Personal Article Policies: When Homeowners Insurance Isn’t Enough

Your homeowners policy provides ample coverage for the everyday items in your home, but what about the extraordinary ones? Whether you are the keeper of your great-grandmother’s heirloom jewelry, an avid collector of antique guitars, or even own costly medical devices, a personal articles policy can provide low- or no-deductible coverage for these difficult-to-replace items and keep you covered for a wide range of events.

Why isn’t my homeowners policy enough?

Well, it might be. For most people, a standard homeowners policy provides perfectly adequate protection for personal possessions, but these policies may fall short for those who own particularly valuable items. In addition, homeowners policies only provide coverage in the case of loss or damage that is the result of specific events. If you own an item, or items, that would be particularly difficult to replace if lost to a non-covered event, or that carries a value that greatly exceeds the sublimits attached to your homeowner’s policy, you may want to purchase additional coverage in the form of a personal articles policy.  

Sublimits

Most homeowners policies contain restrictions on how much the insurer is obligated to pay for certain types of items—even when overall coverage hasn’t been exhausted. For example, a diamond ring valued at $6,000 is likely to be subject to a sublimit that limits claims on jewelry to $2,000 or less—falling far short of the replacement value of the item.

Restricted Events

Coverage from homeowners policies only applies when loss or damage occurs due to the specific events listed in your policy, usually fire, theft, vandalism, and most (but not all) natural disasters. If you accidentally lose your item, or it becomes damaged by flood, earthquake, or other peril not covered by your policy, you will not be entitled to coverage through your homeowners policy.

Deductibles

While deductibles on homeowners policies vary widely, all homeowners should expect to pay something towards replacement of lost or stolen items when they file a claim.

Cover your valuables with a personal articles policy

Personal articles policies fill the gaps between standard homeowners policies and the replacement value of particularly costly items, offering full-value coverage, low- to no-deductible, and coverage for a wide range of events.

What Personal Articles Policies Cover

Items

Personal articles policies can be purchased for almost any item of value you own, including:

·         Antiques and collectables

·         Jewelry

·         Medical and prosthetic devices

·         Cameras and photography equipment

·         Musical instruments

·         Sports equipment

·         Furs

·         Fine art

While personal articles policies are most commonly purchased for items from the above list, it is by no means complete or comprehensive. Your independent insurance agent can help you find and purchase coverage for almost any valuable possession, no matter how unusual.

Events

Depending on your carrier, a personal articles policy may expand your coverage to include accidental loss or damage, as well as loss due to flooding, earthquake, or other disasters not typically covered by homeowners policies. In addition, personal articles policies follow your item anywhere in the world—meaning that engagement ring is covered whether you’re in Portland or Paris.

Coverage

Personal articles policies are typically full-coverage policies. This means that they are written to cover your item for its full appraised value, with no deductible to satisfy before insurance kicks in. 

Purchasing coverage

As always, your independent insurance agent is your best resource for evaluating your coverage needs, shopping for policies, and purchasing the insurance that’s right for your valuables. The insurance professionals at Moreland would love to help you evaluate you understand your current coverage and decide whether a personal articles policy is right for you.

 

Teen Drivers and Auto Insurance

Watching your teen settle into the driver’s seat may bring up some anxiety—but concern over your insurance premiums shouldn’t be the cause of your worry. While teen drivers do pay more for auto insurance, there are steps you can take to mitigate the financial impact and help ensure your teen’s safety on the road.

Why Teens Pay More

As with everything in the insurance industry, auto insurance rates are based on risk—and teen drivers pose a significantly greater risk than adults. A study conducted by the AAA Foundation for Traffic Safety concluded that teen drivers are nine times more likely to be involved in an auto accident than those over eighteen, and six times more likely to be involved in a fatal crash.

Invest in Driver’s Education and Training

While some blame irresponsibility and impulsiveness for the high rates of teen-involved accidents, there is another explanation: simple inexperience. Driving is an acquired skill, and new drivers of any age are at a higher risk of accident during their first year of driving. Providing your young person with driver’s education and ample supervised time behind the wheel will put them ahead of the curve when it comes to practice and may be rewarded by your insurance carrier as well.

