Sarasota real estate closings force excited home buyer and seller to step back, when buyer discovers tragic (homeowner’s) insurance reality!
You think I'm EXAGGERATING the importance of (the right) INSURANCE?
Hazard insurance is a big deal!
If you are buying a house, don’t assume getting insurance is easy and guaranteed. Just ask Martha & William M. of Riverview, Florida. They know first-hand the brain-numbing reality and maddening frustration associated with hazard insurance.
- If you are buying a home, own a home or are renting, are you sufficiently covered?
- Are you overpaying for your insurance? Are you sure you’re not, or are you content with paying what you’re paying, fearing some other insurance company’s quoting you teaser rates?
I experienced insurance HELL the other day. A buyer’s agent called me to confirm her buyer had bound the insurance policy.
GREAT, we were on track to close…on time. Turns out, the buyer *thought* the insurance had been bound.
Truth is, it hadn’t.
Buyer’s insurance company (apparently unbeknown to the insurance agent) had written its quota for the month and *could not* write another policy for our month of expected closing.
Bummer.
Frantic calls apparently yielded the same response — as buyer would have paid double with Citizen’s, the state’s insurer of last resort.
Bottom Line: Prioritize your hazard insurance policy! Get it bound as quickly as possible to avoid delays or closing explosions.
YES, insurance demands priority. With insurance companies coming and going in Florida, you have to remain diligent. You also find a trustworthy insurance agent who will shop the best coverage and premium. Rates for the same property can be DOUBLE with two different insurers. Be very careful.
Click Read More below now for 5 valuable insurance tips that will help you avoid overpaying for insurance. Would you like to know you’re protected from massive oak trees crushing your house?
DON’T LOSE YOUR DREAM HOME OVER INSURANCE
Whether you want to buy a home, renting, or you are a homeowner or real estate investor, are you sufficiently covered…or do you have too much insurance?
Most property owners leave it up to their insurance agents to obtain the right insurance coverage at a reasonable cost. But that can be a costly mistake.
Understanding property insurance coverages and how to cut premium costs while increasing coverage can save you money…real money too!
Get with your trusted insurance agent & review these tips below while looking at your policy or policies:
- DON’T INSURE FOR THE MORTGAGE BALANCE. Millions of homeowners make a very expensive mistake by insuring their homes for the amount of their mortgage balance. Mortgage lenders encourage this “error” by telling their borrowers to buy homeowner’s insurance for the amount of the mortgage balance.
Many soon-to-be homeowners and existing homeowners OVERPAY for insurance…and no one complains. Your new “friend” the insurance agent doesn’t complain – he’s paid commission. Your mortgage lender doesn’t complain – your bank’s interest is protected from loss & that’s all the lender cares about.
Land does NOT burn in a fire or get destroyed in a hurricane, according to savvy and consumer-friendly insurance agents.
- INSURE FOR REPLACEMENT COST MINUS THE LAND VALUE.
On the other hand, here’s a potentially disastrous mistake some homeowners unintentionally commit. They are underinsured because they carry replacement-cost insurance for only their low mortgage balance. In the event of a catastrophic loss, these homeowners are shocked to discover they’re not sufficiently protected. OUCH!
Confirm price /square foot to reconstruct your home. You will need know “tract” from custom to help determine the price /square foot.
By the way, your mortgage balance has nothing to do with the amount of homeowner’s replacement cost needed, unless you are wealthy enough to withstand uninsured or under-insured loss.
- SHOP INSURANCE RATES EVERY 2-3 YEARS.
Hopefully, you have found a trusted insurance agent, who reviews your insurance every couple years. Perhaps a few hundred dollars saved (if even possible) is not worth the switch. A long-term relationship with a trustworthy agent who gets you competitive rates offers one other benefit: your trusted agent will fight for you to get paid in full if the insurance company doesn’t want to pay in full a claim.
- GET AN UMBRELLA POLICY & LOWER YOUR LIABILITY INSURANCE.
My trusted insurance professional further advised me to get an umbrella policy and reduce my liability coverage on various properties. I ended up with MORE coverage but LESS money out of my pocket. I ended up saving over $1200.00 per year for MORE insurance. Kinda cool, huh?
