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Boring yes, but you must protect his home! |
It's a ..................Yawn Yawn Yawn !
Ok you finally decided where you are going to live, you made the offer they accepted and now as if you aren't tired enough of making decisions the lender recquires you go out and get this place insured! All you want to do is start buying new furniture……..ARGH!

It really is not all that complicated it is just another thing you must educate yourself about if you want to take care of yourself and probably the largest single investment you will ever make…Have I scared you yet? These are terms that will help you understand some of the jargon the insurance agent is going to be throwing at you…….And if he is not you might ask why not?
Replacement Cost or Actual Cash Value: Replacement Cost is the amount of money needed to repair your home without any depreciation for normal wear, tear and usage. Cash Value method is cost to repair your home as well but it takes into account that the roof is 15 years old and its life expectancy is only about 20 years…. So your reimbursement would be for the five years left in the roof……That one is a no brainer……
Market Value vs. Replacement Value: This is particularly hard for the buyer of a brand new home to get their heads around. Most insurance companies want you to carry a replacement value of the home (often 80%)….Market value is what you could sell it for today on the spot……..not how much it would cost to rebuild. The insurance company must factor in such acts of nature like hurricanes or fire ( that is not an act of God, what was I thinking? But you get the idea, right?)…….perhaps at a later date due to inflation or in case of natural disaster materials are scarce and increase rapidly in cost....not to mention labor going up because it is wide spread damamge. If you have a home that would cost $200,000 to replace and you have only $100,000 coverage and you have a partial loss of $50,000 the company may very well award you with $25,000. This is 50 % of the claim which is a formula derived from “amount of insurance needed divided by the amount carried, times the amount of the loss …” All right I don’t like it either but let’s not skimp here for goodness sake.
ALE / Additional Living Expense: When your home is so damaged that you cannot live in it this is what covers that additional expense. Generally it will pay only reasonable excesses above what it would normally cost for you to live. Insurance companies do not normally pay this until a civil authority has pronounced the home not safe for habitation. The other element is that the state does not require that these expenses are paid up-front……so keep good records….Terms and conditions vary from policy to policy so Read carefully. Are you getting the picture you have got to ask lots of questions?
Mold and Fungi: Do not assume your company will include damage from these substances….and when they do you must be aware of the many limits that are placed and in what situations they will actually pay. Some policies will only cover certain perils. The sad part is that flood is not a covered peril on your policy( unless you were wise enought to buy flood insurance .*)So let's say you have a flood and you did not purchase flood insurance the company would not pay for mold as a result of a flood. Good Grief this might take some real thought before you decide what to do......

The best advice is to talk to more than one company. Next blog to be about
Comparing Insurance Companies from county to county…there really is an unbiased way….Yawn, Yawn …more about insurance….? I would much prefer to write about designing your home or garden but this is one of those things you must know about!
For More about Real Estate go to http://theguthrieteam.com/ or a more extensive site with IDX /www.greaterpensacolahomes.com
For More about Real Estate go to http://theguthrieteam.com/ or a more extensive site with IDX /www.greaterpensacolahomes.com
Reference for much of this blog was taken from Jeff Atwater, Chief Financial Officer Fl Dept of Financial Services
* Your Realtor will check to see if you are buying in a zone that is prone to flood ( make sure you ask if the home you are interested is in a flood plain) and your mortgage company will recquire flood insurance if you are .....otherwise it is optional.
* Your Realtor will check to see if you are buying in a zone that is prone to flood ( make sure you ask if the home you are interested is in a flood plain) and your mortgage company will recquire flood insurance if you are .....otherwise it is optional.
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