Provide a Safe Vehicle

As with all auto policies, insurance carriers extend preferable rates to teens who drive safe vehicles. While they may not be the hottest cars on the road, vehicles with high crash test ratings and plenty of safety features will lower your rates—and even more importantly—reduce the risk of injury in case of a collision. For guidance on purchasing a safe vehicle for your teen, consult the Insurance Institute for Highway Safety, a nonprofit organization that determines vehicle safety standards and tests vehicles for crashworthiness and collision avoidance.

Ask About Good Student Discounts

Some carriers reward students for their hard work through good student discounts. If your student has an A or B average, be sure to inquire whether your insurance company has such a program.

Add Young Drivers to your Existing Policy

Rather than purchasing a dedicated policy, consider adding your teenager to your existing household auto coverage. Adding a driver, particularly a young one will raise your rates, but will likely cost less than purchasing a second policy for your young driver.

Investigate Occasional Driver Discounts

If you have a newly licensed driver but no plans of purchasing them their own vehicle, you may be able to add them as an occasional driver at a significantly lower rate. Most carriers define an occasional driver as someone who’s driving makes up less than 25% of the vehicle’s time on the road, which means you may be able to add a young person who has limited use of a car on evenings and weekends at a lower rate.

Consult an Independent Agent

Auto insurance for young people varies carrier-to-carrier and state-to-state, which can make shopping for coverage confusing for a lay person. An independent insurance agent can help determine what kind of coverage is most appropriate for your family, and which discounts your teen may be eligible for. Remember, independent agents work for you, not the insurance company, so you can trust them to provide unbiased advice.

Concern over your newly licensed teen may be unavoidable, but skyrocketing insurance premiums are not. Keep price hikes to a minimum—and your young person safe on the road—by having your teen complete driver’s training and ensuring that their vehicle has a high safety rating. As always, the independent agents at Moreland Insurance are available to help shop for plans, hunt down discounts, and ensure everyone in your household has the auto coverage they need.   

Homeowners Insurance and Knob and Tube Wiring

Whether it was the antique fixtures, real wood floors, or leaded windows that charmed you into making your offer, you know that older homes come with the kind of charm that money can’t buy. Unfortunately, the walls of that adorable Craftsman bungalow may be hiding a much less appealing feature: knob and tube wiring. Common in homes constructed before 1950, knob and tube systems are ill equipped to handle the electrical needs of the modern household, often show signs of age-related deterioration, and have often been inappropriately repaired and expanded over the years. All of these factors contribute an increased risk for fire and accident, which in turn causes many insurers to balk at providing coverage.

What is Knob and Tube?

Knob and tube is an early electrical wiring system used widely in homes from the late 1800s through the early decades of the 1900s. These systems consist of fabric- or rubber-insulated copper wires that run through the cavities of your home’s walls and ceilings. These wires are insulated by ceramic knobs that hold them away from the studs in your walls, and tubes, also ceramic, that insulate the conductors where they pass through joists. 

Why is it so difficult to insure homes with knob and tube?

To put it bluntly, knob and tube wiring is difficult to insure because it comes with significant added risk of fire or electrical shock. Some of this risk is endemic to the knob and tube wiring—such as the lack of ground conductor and a tendency to have switches on the neutral wire--while many others are the result of age and inexpert additions to the system.

As the decades push on, the rubber insulation on some knob and tube systems may become brittle and begin to fail, creating the potential for dangerous arching. This is particularly common in areas where electrical appliances, such as ceiling lights, have exposed the wiring above them to heat. The wires are also open to damage from animals and many systems have been stressed by improper alterations over the years. Inexpert splices and branches that are too large for the fuses supporting them both create the potential for arching and overheating—both of which create a significant risk of fire. 

How can I find a policy for my home?

Finding a homeowners policy for a house with knob and tube wiring can be particularly challenging. Some carriers refuse to insure homes with these wiring systems entirely, while others are willing to underwrite policies for an (often significant) rate increase. For those shopping for a policy as part of the homebuying process, some carriers may be willing to provide coverage under the condition that you replace the wiring within a set period after closing.

