All Things Real Estate: Reviewing your insurance policy can save you money

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All Things Real Estate: Reviewing your insurance policy can save you money
Philip Raices

It appears that we may have missed another real winter with milder weather, less than 7 inches of snow, far fewer broken pipes, and probably fewer accidents and broken bones from falling on black ice.

However, property sales increased in January, due to unusually milder temperatures and almost non-existent snowfall, with slightly lower rates for those who were qualified for a mortgage depending on your income, credit, and debt/income ratios.

Some still think that climate change isn’t real.  Oh really?  Just do your research and check the most recent severe “atmospheric river” that had provided excessive 8-10-plus inches of rainfall in California recently, and the 10-plus feet of snow that had piled up in the Sierra Nevadas 6,500 elevation and even one to two feet at the 4000-foot level.

How about the 1,200 tornados, that occur yearly in the U.S. (as per the National Severe Storms Laboratory and the National Oceanic and Atmospheric Administration), that have been rampant across Tornado Alley (Oklahoma, Texas, Kansas, Nebraska, Colorado, and South Dakota are the main targets), but can also include North Dakota, Wyoming, Minnesota, Iowa, Illinois, Indiana, Ohio, Missouri, Arkansas, Louisiana, Kentucky, and Tennessee.

That surely is quite a lot of area where not only there is loss of life, but millions to billions of dollars of real estate that are affected yearly.  Moreover, parts of Florida and in and around the Gulf of Mexico have been very prone to these natural disasters produced by hurricanes.

Hurricanes can occur almost anywhere else, and even in the past few years, Long Island has experienced extremely intense microbursts that have carved out a severe path of destruction on the Gold Coast of the North Shore of Nassau County.

Floods are another prime dilemma for homeowners who have seen in recent years, incredible damage and total loss, which generally is not covered by homeowners insurance.

Hurricanes, hail, and wind are usually covered under most policies as well as lightning strikes, fire, smoke, heat damage, and puffbacks from oil burners.

Real estate is a major factor and commodity that is very much affected by the excessive costs to repair and rebuild, creating a burden on the local, state, and federal governments. This is the major reason why insurance costs in those affected states have at least doubled and in some cases up to 10 times, especially in coastal areas in North and South Carolina, Georgia, Florida, Texas, and other states, according to Money Magazine. Based on data from Quadrant, the average cost of homeowner insurance for a typical 1,800 sq. ft home has risen to $2,417 per year.

Hawaii residents have the lowest cost of insurance at $762 per year.  Oklahoma has the most expensive policies with an average yearly cost of $5,839.  However, location, credit scores, claims history, dwelling age, deductible, and overall risk level can have a pronounced effect on your insurance costs per year.  This information was derived from marketwatch.com in its March 1 article reviewed by the Insurance Information Institute.

I happen to choose to take the highest deductible on my homeowner's and auto (combo policy will provide the most economical cost) that I feel comfortable with to gain the lowest rates.  This will all depend on your history of claims and your comfortable risk tolerance.  However, over several years it can pay off with the excellent savings that you will derive.

I suggest that you check your policies and make sure they are up to date.  Make certain that you have more than adequate coverage in the event of a hurricane, microburst, gale wind lightning strike, hail or a tree falling on your home.   For the majority of homeowners, your home is the most valuable asset that you will own in your lifetime that has helped build your long-term wealth, so it is extremely crucial to make sure that your homeowner's insurance provides you with the most complete and maximum coverage across the board at the most economical price.

Also, make sure that you are insuring your home and not the land, as I have seen some insurers include the land in the policy.  However, 99.9% of the time your land doesn’t need insurance as it doesn’t burn or experience any damage unless it’s a flood, which is next to impossible to get that type of coverage!  You need to review your policy yearly as homes have increased in value over the last 10 years and you want to be certain that you have more than enough coverage in the event of a claim.

Lastly, you might want to look into an additional umbrella policy, which is an excellent add-on as it is another layer of coverage in the event of a major claim. As the adage says, “An ounce of prevention is worth a pound of cure.” Always shop your insurance as you just might save money.  If you need any advice or guidance in choosing an insurance company with the best rates and coverage, call me anytime for a free consultation.

Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 in Great Neck.  For a 15-minute consultation, value analysis of your home, or to answer any of your questions or concerns he can be reached by cell: (516) 647-4289 or by email: https://WWW.Li-RealEstate.Com

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