you have engaged to do your remodeling is highly reputed with great references. But even the best can make mistakes. Before hiring a contractor take the time to ensure that they, and all the subcontractors they may use, are not just licensed but also bonded and insured. While asking to have a look at the certificates of insurance is essential, many insurance experts recommend going one step further and contacting the insurers to make sure that the certificates are genuine. These experts also say that contractors should ideally carry a minimum of $1 million coverage for each type of insurance they have.

Add Yourself to the Contractor’s Policy

The contractor will have a general liability insurance policy. It makes sense to have yourself added to the policy and it costs little or nothing. If this is done then you will be fully covered against liability for any damage that may happen during the course of the remodeling such as a water main being damaged or broken and causing a neighbor’s property to be flooded. Having your name added to the policy has another advantage – if the policy lapses while the work is underway, the insurer will notify you.

Will the Value of Your Home Increase?

Many remodeling projects can increase the value of a home. An example of this is a kitchen remodel or a room addition. If your home is destroyed after the remodel, it will cost more to replace. It is a good idea to check your homeowner’s insurance policy to ensure that the coverage you have is enough to cover the cost of rebuilding a home that is more expensive than it used to be. Many insurance policies do contain a replacement cost endorsement that will cover the cost of rebuilding your home. Do you have it?

Remodeling and Peace of Mind

Home remodeling can be a stressful experience with costs to be controlled, deadlines to be met and contractors to be dealt with. These are a part of all remodels and there is no way to escape them. But the fear of financial loss when things go bad is an unnecessary burden and one that you need not carry.

Talk to Insurance by Allied Brokers to find out about the additional coverage you need to protect yourself when your home is being remodeled. Call us at 650-328-1000 or visit our website at http://www.alliedbrokers.com/.

Covered or Not Covered...?

State Farm Insurance recently filed a lawsuit against former Penn State assistant football coach Jerry Sandusky. Sandusky, the convicted child molester, had asked the insurer to pay for the legal costs of his criminal defense.

State Farm said NO WAY! They argued that although homeowners’ insurance can offer coverage for claims arising from the insured’s negligent acts, it does not cover intentional ones. The lawsuit is still under litigation but it’s pretty clear that Sandusky doesn’t have a chance with State Farm. The outcome is a little murkier for Federal Insurance, the second insurer Sandusky asked to pay for his defense costs.

Federal had issued a directors-and-officers liability and employment practices liability policy to The Second Mile, a youth charity group founded by Sandusky. The challenge here will be defining exactly at what point, and in what situation, negligence become intention. Isn’t directors-and-officers liability insurance all about bad behavior, like sexual harassment? And isn’t all bad behavior intentional? Surely hairs will be split.

Top 5 Reasons Why People Don’t Buy Earthquake Insurance

As a Californian, you are always waiting for the other shoe to drop. Sure, you’ve thought about earthquake insurance, but you talked yourself out of making the call because you assumed…

It’s too expensive-Insurance is meant to cover the losses you can’t afford to pay. $1,500 for insurance to rebuild a $600,000 home is a reasonable price for such a big risk. Our company’s biggest insured loss was with Fireman’s Fund for $900,000. It happened in Los Gatos during the Loma Prieta quake when a Victorian jumped completely off its foundation.

The deductible is too high - Yes, 15% is high, but insurance companies would go broke fixing every piece of cracked stucco. Earthquake insurance is for major damage only- like when the same quake caused another client’s swimming pool to empty completely into his house.

The state will bail me out - Seriously? The State’s broke- don’t count on it.

Insurance companies will go bankrupt - Ok, some might. 21st Century almost did after the 1995 Northridge quake and pulled out of the California homeowner’s market. Allied Brokers, however, represents the only strongest companies in the industry and we steer our clients away from “shaky” carriers.

It will never happen to me - Maybe… or maybe not; how lucky do you feel? Case-in-point: an Allied Brokers client bought a house in Santa Cruz just one month before the Loma Prieta quake. He purchased a normal homeowner’s policy but passed on the earthquake insurance. He gambled that he would never need it. His chimney collapsed and his floors and foundation were severely damaged- to the tune of $60,000. Don’t let the Big One get you! Call Allied Brokers today.

Visit our website at http://www.alliedbrokers.com/ for information about all the types of insurance we offer. Or call 1-888-505-7988 for a free rate quote.

Where Are Homeowner and Auto Rates Going? Up!

Believe it or not, insurance rates had been decreasing for the last 8 years.Unfortunately, in 2012 they will start going up again- 5% to 30% per year until we reach 2003 rates. The favorable conditions that in the past allowed insurance companies to lower their rates and attract more customers have vanished. Insurance will be harder to get and more expensive for the next few years.

2011 was a tough year for everyone and the insurance industry was no exception. 2011 third quarter insurance industry profit declined 92%. The biggest hits came from record catastrophe claims and the crash in the real estate market. Because insurers invest heavily in real estate, the value of their investments plummeted and their need for additional capital to meet the insurance risk reserves required by law increased.

The California Insurance Department has approved rate increases for insurers. Financially strapped insurance companies have few options and none of them benefit the consumer. Insurers can go out of business, stop writing new policies, stiffen eligibility qualifications or raise the rates of current customers.

If your insurance provider raises your rates, call us at Allied Brokers immediately. As a broker, our agents can shop numerous providers to find you a lower rate. Since not all companies will raise their rates immediately, we can save you money and buy you time by switching you to a different provider.

Visit our website at http://www.alliedbrokers.com/ for information about all the types of insurance we offer. Or call 1-888-505-7988 for a free rate quote.