Whether you ultimately want to keep your original wiring or would like to modernize your home’s electrical system after purchase, the complexity of finding a policy for a home with knob and tube makes the guidance of an insurance agent particularly valuable. An independent agent can help you find a carrier willing to work with knob and tube and negotiate rates that won’t break the bank.

Earthquake Insurance: Are You Ready for the Big One?

Your homeowners policy provides coverage against a litany of dangers, from wind to vandalism, to riots and back again--but did you know that standard policies have exclusions for earthquake-related damage? This might not mean much to homeowners in the geologically stable areas, but these exclusions present a cause for concern among those living along the earthquake-prone west coast.

Why doesn’t my homeowners policy cover earthquakes?

In short, because earthquakes present a potentially devastating kind of risk to insurance companies. Most perils commonly covered by homeowner’s policies are likely to affect only a few homes at a time, and while they can be expensive to remediate, are unlikely to result in the total destruction of the structure.

Earthquakes, by contrast, occur over a large geographic area and—while most do little more than rattle the glasses on the shelf—are capable of leveling buildings or even altering landscapes enough to prevent rebuilding.   

From the insurer's point of view, earthquakes present the potential for hundreds of high-dollar-amount claims following a single event—a risk they are not usually willing to take for the standard homeowners insurance premiums.

Get Covered

Since it’s unlikely that your existing policy covers earthquakes, you will need to purchase either a special endorsement (also called a rider) for your homeowner’s insurance or a separate earthquake policy. Which you choose will likely depend on whether the carrier you use for your homeowners insurance can offer an earthquake endorsement at a competitive price. An independent insurance agent can help evaluate the coverage offered, and decide whether you should look elsewhere for earthquake coverage.

What Earthquake Insurance Covers

Policies will vary from carrier to carrier, but most earthquake policies provide coverage for damage resulting from any sudden movement of the earth including quakes, sinkholes, and sinkholes.

Most earthquake policies provide coverage for both structural damages to your home and damage to its contents. If a tremor causes a roof to collapse and crush a beloved grand piano, your insurance will pay to have both the roof repaired and a new piano—after your deductible has been satisfied.

What it Doesn’t

Damages resulting from the secondary effects of earthquakes are usually not covered. If a quake causes a fire to break out in your home, or breaks open a pipe and causes widespread flooding, the resulting damage will not be considered earthquake damage—even though the earthquake caused the fire or flood. The good news is that these secondary effects are likely covered by your existing homeowners policy.

Homeowners who live near large bodies of water should note that tsunamis—while they are often caused by earthquakes—are not covered by most earthquake policies or standard homeowners policies. For tsunami coverage, you will need to purchase a rider for your homeowners policy that provides coverage for flooding.

It’s worth noting that, unlike homeowners policies, which provide coverage for all structures on your property, earthquake policies usually provide coverage for your home and its contents, excluding landscaping, pools, and outbuildings. Your insurance agent can help you find and purchase coverage for these items if desired.

How Much Does it Cost?

The cost of an earthquake policy or rider will vary widely based on a couple of factors.

Location

The location of your home will play a large role in deciding how much you pay for coverage. Your insurance company will look at the history of seismic activity in your area and make a decision based on the frequency and severity of quakes in your area, and any features particular to your property that contribute to the likelihood of significant damage in the event of an event.

Construction

Your insurance company will also look at the construction of your home and evaluate its ability to withstand tremors. Recently constructed homes built to withstand seismic activity will be easier and cheaper to insure than older homes—especially older homes that have not been retrofitted to better withstand seismic activity. In some cases, an insurance company may require modifications—such as strapping a free-standing house to its foundation—before it will be willing to provide insurance at all.

Earthquake policies, with their regional differences and many exceptions, are a particularly complicated area of insurance, and one that many homeowners are nervous about navigating on their own. From evaluating your current coverage, to deciding between a rider or separate policy, to adding coverage for additional structures on your property, a qualified independent agent can be an immense help in finding the coverage you need at a reasonable price.

 

 

 

 

 

Homeshare Rentals and Homeowners Insurance

Homeshare sites like Airbnb, VRBO, and HomeAway have made it easy for homeowners to turn their spare rooms into alternative streams of income, but running a vacation rental out of your property comes with a few complications. Before you invest in that guest book, take some time to look over your homeowners policy and make sure you are covered for home-share related events. 