Ask your agent if you will benefit from an umbrella policy.
By the way, you might ask about umbrella liability insurance policy extending to your automobiles as well as your property (or properties) should you be at fault in an auto accident. Oh, and will your insurer offer you guaranteed renewal no matter how many claims you might have? Is that important to you?
In Florida, it should be important, as many insurance providers canceled policies after hurricane payouts.
- DON’T MAKE SMALL INSURANCE CLAIMS.
Best advice I ever received was not to file small claims. Pay small claims out of your pocket. Sure it sucks to have to pay. However, you will pay more when your insurer jacks your premium or, worse, cancels you.
One other tip my insurance guy recommends is to consider increasing your deductible to $1,000 (ONLY IF) you can afford the extra $500 if/when you must file a claim. You will save moolah!
Do you want to buy or sell a house in or around Sarasota, Florida–even in or around Orlando? Call me. I want to help you. While you’re dialing, please go below & leave me a comment about insurance. What tip, warning or story do you have about insurance? I want to hear from you. Thank you!
A few years ago, Hurricane Charley ripped through Florida, leaving behind unprecedented & costly mayhem. Want to take a guess at how many homeowners and renters discovered the shocking & devastating reality of insurance – that they didn’t have the coverage they thought they had?
Many families lost everything!
Always remember, you and I pay for insurance, hoping we NEVER need it.
Sarasota real estate insurance tips will help you grab the keys to your new home and save money for years to come. However, it’s not just about getting the keys or saving money each and every year. It’s about knowing you’re covered if/when you need the coverage.
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{ 2 comments… read them below or add one }
I own an independent agency. I would like to comment on the article:
Agents don’t have “quotas”. What likely happened was the particular company “closed the zip” code. Which means that insurer stopped taking new business in the zip code where the property is located. That’s how they watch their liability exposure. It’s crap. But – it’s FL.
FL property insurers are totally out of control.
You are right about getting multiple quotes. Company rates vary dramatically.
Citizen’s should be double but would likely be as cheap if not cheaper than standard companies. Citizen’s is a disaster unto itself.
Agents that tell people to go to Citzen’s for potential claim security are very inaccurate and are misleading insureds.
Treat them as they should be treated. The true last resort.
Unfortunately, thousands of agents don’t have adequate markets so they write thru Citzens’. And, they write business into Citzens’ that should be with other carriers.
Citizen’s – for example – has grown by an average of 26,000 new policies per month in 2010 (according to published reports). They are the largest insurer in the state and are totally broke! If they were a real insurer wanting to be admitted to this state to write business, they wouldn’t even be considered. According to their own reports, Citizen’s has $2T in liability, @ $4B in cash reserves and $8B in reinsurance. Oops, and of course the promise to issue bonds if and when needed.
When you indicate “bind as soon as you can”. I understand your position but it gives the agent nightmares. What percent of your potential closing dates change? When ins. covererage is bound and the closing date changes – they agent has to cancel the policy and start all over. FL insurers don’t allow date changes on policies after binding. The insured may or may not have paid for a canceled policy – the insured will be getting two sets of bills – the lender is involved and giving everyone grief about what policy they have, what policy is paid and not paid, etc.
There is a time to bind but it is not before all parties believe they have a solid closing date.
I get the process and all the nuances between contract and close. It is a little “touchy”. If everything has been completed with all info obtained and ready to bind – once you have a solid date – the coverage can be bound and policy issued within an hour (in almost all cases).
I’m just sayin’
Thanks, Tom, for pointing out something VERY important about binding a policy: get a solid closing date before binding.
I also appreciate your comments about Citizen’s, the insurer of last resort. Unfortunately, for many buyers, Citizen’s becomes their only choice albeit an expensive last resort I might add.
Though I believe it’s important to quote rates, I also believe – in fact I really believe – it’s more important to find a GOOD insurance agent whom you trust.
He/She will more than make up for any slightly higher premium.
Tom, what are the top 10 or more frequently asked questions you get from people contacting you?
Further, what are the 10 SHOULD BE asked questions you don’t get but should be getting from people contacting you?
Thank you. I look forward to hearing your FAQs and SAQs.
Mike
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