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Updates & tips from Tim Shaw Insurance
See what disturbing trend has arrived in Florida Home Insurance
If you leave your home unoccupied for more than 30 days and should a water pipe burst or break, you will have no coverage for the loss UNLESS you had turned off the water supply to your home and drained the pipes and the water heater. How many of you knew about this?
Our agency settled two claims in the past 6 months with just such a loss. One was north of $200,000 in damage (two story) and the other $135,000. Water losses are the number one cause of loss to all Insurance companies writing homeowners insurance with the only exception being a Catastrophic loss such as a hurricane.
Now, I don't disagree with them that it is a good practice to turn off the water supply even if you leave for a weekend because we all know that if a fitting under the toilet failed, we would want to be home when it happened. This type of loss can do enormous damage in a very short period of time.
There are only two carriers I am aware of that will not apply this exclusion and we represent them both. If you are not sure if your policy contains this language, give me a call, I will be happy to research it for free.
Tim Shaw, Certified Insurance Counselor
www.timshaw.com
tim@timshaw.com
Home insurance companies in Florida have been adopting a little known endorsement that is putting your Home and your personal property at risk without many of you knowing about it. An overwelming majority af carriers in our State have adopted this new exclusion. If y... Read More
Why Insure my home for more than what it is worth?
Why is my home insured for more than it's worth?.............. This is the #1 question we get.
Most of us have a home market value that is much less than what it would actually cost to re-build the home. Thanks to declining real estate values and foreclosures. Insurance carriers do not take market value into the insurance valuation calculation at all. The reason most of you ask? Well, insurance companies have to make sure that, in case of a total loss, there is enough coverage to rebuild the home exactly how it was prior to the loss. Most responsible insurance carriers have a replacement cost calculator that allow their agents to adequately value and insure homes but in many cases, clients feel this amount is too high based on their purchase price or their taxable value. So why is REPLACEMENT COST more expensive than these purchase or taxable values? Here are 3 reasons that immediately come to mind;
- The insurance company must clean up the site and remove any debris from the destroyed home.
- The insurance company will rebuild only one home so any economies of scale in building multiple homes are completely gone.
- The insurance company must also account for any increase in labor and materials cost. After a big catastrophe materials and labor are in high demand and, as we all learned in business 101, if demand goes up you can expect costs to go up.
But what if you don’t care and want less coverage? Some insurance carriers will allow you to insure your home on an actual cash value basis, otherwise known as depreciated insurance coverage. Many insurance companies today will not sell you a policy that has a value less than the cost to replace your dwelling. However, if you shop around enough, you may find one that will. Buying a $100,000 value policy on a $200,000 house can be a short trip to financial disaster. After a loss (partial loss that is) your insurance company will appraise the “replacement value” of your home on the date of loss and will then apply the co-insurance penalty. The penalty is the coverage I had, divided by what I should have had, then multiplied by the loss. Whatever percent of replacement cost value you insured your home for will be multiplied by the appraised RC value of your policy . Then you subtract your deductible to find out the value of your claim and what you will receive. So, if you insure your $200,000 home for $100,000, and lets say you have a $100,000 loss, simply multiply $100k by 50% and you will recieve $50k, less your deductible. That is a recipe to financial disaster.
Remember, the current value, purchase price or tax assessment HAVE NOTHING TO DO nor has any relationship to REPLACEMENT COST, which is the only number that insurance companies can use for insurance purposes.
Tim Shaw, CIC
Why is my home insured for more than it's worth?.............. This is the #1 question we get.Most of us have a home market value that is much less than what it would actually cost to re-build the home. Thanks to declining real estate values and foreclosures. Insuran... Read More
Insurance in Florida likely to be affected by the earthquake in Japan
Japans tragedy might increase your
home insurance rates
For those of us that live in Florida, we are reminded every morning how great of a place it is to live. When we receive our insurance bill, we are reminded why it's such a lousy place to live. Florida just happens to be geographically located in a "catastophic, disaster prone area" due to our hurricane exposure. Our State is like a strip of bacon sticking out in the middle of large, warm, tropical waters. For Insurance companies, that is a problem.
Disaster prone areas pay more for their property insurance as they should. If
you lived in Battle Creek, Mich, you would pay about 1/4 what you pay here, but what disasters ever happen in Battle Creek ?
Obviously, Insurance companies have to buy special insurance in these disaster prone areas to protect their ability to pay normal claims since catastrophic losses would bankrupt them. They buy what is called Reinsurance, mostly from offshore Reinsures out of London . When catastrophic losses happen like the one that just happened in Japan, Reinsurers are going to lose Billions in claims. What does that have to do with you and me, you might ask? Well, since those same reinsurers are the ones protecting you and me vicariously through our homeowners insurance, when they ask for more money at renewal from your insurance company, where do you think they will find the money to pay higher insurance costs? You guessed it. You. and me.
So next time you hear "you have to pay for the sunshine here in Florida" you will understand. Now, you could move to Battle Creek, Mich. Your insurance would be much cheaper, but is it a good trade-off? To some, yes, to most of us, not yet!
Tim Shaw, CIC, CEO
Tim Shaw Insurance Group, Inc.
Fort Myers/Naples, FL
Japans tragedy might increase yourhome insurance rates For those of us that live in Florida, we are reminded every morning how great of a place it is to live. When we receive our insurance bill, we are reminded why it's such a lousy place to ... Read More
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