Your current policy

The more visitors you have to your home, the greater the likelihood that one will have an accident or cause damage to your property. Running a business that brings customers to your door increases the number of people coming in and out of the insured property, and with it, the risk to your insurer. For this reason, most homeowners policies have exclusions for “commercial use” that exclude coverage for events that occur as a result of business-related activities.

Whether or not a homeshare rental constitutes commercial use is up to the discretion of your carrier. Some may still provide coverage if you only rent space occasionally, while others may insist that you purchase extra coverage for paying guests, even if you only rent a few times a year. It’s worth making a call to your insurance carrier to find out how they deal with events involving home-share guests before you need to file a claim.

Purchasing the coverage you need

It is likely that you will need to purchase extra coverage for your homeshare rental, but the amount and type of coverage will vary based on the policies of your carrier and your personal preferences.

Homeshare Endorsements

Covering your homeshare rental may be as simple as calling your carrier and asking for a special endorsement (also called a rider) to extend coverage to paying guests. These endorsements vary but should extend your existing coverage to home-share activities, and may increase the amount of coverage available.

Homeshare Insurance

Many insurance carriers offer special policies for home-share hosts. These policies are usually affordable, and most provide coverage tailored to home-sharing--such as funds to fight bed bug infestations or willful damage to your property by a paying guest.

Business Insurance

If you take guests with great frequency, and especially if short-term rentals make up a significant portion of your income, a business policy may be the most appropriate route. These policies are the most expensive option, but also provide the most robust coverage, including funds to cover lost income should you have to interrupt your rental activities for repairs.

Coverage through hosting services

Many of the top homeshare sites offer some amount of coverage to hosts who book through their services, but these protections are this coverage is incomplete when compared to an insurance policy. Many exclude important areas of coverage such as personal liability, damage to possessions inside your rental, 

Insurance policies vary from carrier to carrier, and even customer to customer—something especially true as the industry works out responses to homesharing. As always, be sure to read your current policy thoroughly before purchasing any new coverage. If you would like help understanding your current coverage, or with purchasing coverage for your short-term rental, we home you’ll let one of Moreland’s independent agents find the policy that’s right for you. 

 

Renters Insurance 101

Many people do not purchase an insurance policy that covers their personal possessions until they buy a home of their own—but renters still have assets to protect. Renters insurance is there to help if your possessions are damaged or stolen, includes personal liability coverage, and can even provide funds for alternative accommodations in the event that you need to relocate while your unit undergoes repair.

Coverage for your posessions

While renters may not have as much wealth tied up in their homes as people who own a house or condo, they often have quite a bit invested in the things inside those homes. Renter’s insurance can help you to purchase a new guitar if yours is stolen from your apartment or buy a replacement computer if yours is ruined by a leaking pipe. Somewhat surprisingly, renters policies also cover items that are stolen from your vehicle--even if it isn’t parked at your rental at the time of the theft.

Still ambivalent? Many renters--especially students and other young people--may not feel that they have enough possessions of significant value to warrant the purchase of a policy, but taken cumulatively, even smaller ticket items add up. Even if you don’t wear designer brands, think of the cost involved in replacing your entire wardrobe in one fell swoop, or—even if you decorated your apartment on a shoestring budget—purchasing an entire home’s worth of furniture. Carrying a renter’s policy can make it possible to restore these possessions—and along with them a sense of normalcy—after a disaster.

Liability

People often become concerned about personal liability after purchasing a house or condo, but renters can also be held financially responsible for accidents that occur in their homes. If you are sued following an event that occurred at your rental, renters insurance can help cover your legal fees as well as any damages you are required to pay.

Alternative Accommodations

In the event that a disaster renders your rental uninhabitable, renters insurance can step in and cover the cost of alternative accommodations. Whether you need to relocate to a hotel for a few nights, or find a sublet while more extensive damage is repaired, your renters policy will ensure you don’t incur additional housing costs while you are away from your home.

