Insurance, Optimism and this Friday 7/20/12 7-8:30 PM

Email that just went out:

Don’t miss out on these low finance rates, you can contact me at: [email protected] 781-405-1845 cell

1. We’ve got an excellent breakdown on insurance.
2. What’s happening on LinkedIn.
3. This Friday 7/20/2012Movers and Shakers.

1. Insurance for Landlords and homeowners
What you need to know before you buy! by Mike Mumma (DIG October 2011)

Homeowners policies are for owner-occupied units.
Swelling policies cover the owner of a building that s rented to others.
Home owner policies are referred to as an “HO” policy
Dwelling policies are referred to as a “DP” policy

Good – a DP-01/HO-01 is called a Basic or Fire policy and provides the least coverage. It is named a peril policy (specified coverage) and covers ten named perils.

Better – a DP-02/HO-02 is called a Broad policy; it is a named peril policy too and covers the same ten perils as a basic policy plus seven more.

Best – a DP-03/HO-03 is called a Special or All Risk policy. This policy does not list named perils but rather lists Exclusions of what is NOT covered.

None of the above policies cover land.

Some companies have policies equivalent to the aforementioned policies but are written in their own proprietary language and are numbered according to the providing company.

All of the above policies are written as Actual Cash Value on dwelling (building) and personal property.

With the DP-01/HO-01 and DP-02/HO-02 policies, in the event of a loss, the burden of proof of coverage of a loss is upon the claimant (that’s you). However with either a DP-03/HO-03 the burden of proof that a loss is not covered is upon the insurance provider.

Endorsements: Most policies can be altered or amended to increase OR decrease coverage. When the policy is changed from its original intent, the part that changes it is called an Endorsement. There are many, many endorsements that can be purchased to custom fit a policy to your individual needs.

Common Endorsements to consider and why:

Personal Property Replacement Cost: With this endorsement, in the event of a covered loss, no depreciation is deducted from the value of  covered personal property.

Water backup and Sump Discharge or Overflow: This endorsement is sometimes called a “Sump Pump” endorsement. You need to have a sump pump installed in the basement to use this but the endorsement expands coverage in the event of a basement wet from a source other than what is normally covered. Check limit of liability (total dollar amount of coverage) to be sure items in your basement will be covered in the even of groundwater infiltration, sewer backup, etc, (i.e. having $50k of valued items and only $10k of coverage).

Scheduled Personal Property Endorsement: If you have expensive valuable such as jewelry, furs, firearms, etc this coverage is good to have, as all policies, as written, have small limits of liability for these items.

Home Business Insurance Endorsement: This is useful if you  have a home office or run a business out of your home. The actual name may be different according to your specific needs.

Deductibles and premiums: Insurance premiums are the dollar amount you pay annually, regardless of your payment schedule. A deductible is the amount you pay out-of-pocket to contribute to the repair or replacement of a covered loss. Your premiums can be altered by increasing or decreasing your deductible from say $500.00 to $1000.00 your premium may go down. However, in the event of a covered loss with a huge deductible is a deterrent  for most people and quickly makes a bad situation worse. Therefore, it is best for most folks to keep their deductible between that $500. and $1000.

Insurance Providers: According to Mr. Mumma “In PA there are 137 homeowners insurance companies (at last count). In my experience, two companies to avoid are Nationwide and All State. They both purportedly have low premiums but both often require a fight to get your money for the repair or replacement of the covered loss. For Owner-occupied buildings a Mutual insurance company frequently costs less, provides more coverage and is generally easier to settle a claim with. This is because most insurance providers are traded on Wall Street and they only want to pay their stockholders. When they pay claims they lose money (profit). For landlords, State Farm has a good All Risk policy. However, they are not the only company that provides insurance for rented buildings.

While it can be time-consuming, shopping for a good company with good coverage will pay big dividends in the even of a covered loss. Shopping for a good company is free and you should ask as many questions to be sure you have proper coverage for your situation” Mike Mumma’ [email protected]

2. On my LinkedIn account I’m getting a ton of positive RE articles. Do you believe we’re coming back now?

7/18/12 Yes the US Housing Bust is over. Wall Street Journal.
Survey Shows Americans are Increasingly Confident about HomeOwnership. Brookfield Relocation.
Thirty year Mortgage Rates are at record low. USA today.
10 tips for seamlessly selling your home. Boston Globe.
7/10/12 Multiple Offers return as Buyers are Back. Ris Media.
US Home sales up 20% from last year. Housing wire.
FannieMae: Optimism on Homeownership Improves in June. Wall Street Journal
7/4/2012 These Signs Show a Housing Market Recovery. NY Times
CoreLogic: Home Prices Rise for Third Consecutive Month.
Rental Market Attracting Residents Despite Price Increases: Survey. DS News.
10 Home Improvements You’re Wasting Time and Money on. Real Estate.**

** By the way here are the Home Improvements you waste money on according to Jason Notte:
Inground Pool
Outdoor Kitchen
Master Suite Addition
Roof Replacement
Garage Addition
Replacing a Fiberglass Entry Door
Bathroom Addition
Backup Power Generator
Sunroom Addition
Home Office Remodel

3. I look forward to seeing you this Friday July, 20, 2012 7-8:30 PM Movers and Shakers Admission FREE ($5.00 donation for non-Members to cover our tip) Coffee (or soft drinks) and snack (donut or dessert) Denny”s of Danvers LLC 152 Endicott Street, Danvers, MA 01923 978-774-1897 7-8:30 PM BEGINNING/INTERMEDIATE Real Estate Investors Review Basic Selling. Where to Invest? Which deals can move your career along the quickest?
Hosted by Mike Hurney, Author of “How to Become a Real Estate Investor in 12 Easy Lessons”

Mike Hurney, Director, NMLS #43341 PO Box 307, Marblehead, MA 01945 781-639-8616 office

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