Replacement Cost + Knowledge = Satisfaction

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By: P. Andersen, 8/26/14

 

Sometimes managing a loss and resultant claim is all about the big thing, the big loss, and the true hardship.  Sometimes it is something simpler, the smaller things that make a difference.  During a repair of a damaged wall in an insureds residence, painting was required.

Most homeowners’ property coverage is written on a “Replacement Cost” basis, which relates to the concept of “making whole” as we discussed in a previous blog.  Replacement Cost means you are paid on a covered claim with the goal of replacing the lost or damaged property with like, kind and quality materials at current prices without the application of depreciation.  Replacement Cost became the norm because the old way, Actual Cash Value*, was creating a hardship with policy holders when a claim was paid.  That 5 year old couch might have an actual cash value of $90, but replacing it could cost 10 times as much!

So, back to our client with the wall that needs painting…  We let the insured know that as a part of Replacement Cost, the entire room was eligible to be painted, because making them “whole” meant the entire room needed to have a matching color.

You rely on your insurance agent to assist you when you have a claim, be sure you trust the claims department to be knowledgeable, interested, and thoughtful.  I know those are the words I would use for Levitt-Fuirst’s claims department…

*Note: Most of your auto policies are on an actual cash value basis, with claim payments being limited by the blue book value of the vehicle.  There is often a rider for leased vehicles that raise the claim payment on a total loss to cover the remaining lease payment, but in general, this is the industry standard.  Classic Cars, you ask?  Agreed Value, but you probably read that in this blog, posted a while back!

Buying Your First Home, Part 1: How Much House?

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By P. Andersen, 8/20/14

I am in the process of buying my first house. It is an exciting time of looking forward to a new life filled with ideas, hope, and of course, terror. I am starting late in the game, having lived in Manhattan through my prime “Home Buying Years”, where $700,000 buys you a spacious (Almost 1000 sf!) one bedroom in a good building, and where even that one bedroom was outside my budget. So, time passes, circumstances change, and new opportunities arise. Here I am, several years later, faced with something I had only conceptually thought of before. I felt it might be useful to some of you out there if I took you along for the ride, because if you are looking for your first home, you might learn from my mistakes.

The Insurance Piece

Clearly, I work for an insurance agency, and we generally discuss insurance in this blog. Let’s get that out of the way right here. Homeowners insurance? You need it. It is pretty reasonable in the big scheme of things, and you should have an expert place the policy with a good carrier that can be counted on in the case of a loss. You want to be sure to have a valuable articles policy for your unique items (art, wine, jewelry), but you knew that from our previous blogs. Next, you need to know what your flood zone is, because you have to budget flood insurance if you are in a higher risk area. Get the details on the town and the lot and its history before making an offer, and read our flood blog for additional information. Also, did you know that your auto insurance will be impacted too? I am moving from the Bronx, and my auto insurance will dip a few hundred dollars after moving to a quiet Westchester hamlet. It is a nice little bonus, and offsets some of the difference between renters and homeowners insurance. Call us, Levitt-Fuirst has a wonderful personal lines staff, and we want to be there for you when you are ready to buy that first (or second or vacation) home.

So, that was the insurance piece! To be honest, in the big scheme of things, the insurance part is easy if you have a trusted insurance advisor guiding you. It is all the other stuff that rattles your teeth and makes you question getting up in the morning. Today I am going to give a few tips on preparing you for your house search, because walking into this process with eyes wide open will help you keep your sanity!

 How Much House?

Before you buy a house, you have to know what you can afford. Seems silly, but this is where so many people (like me) miss essential bits of information that truly impact what they can afford. First, your credit is a key piece to this whole puzzle. If you have great credit, you are ready to move on to the next step. If you don’t, taking a year to improve your credit might be wise. The rate you pay for your mortgage, for the next 30 years, will be directly related to that 3 digit number! Taking steps to improve your credit for a year might just be the best financial decision you can make. Also, did you know a better credit score could improve your insurance rates as well?

Once you are set with your credit score, it is time to evaluate the actual dollars and cents. Your ongoing costs include the cost of the mortgage itself, the estimated cost of the taxes for the town you will be living in, and the cost of the PMI, or Mortgage Insurance, if you are putting down less than 20%. Up front, you have the down payment, from 5% to 20% for a standard “conforming” loan, and legal fees and closing costs, which can add up to 4% to 7% of the total cost of the property. That down payment and closing cost figure is all right up front, and constitutes a hefty investment for a prospective new home owner. The numbers can be an eye-opener in this region, where $500,000 is considered a reasonable home price…

With all of this information, you should have a better idea of what you can afford. Taking that conceptual number, it is time to get pre-approved for a loan. If you are serious about buying a house this is where the rubber meets the road. This is where you will find out what sort of rate you can expect, which will clarify how much house you truly can afford. You can get these mortgage quotes from an institution you regularly use or have a relationship with, or you can shop for mortgages using the various tools available, such as Quicken Loans or Lending Tree. However you choose to get your indication, doing so before you start your house hunt is an excellent idea – when you find your perfect home, you want to be able to move quickly to secure it.