Damages to Your Rental

Like homeowners insurance, renters insurance can be used to cover damages to your rental house or apartment that would otherwise be your responsibility. If you accidentally leave a tap running and cause water damage to your rental, or leave a candle lit and start a fire, your renter’s insurance will step in and cover repairs--up to the amount specified in your policy.

Landlord vs. Tenant Responsibility

Many people have an inaccurate understanding of their landlord’s responsibilities and as a result, neglect to purchase a renters policy. While it is true that your landlord must maintain your rental and pay for repairs necessitated by events outside of your control, landlords are not required to replace tenant possessions that become damaged in their unit, and can force tenants to pay for repairs to their rental space if the tenant’s actions can be shown to have contributed to the damage. Renters insurance helps to cover these gaps, preventing disasters in your rental home from wreaking havoc in your bank account as well. 

Low-Cost Protection

Renters policies offer a lot of protection for a very modest price. Most policies cost between $10-$15 per month and offer—for roughly the same price as a cheap lunch out—coverage against property damage, personal liability, and relocation costs.

 

While many people put off purchasing insurance until they are ready to own a home of their own, renters can protect themselves from significant financial hardship by carrying an affordable renters policy. Like all insurance policies, renters policies vary from carrier to carrier and even individual to individual. Be sure to read both your lease and insurance policy thoroughly, and enlist the help of an independent insurance agent if you need assistance understanding your coverage.

 

 

 

The Independent Advantage

Purchasing home, business, or disability policy can make the difference between future ruin or weathering an unexpected financial storm—so it’s worthwhile to seek professional advice. An independent insurance agent can help look at your current coverage, gauge your needs, and offer cross comparisons of policies from a diversity of underwriters. The work of an independent agent doesn’t end when you find your policy though; you can count on their continued assistance when it comes time to file a claim or search for necessary updates on your coverage.

Independent vs. Captive Agents

We covered this topic at length in a previous post, Independent vs. Captive Agents, but in short, captive agents work for insurance companies and are employed to sell the products of that company. Independent agents, on the other hand, work under brokerages and act as a bridge between their customers and a number of insurance companies.   

Choice and Convenience

For consumers, this translates into the difference between consulting a salesperson or hiring a personal shopper. The salesperson, played here by the captive insurance agent, is only able to present products from the company they represent, while the personal shopper can provide their client with products from the full variety of sources.

An independent agent’s ability to shop around translates into the ultimate one-stop-shopping experience for all your policies. Rather than attempting to find appropriate life, home, auto, and disability coverage from a single company, an independent agent can assemble coverage from a variety of sources, with an eye to both price and your individual needs.

A Professional Advocate

Customers are often attracted to the choices provided by independent agents, but the claims process is where these professionals really begin to shine. If you worked with a captive agent to find your policy, you are stuck dealing with a representative of your insurance company when it comes to filing a claim or deal with a billing issue. An ethical captive agent will still try to work on behalf of their customers, but they still represent your insurance carrier—a difficult problem to surmount when your interests and those of your agent’s employer are at odds. 

An independent agent’s success or failure depends on creating successful relationships with long-term customers, so when the time comes to file a claim or settle a dispute, an independent agent can be counted on to represent your interests to your insurance company. For this reason, we encourage our customers to call us before they file a claim with their insurance company. Having an informed professional there to advocate on your behalf is crucial to making the claims process move smoothly, and can take some of the stress out of an already difficult time.

A Relationship that Matters

An independent agent is more than a salesperson there to make a deal, we are resources you can turn to again and again as your family grows, your business develops, and your life takes off in new directions. When you form an ongoing relationship with an independent agent you gain access to an industry insider who has a complex understanding of the industry, and as the years go on, your needs as a consumer as well. We encourage our customers to consult their agents on a regular basis to discuss any need for increased coverage or note areas where they might save money by making changes to their policies.  

Large insurance companies and their agents may be ubiquitous, but the customer experience offered by independent brokerages remains unmatched by captive agents. Independent agent’s lack of ownership ties to policy underwriters allows us to provide our customers with flexibility, advocacy, and bias-free advice that creates great consumer-to-policy matches and keeps our customers returning to us for years to come. 

