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Insurance 101- The Learning Curve Series: Earthquake Insurance

Recent studies in the past few years has suggested that Washington State has a greater chance of major Earthquake Events than were previously thought. Most Insurance Contracts exclude Earthquake Damage as a covered peril.

If you are concerned about damage from an Earthquake and the affect this may have on your financial world, call your agent to find how much an Earthquake policy would cost you.

Earthquake polices usually have deductibles based on a percentage of the Dwelling or Coverage Limit. An example might be the coverage limit of $250,000 with a 10% deductible of $25,000.

Why so high?

Remember if you have a fire it is usually contained to your property or an adjacent property, but if there is an Earthquake it affects a large area with a huge volume of claims, limiting the smaller claims helps the pool of available dollars for claims to be secure.

Insurance 101- The Learning Curve Series: Insurance Review

OK, so you did buy that home and you just got your new Insurance Policy in the mail. Now what? Call the agent and set up an Insurance Review. You may have gone over the high lights of the policy when you applied for coverage, but now is the time to make sure your policy includes all the right coverage. I didn’t say wrong coverage, I mean are the coverages, limits, features, and benefits the right fit for what you and the Lender want in an Insurance Policy?

When you have a claim sisuation, that is the wrong time to find out you could have added some feature or benifit to your policy.

Since most Insurance Contracts exclude Earthquake and Flood damage, is this something you are concerned about?

Since Insurance Contracts have theft limits on claims such as Theft of Jewelery, Money, and Other limits as listed in the Policy do you want to increase those limits?

Call to schedule an Insurance Review.

Crawl Space Ventilation

The purpose of crawl space ventilation is to keep the moisture/humidity level in the space at as low a level as possible.  This is important because wood destroying organisms thrive in moist environments.  Anobiid beetles (most common and most destructive wood eating insect in Western Washington) for instance, thrive in a wood moisture level as low as 13%.  An unventilated, or inadequately ventilated crawl space is apt to have high moisture levels.  Most newer homes are provided with adequate ventilation through building codes.  Homeowners often defeat this ventilation by installing foam block inserts, thinking they are protecting water pipes.  The proper way to protect water pipes is with pipe insulation.  Closing off foundation vents does not allow moisture to leave.  Older homes often have inadequate ventilation. Standard building practices require one square foot of vent area for every 150 square feet of crawl space.  Vents should be evenly distributed and within a few feet of corners to promote air circulation. One example of inadequate ventilation is the louvered vent cover shown below.

This type of vent actually has only half the vent surface area that it appears to have.  This restricts air flow.  A better solution would be to replace the louvered vent screen with 1/4 inch mesh galvanized hardware cloth.  This would give full ventilation surface area.  I always advise my clients to do this.  To sum up; keep vents open.  The only time, in this county, to block vents is when we are having a serious northeaster with the temperature and wind chill down around O degrees fahrenheit, and only for the duration of the northeaster. 

As always, thanks for reading.

David Helm, Bellingham home inspector

http://www.helmhomeinspections.com

What is a Short Sale?

Everyone’s talking about this new phenonemum called the Short Sale.  What is it you ask?  A short sale in real estate is not always a pleasant transaction.  In times of declining home values, a homeowner can be caught in a position of negative appreciation.  In other words, the current market value of the home is less than what is owed to the bank.  This causes a problem if the homeowner experiences a hardship such as loss of work, or if he/she needs to relocate for any reason.

At this point the homeowner has 4 options available to him/her: 
 

• Continue making payments until market conditions improve to sell the home.
• Do a Deed in lieu of foreclosure.  Give the keys back to the bank and walk away.
• Quit making payments and allow the home to be foreclosed on by the bank.
• Do a Short Sale

A Short Sale is when the homeowner procures a buyer that is willing and able to purchase at a price less than what is owed to the bank.  Next you have to get the bank to agree to take this lesser (or short) amount.  This is where having a trained professional on your side makes all the difference.  The bank won’t want to let you off the hook too easily, and not without plenty of proper documentation. 

As a Real Estate agent, I am not licensed as a lawyer nor a CPA and cannot advise on those consequences. Except for certain conditions pursuant to the Mortgage Forgiveness Debt Relief Act of 2007, be aware the I.R.S. could consider debt forgiveness as income, and there is no guarantee that a lender who accepts a short sale will not legally pursue a borrower for the difference between the amount owed and the amount paid. In some states, this amount is known as a deficiency. A Real Estate lawyer can determine whether your loan qualifies for a deficiency judgment or claim.