Are you tired yet? All of that, and we haven’t even looked for a house? No wonder this will take a blog or two to cover… Next week, Part 2 will discuss finding your home, and the tools that will help you do it. Finally, we will discuss the time between contract signing and closing, and which wine regions offer the best wines for keeping you sane during this process.

Links:

Credit Score Companies

Equifax

Experian

Transunion

Improving Your Credit Score in a year

Mortgage Calculator

Getting To Know the Towns of New York State

Westchester and NY Tax Rate Comparison

Grading Schools in NY

Storm Preparation 101!

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by Peter Andersen

 

There was a time when the idea of a hurricane in the tri-state area was not taken seriously. “A hurricane? In New York? Nope, not going to happen”. Until a few years ago, we were all pretty sure that any hurricane that ran up the east coast would weaken, reduce to a fraction of its former self, and become a glorified late summer storm. Sandy set us straight, though, didn’t she? A perfect combination of weather events allowed for a devastating landfall, as high tides rolled across Manhattan, trees tore down power lines across the region, historic covered bridges were washed away across Vermont, and much of the region went dark.

What did we learn? Hopefully, we learned enough to be better prepared the next time. We learned not to assume. We learned that even unexpected things happen at unexpected times (A hurricane in OCTOBER???). Hopefully, we also learned that we have to be smart and proactive to minimize the impact a storm like this can have on our lives.

From an insurance perspective, there are quite a few things you can do in preparation. Be sure your home is properly insured, your auto has comprehensive coverage (a co-worker here at Levitt-Fuirst had her car flattened by a tree during Sandy), and that you have documented your valuable articles in case there is damage to your home and its contents. Flood insurance was a key coverage for many during Sandy, if you haven’t already, give yourself a flood primer in our piece from July 21st.

Outside of the house, there is much you should do as well. Another of our posts mentioned keeping your trees trimmed for the summer, but this is really a 4 season rule. In the summer, we have regular heavy storms and occasional named storms that come through, and ice storms, snow storms and blizzards wreak havoc from October through April – it isn’t easy being a tree! Keep them pruned and healthy to minimize the damage they can cause to power lines, roofs, and other structures on your property. Also, be sure to clear your lawn of anything that could be blown by the wind – these can be dangerous projectiles in a big wind event.

Inside the home, close your windows, turn up your refrigerator and freezer to the coldest settings in case of a power outage. For short term emergencies, you should have supplies on hand such as plenty of canned food, water, and cash. After 9-11, myself and many other New York City residents were prompted to create Emergency Kits – first aid, food, money, water, flashlights, batteries, blankets. These were important items for the horror of those days, but they also would come in handy during any storm or event that takes out your power for more than a day or two.

Do you have a plan for those occasions when the power goes out for an extended period of time? Sandy saw homes without power for weeks! In those longer term power-loss events, perhaps a generator would be a worthy investment? Make sure to locate friends or family that would welcome you should you need to relocate, and make an evacuation plan. Be sure to gas up your cars! I think we all learned that the hard way – with major storms come major gas supply problems. If a storm is on the move, gas up your cars and use them as little as possible – when you need to get out of town, that foresight might be the difference between securely arriving at your destination, and using your last fumes searching for an open and operational gas station.

For so many years, we were lulled into a false sense of security that our region was secure from large scale events, be it hurricanes, terrorism, or huge regional blackouts due to a domino effect of power station problems from Ohio to New York. The idea is not to know exactly what will come next, but rather to be as prepared as possible for ANYTHING that could come next. Simple steps and precautions can help you as you endure events that are beyond your control, protecting yourself and your family, and speeding your financial recovery in the face of damage to your home or property.

 Hurricane Preparation Links:

In The Good Ole Summertime

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By: Alan Mani

 

Its summer time!!! You’re up in Greenwich or Armonk and everybody is swimming, sunbathing and grilling. Laughter is in the air and everybody is having a grand old time. Unfortunately, there is another side of that coin – one that includes storms and risks and dangers that threaten your summer fun. So how do increase your odds of this coin landing on the side of laughter and joy? You take the necessary precautions, that’s how.  Allow me to give you some advice on some of the things you can do to stay safe.

Open Pools – You may not want to hear this but drowning is the leading cause of death among children under the age of 4. It is also the third leading cause of death among children overall. What can you do to prevent this? Install a 4-sided fence that is at least 5ft high. Another thing you can do is talk to your pool expert to find out which pool cover would be best suited for you.

Long branches – When you prune your trees it’s not just for the trees health or for cosmetics, it makes it a safer environment. Tree branches can obstruct visibility and when a storm comes around it can break the branches and they can fall on your car, house and power lines. Hire a professional arborist to trim your trees.

Grill Fires – How can we reduce the chances of a grill fire? All you have to do is keep the grill 10 feet away from anything flammable…easy huh!

Clogged Gutters – Doesn’t sound like a big deal but when they’re clogged they can be weighed down by water and debris and that can cause them to pull away from their attachments. This creates opportunities for ants, mosquitoes, and rodents to enter your home. Cleaning your gutters out twice a year is what’s recommended.