 

Homeowners Insurance: What it Covers, and What it Doesn't

You have a homeowner’s insurance policy to cover losses in case of a disaster, but do you know what kinds of damage it covers? Not all homeowner’s policies are the same, but there are industry standards that dictate what basic policies cover in most cases—and what they don’t.

What is homeowners insurance?

At the most basic level, homeowner’s insurance covers the cost of repairing or replacing your home in the case of a disaster. The policy holder pays a yearly premium in return for coverage of their property. In the case of a covered disaster (more on what events are covered later), such as a lightning strike or break-in, the insurance carrier covers costs associated with the event, usually after the policy holder has met a prearranged deductible.  

While those who do not owe money on their homes may choose whether or not to carry a policy, homeowner’s insurance is almost universally required by mortgage lenders. Please take a look at our previous post on homeowner’s insurance and the home buying process for more information on the subject.   

What it covers

Damage to your home and other structures

Homeowners policies cover the cost of repairing or replacing your home if it is damaged or destroyed by an event covered in your policy. Additionally, most policies cover similar repair or replacement of other structures on your property, such as sheds, detached garages, and fences.

Property in your home

Most policies cover property in your home that is lost or damaged during a covered event. If your computer is stolen in the course of a break-in, or you need new furniture after a fire in your home, your policy will cover the cost of those items after your deductible has been met. While personal property is commonly covered, many homeowners choose to take out additional coverage on particularly valuable items. An independent agent can help evaluate the need for such coverage.

Liability

Your policy is likely to include coverage in case someone is hurt or has their property damaged during a visit to your home. Coverage commonly includes damages and related court costs. While most homeowner’s policies offer some liability coverage, many homeowners elect to purchase additional protection in the form of a personal umbrella policy.

Covered Events

Homeowner’s policies cover costs related to most unexpected disasters. These events are among those commonly covered by homeowner’s policies, as reported by the Insurance Information Institute.

Commonly Covered Events

·        Fire and smoke

·        Theft and vandalism

·        Explosions

·        Lighting strikes

·        Windstorms

·        Falling objects (such as trees and tree limbs)

View a full list here.

Events requiring special coverage

Homeowner’s policies cover a wide range of potential perils, but many people are dismayed to find that their homeowner’s policy does not cover damages caused by all natural disasters. Some commonly excluded events include:

·        Floods

·        Earthquakes

·        Sinkholes

·        Termite damage

Special Coverage

While most basic policies do not cover these disasters, it is possible to purchase additional coverage if you live in an area prone to earthquakes, flooding, or if you wish to add some other kind of special coverage to your policy.

While the above information is true of most basic homeowner’s policies, you should evaluate your policy to make sure you are covered in all necessary areas. If you need help with this process, an independent insurance agent can assist you to understand your current policy, advice you about any potential gaps, and facilitate the purchase of any coverage you elect to add. 

 

Driving on the Job - Does Your Insurance Policy Cover Work Trips?

If asked to name jobs in which workers are paid to drive, you might first think of bus drivers, delivery people, taxi driver, and other positions that require long hours behind the wheel of a company owned vehicle. But what about nannies transporting children to and from activities, caregiver who transport clients to complete life tasks, and regional managers who spend much of their day driving between locations? Even if driving doesn’t define what you do, there is a chance you are using your personal vehicle in the course of your duties—something that could impact your coverage in case of an accident on the job.

Personal vs. work related uses

Personal auto insurance policies view your morning commute as personal use, and provide coverage in case of an accident on the way to or from your place of business. Things get a little more complicated though, if you use your personal vehicle during your workday. If your job requires you to drive your own car while on the clock, you might need to take a look at the fine print in your auto policy.

Generally speaking, personal auto insurance policies cover your commute to and from work, personal errands, and leisure travel; while tasks that occur during your workday--especially ones that involve transporting people or goods for an employer-- are likely to fall under business use. Plans written for personal use only will not cover business use and may leave you high and dry in the case of an accident.

Driving in the gig economy

Insurance carriers calculate costs by using probabilities, and the probability of being involved in an accident rises sharply when you’re spending hours behind the wheel, ferrying fairs for companies like Lyft or Uber. As a result, many insurance companies have added language to their personal use policies that specifically exclude trips undertaken with a rideshareing app open from coverage—even if there is no fare in the vehicle at the time of the accident.