If you are considering purchasing a property listed as a Short Sale, I can offer you some advice and strategy.  With a little patience, the upside in many cases is getting the Home you want for less than market value.

Call me…let’s talk Real Estate,

Dale Kreiser 360-319-6365

Insurance 101-The Learning Curve Series: Insurance Inspection, Why?

I just paid to have an inspector look at the home and the lender approved my home but the Insurance Company also inspected the Home and says I have to remove the moss, Whats going on?

Buyers please remember that the two inspections are for different reasons, For example the inspection for the loan might note there is excess wear on the roof or that there is moss on the roof. The roof will last a few more years but the chances of an insurance claim may go up dramatically.

The insurance looks at the moss and the used up roof as is there may be a future claim. The Insurance company is in business to pay for damage and the risk of the wind blowing off the roof and the water damage may be more than they are willing to take at a preferred rate.

The lender may be willing to loan because they dont have to pay for a wind damaged roof. These and many more questions about Insurance Inspections are just a phone call away.

Insurance 101-The Learning Curve Series: How to Shop for Home Insurance

What do you look for when shopping for Home Insurance? Most people just look at the cost and think all Home Insurance policies are exactly the same. This is not true.

Look for these variables.

Coverage, this is the easiest part. Is the limit of coverage for the dwelling enough to rebuild it?

Features, do you want add on features that broaden the coverages in the policy?

Benifits, does the policy provide you with the benefits you desire?

Is the company strong and financially able to pay its claims?

Do want to work with an agent, an agency, mail order, or internet?

I recommend interviewing trusted recommended  professionals that you are referred to. I know that most of my customers come directly from referrals. Ask your Realtor and Lender who they have a good experience with, who takes care of their customers quickly and accurately.

Pest Inspection: What is it and what does it cover?

Back in the early days of home inspections all that was done was called a pest inspection.  These days, a home inspection is much more comprehensive, covering grounds, structure, roof, crawl space/basement, all systems and of course, pests.  The term for pests is Wood Destroying Organisms (WDO).  This is a state mandated term that covers very specific things.  A WDO inspection searches for evidence of all the state recognized WDO (see my earlier post on WDO) and conditions that are conducive to WDOs.  What are conducive conditions?  They are things like plumbing leaks, inadequate ventilation, restricted or non functioning gutters, vegetation touching siding, earth to wood contact, failed or missing caulk or grout in water splash areas and conducive debris (cellulose based or storage that restricts air flow) in the substructure.  These are all important issues and generally represent at least 50% of issues found in home inspections.  In order to report on these issues, according to current Washington law, an inspector must be licensed as a Structural Pest Inspector by the Washington State Department of Agriculture.

As always, thanks for reading this.

David Helm, Bellingham home inspector

http://www.helmhomeinspections.com

Insurance 101- The Learning Curve Series: What Factors Make Up My Insurance Pricing?

There are many Factors the go into the Pricing of an Insurance Policy. Some of these are age of the home, location to fire protection, condition of the structure, presence of hazards, Insurance Scoring which may include credit, prior claim history, and building materials.

Many companies give great discounts for having protection such as smoke alarms, deadbolt locks, and fire extinguishers. Also discounts for having both the Home and the Auto Insurance with the same company.

For more information contact an Insurance Agent.

Insurance 101- The Learning Curve Series: Insurance Binders

What is a binder and why do I need one? When you are buying a piece of Real Estate you typically leverage your purchase and put some of your money as a down payment and secure the balance with a Mortgage. The lender wants to make sure you that you are a good risk and that the property  is protected in the event of a loss so they don’t lose the money they loaned you. This is their investment in your property.

The lender then requires you purchase Insurance naming them as a loss payable on the policy. The Insurance Agency then applies for a policy and issues a Binder (coverage) and sends it to the lender. The Insurance Company then reviews, inspects, and evaluates the application and if acceptable issues the policy.

It is important to get this part of the process handled before going into closing the transaction (No Binder no Loan).

Insurance 101-The Learning Curve Series: Renters Insurance

Why this topic on a Real Estate Web Page? It is important to know that either while waiting to purchase a home or if you sell your home and you are in flux to get another home you still have insurance needs.

A Renters Insurance policy is a Contents and Liability policy that provides Valuable protection. Look up Home Insurance in this series and think about Renters Insurance as a Home Insurance policy without the home.

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