As much as we at Levitt-Fuirst are in the business of providing insurance for the protection of your home, valuables and life, we also want to promote prevention of loss, which is why we offer tips on both. If, with a few small preventative measures, you can save yourself from a loss – why not try it. Don’t think of it as an either/or proposition – “If I do these preventative measures then I don’t need insurance, or if I have insurance then I don’t have to prevent accidents” – think of it as a symbiotic relationship. They can coexist peacefully all under one roof – prevention AND protection. But Protection likes cheese on his burger.

Jeeves, the Sound of Music, and the Dust Bunnies…..

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By: Louise R.

 

If you are anything like me, a working mom with 2 kids that need shuttling around, animals that need taking care of, and a house that needs to be cleaned regularly (ostensibly), you may have toyed with the idea of hiring someone to help you with all of that – be it a nanny or
housekeeper, live-in or live-out. And when I say “toyed with the idea”, I mean lay curled up in a ball, whimpering, while looking at the dust bunnies as they multiply at amazing rates (you know what they say about bunnies) chanting over and over “I need help, I need help…”.

So, since this is mainly an insurance, informational blog, I will not extol the virtues of laying by the pool while Jeeves brings me a fruity little concoction with a paper umbrella, as my house is being cleaned and my children are being minded and all is right with the world…..wait, one more minute….okay, I’m back and ready to school you in the ins and outs of domestic help and the workers’ compensation insurance that might be required. Remember that a workers’ compensation policy not only protects the employee but the employer as well. There are different rules in different states, so my main advice is to check with your insurance broker to find out exactly what your state’s requirements are and the best policy to go with. I went to Donna Boonjamalik in the Levitt-Fuirst Personal Lines dept. and this is what she told me:

“Domestic Workers include Chauffeurs, nannies, home health care workers, nurses, baby sitters, cooks, housekeepers, butlers, companions, gardeners and other types of regular employees working in a private household. We would normally suggest a Workers’ Comp Policy if an insured has hired a “regular” person to perform a task for hire on a regular basis Full or Part Time such as:

1) Hired a cleaning lady 2 X’s a week
2) Hired a babysitter/nanny
3) Hired a Chauffeur

There are 2 rates. Full Time and Part Time Rates and they are based on Per Capita ( how many ) Employees there are.“Regular Employees” are not covered under the Homeowner’s Policy. The Homeowner’s Policy provides Workers’ Comp for temporary work, such as:

1) Hiring a painter to paint your house
2) Hiring a roofer to put on a new roof
3) Hiring a landscaper to plant trees & bushes

Only if a Domestic Employee works 40 or more hours a week are they required to have Workers’ Comp policy. A policy for Part Time Domestic Help is not required but always encouraged to protect both the employee and the employer.”

Now that you are better educated, I can slip back into my fantasy world….. a beautiful, sunny day by the (hypothetical) pool, visions of my perfectly minded children being taught “The Sound of Music” soundtrack by a cross between Julie Andrews and Mary Tyler Moore, my house sparkling like 1,000 diamonds and smelling like (I’ll be darned) a pine forest, and the ever-loyal Jeeves standing by with my pool-floaty…… and the peace of mind that all is covered by the insurance that I need.

Travel: To the World Cup and Beyond!

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By Louise R.

Let’s put it out there – I work for an insurance broker. This likely conjures images of sleazy men with comb-overs and ill-fitting suits. My bosses at Levitt-Fuirst, however, have pretty nice suits, and we sell the most exciting insurance products in the world!  Okay… that MAY be an exaggeration.  Let’s face it, though – in my 22 years at Levitt-Fuirst, I’ve learned a thing or two about all types of insurance, and I can offer tips on things that you don’t know you need until, sadly, you need it.

One of the biggest things in the news today is the World Cup. Have you thought about traveling to Brazil, cheering on Team USA? Maybe just traveling to Brazil and laying on the beach, and mentally cheering on Team USA?  Or is it Europe, Asia, Canada or the Caribbean that is calling you?  Are you bringing your jewelry with you? AHA!! Gotcha! Insurance as it relates to your life…namely in the form of a jewelry floater on your Personal Lines policy. Insurance IS exciting, when it protects you from lost or stolen jewelry!

Our resident Personal Lines experts here at Levitt-Fuirst advise that any larger items (over $10,000) be “scheduled” on your homeowner’s policy, which is a nice way of saying “list it specifically on your policy”.  Do you have many smaller jewelry items you are bringing?  You should “blanket” your less valuable pieces together into one limit.

As you can see from the linked NBC News article, thefts while traveling to Brazil are a major concern…  “Rio has seen an increase of something called ‘arrastão,’ which means ‘big sweep.’ A wave of thieves line up along the sand and rob everyone in a lightning quick operation that is in and out before beachgoers or police can even blink.” Not something that you think about while planning a great trip. And that’s why we are here – to think about the things that you don’t, and to know what type of insurance will keep you protected.