What this means for employees

If you find yourself behind the wheel as a regular part of your workday, you should make sure that you are covered in the case of an accident. Especially if you work for a larger company, it is possible that your employer already holds a policy that covers you while you make work-related trips, if not, a review of your own should reveal whether you have a business exception. If you find that you are not covered while driving for work, you can add that coverage—which usually comes with an increase in your premium. When in doubt, speak with an independent insurance agent to gain some clarity on your coverage, and see if any changes need to be made.

If you drive for Lyft, or a similar ridesharing service, you should likewise review your policy to root out any exceptions, and call your insurance agent to arrange proper coverage.

What this means for employers

Risk associated with work-related driving cut both ways. While your employees may incur the extra cost of adding business coverage to their policies, you acquire liability a as a result of having a representative of your business on the road. Employers can protect themselves from these risks by carrying Non-Owned Vehicle or Hired insurance policies that cover the cost of damages if your employee becomes responsible for an accident while on the clock. Again, check in with your insurance agent to review your current policy and discuss any changes that need to be made.

 

Homeowners Insurance and Buying a Home

Congratulations! After countless hours pouring over listings, visiting open houses, and scrutinizing disclosure forms, you’ve had an offer accepted on your dream home. You’re in the home stretch, but there are still a few more things to do before you can start picking out curtains—among them, securing a homeowner’s policy, and deciding how you’ll pay for that policy once you have it.

 

Why you need homeowners insurance

Homeowner’s insurance protects you in the case of a disaster or accident on your property, but along with simply being a good idea, obtaining a homeowner’s policy is a standard requirement on home loans.

Since your lender is using your new home to secure your loan, it is in their interest to make sure that your property value remains close to original amount lent for purchase. While your lender has little control over the whims of the market, it can make sure that your house or condo doesn’t lose significant value in the case of a disaster or accident by requiring you to carry a homeowner’s policy.

Your lender will require proof of homeowner’s insurance before they agree to release funds to pay for your new home, so securing a policy should be a priority as you approach closing.

Paying for insurance: escrow or no?

There are two ways to go about paying for homeowner’s insurance attached to a loan.

Direct Payment

The first and most obvious method is to make payments directly to your insurance carrier. While your carrier might offer other options, homeowners insurance is traditionally paid in a lump sum once a year—requiring the homeowner to have a lump sum set aside for the purpose. 

Direct Payment is good for:

  • Very financially secure homeowners who want more control over their funds
  • Homeowners who can set aside lump sums for their policies, and who would like to accrue interest on those funds

Escrow

Note: The escrow account discussed here is different from the account used to transfer funds when closing on your home.

Escrow is an account—typically opened when you close on your home—that your lender uses to collect funds for your mortgage, insurance payments, and property taxes, ensuring that the funds are available when it comes time to pay. Rather than handling these costs in lump sums when they are due, the homeowner pays small monthly sums into the escrow account, which the lender then uses to pay taxes and insurance costs on the property—as well as to collect on the mortgage. While escrow is sometimes elective, there is a strong possibility that your lender will require the use of an escrow account.

Your monthly payment

If you choose or are required to use escrow, your lender will calculate your payment based on three factors.

  1. Your estimated property taxes.
  2. Your mortgage costs, including premium and interest.
  3. Your homeowner’s insurance costs.

Since some of these amounts are changeable, there is a chance that you will pay more than what is needed to cover these costs into escrow, or too little. If there are leftover funds you will be refunded by your lender at the end of the year. If funds were insufficient, you will be required to pay the remainder—which is usually calculated into your monthly payments for the next year.

Escrow is a good option for

  • First-time homebuyers
  • Those who might have a hard time budgeting their insurance premiums
  • Homebuyers whose lenders require the use of an escrow account.

Get a quote

While methods of paying for your policy vary, the need for homeowner's insurance to protect your home and secure your loan is universal. Whatever your needs, a qualified insurance professional can help make sense of your options and help you find a favorable rate—all in time for closing. We hope you’ll consider Moreland for your homeowner’s insurance needs. To obtain a homeowner's insurance quote online please visit our online portal, we’ll look forward to assisting you with your policy.