Part 1: Shopping for your home
This post is part 1 of a 2 part series. Part 2 covers the closing process.
So, you are shopping for a home! This is a very exciting point in your life, and there is much to consider in making your choice. While I know that there will be many other important factors that influence your decision on what home to buy, I thought it might be helpful to provide some tips on what you can look for from an insurance perspective. Insurance costs can be quite different from one home to the next, and some homes may be difficult to fully cover – or even to insure at all. There are a number of things you can look for when you are touring houses.
One of the most important things to look at from an insurance perspective is the exterior condition of the home you are considering. Insurance companies are most concerned about the exterior, because it defends the home against the elements of nature. First and foremost, step away from the home and look at the roof on all sides. Do the shingles look fresh and new, or do they look old and worn out or (worse yet) are they covered with moss or lichen, curling, lifting or even broken off or missing? Also look at the siding, fascia and trim. For wood products, is the paint in good condition, or is it peeling, flaking or even rotting? Don’t forget to also look at the condition of any outbuildings, as these also affect the insurability of the home. How condition issues can affect insurance.
Many home buyers prefer a home with an updated kitchen, windows, etc. However, there are other updates you might not otherwise consider that are equally or even more important – both from an insurance standpoint and also because of what future expenses may be right down the road. As mentioned above, ask about the age of the roof. Most roofs installed over 20 years ago need to be replaced, and they are also harder to insure. Another important question is the age of the furnace – newer being better. Lastly, if the home was built before the 1970s, is the plumbing and electrical fully modern? For a further discussion of updates, see this separate post.
There are certain types homes that may be more expensive to insure. For example, many insurance companies won’t insure log homes. Having said that, log homes are beautiful, so you may well be willing to pay a little extra (if necessary) to insure with a carrier who will cover log construction. Also, manufactured homes (singlewides and doublewides), while less expensive to buy, will generally cost more to insure – even if they were installed on a permanent foundation. Also, flat roofs are harder to insure, as there are many insurance companies don't like them.
First, the good news is that you don't need to worry too much about a built-in fireplace, as these typically aren’t a problem for most carriers. However, a woodstove may limit your options and cost more to insure, and you will likely face a challenge if the stove isn't installed properly or isn't UL approved. An even bigger problem is wood heat in a detached garage - quite common in the Northwoods but unfortunately unacceptable with most insurance companies. So if you are thinking about buying a home with a woodstove in an outbuilding, keep in mind that your options will be to remove it, possibly not cover the building at all or to take what you can get from one of the small selection of companies willing to insure it. Outdoor wood boilers are not always as large of an issue, but read my post about insuring these.
Insurance companies worry about safety hazards, because your Homeowners policy will cover your liability if someone gets hurt on your premises. One common hazard is missing railings on exterior steps, decks or porches. Generally, insurance companies want to see railings if the height of the deck or porch is more than 30-36 inches off the ground or if there are more than two or three steps. The good news is that this can often be a fairly easy fix, especially for smaller decks or a short flight of steps. Also, if the home you’re viewing is one of the few in the area that come with either a swimming pool, be advised that most insurance companies want to see a six-foot fence with a self-locking gate – a rarity in the Bemidji area.
Whether your goal is to be as far back in the woods as possible or as near to schools or work as you can get, or even in a particular neighborhood or on a specific lake, I’m sure location will be an important factor in your decision. Keep in mind that distance from the fire department will be a factor in your insurance cost. Within five miles is best, and over ten miles away is least preferred. While remote homes are certainly insurable, you will likely pay 20-80 percent more to insure a home more than five miles away from fire service. This may well be a price you are willing to pay for the location you desire, but it is something to keep in mind.
In summary, whether you are a first time home buyer or a seasoned pro, you have a big decision ahead of you. I hope that this insurance information is helpful to at least carry in the back of your mind as you choose your next home. If I can answer any questions, please contact me. Good luck!
In Part 2 of this series, I guide you through the insurance aspects of the closing process, from the point that you sign the purchase agreement through the day you close.
We thought it might be helpful to assemble a list of the Home and Auto insurance agencies available to you as an insurance consumer in the Bemidji area. Obviously, we hope you will buy your insurance through us, but we also feel that you would appreciate an open and objective discussion of your options. Competition is a good thing, as it provides you the consumer the opportunity to review and decide who deserves your business. We encourage you to evaluate your options on the three aspects of good insurance value: price, coverage and relationship.
Local independent agencies
Independent insurance agencies have a great deal of flexibility in finding the best solution for your insurance needs, because we represent a number of different insurance companies. This allows the agency to deliver on price (by shopping among their carriers for you), coverage (by picking carriers and products that meet your needs) and relationship (as you can keep your current agent even if your current carrier no longer meets your needs). Pine Country Insurance is an independent insurance agency; but let’s introduce you to the others in Bemidji.
Insure Forward is one of the older and easily the largest agency in town. They were previously known as Insurance Placement Service or simply IPS until their purchase by Bank Forward approximately ten years ago. With their multitude of carrier contracts, large staff and breadth of knowledge and experience, they have much to offer, including great options for midsize to larger local businesses or insurance consumers with hard-to-place needs. They are located on Paul Bunyan Drive within the Bank Forward building and can be reached at 218-751-2330 or www.bankforward.com.
Risk Management Services of Bemidji (aka RMS) was the brain-child of local entrepreneur Matt Sparby, who hired Dan Posner as the first agent around a dozen years ago. Since then RMS has grown by leaps and bounds and gained a sizable market share in commercial insurance, as well as a decent personal lines presence. Much of this growth was organic, but it was also helped along by the acquisition of the local agency Beltrami Insurance Group a few years after their founding. Like Insure Forward, RMS has the size and scope to be able to handle nearly any type of commercial or personal insurance need. RMS is located in the Sparby Financial building across from the hospital on Anne St and can be reached at 218-759-1201 or online at www.rmsinsurancebemidji.com.
Another independent agency worthy of special note is Northway Insurance, which has been a staple on Third Street in downtown Bemidji for many years. It was started in 1985 by Steve North, and he grew it to be one of the largest agencies for his primary carrier in the state. In 2001 North added a second location in Park Rapids when he purchased a local agency there, which he later sold. Steve sold the Bemidji Northway location to two of his long-time employees one year ago. Northway of Bemidji and its three staff members offer a broad array of personal and commercial insurance products and can be reached at 218-751-0821 or online at www.northwayinsurance.com.
There are a number of other local independent agencies. Among them are older agencies (Bemidji Insurance Plus and Dale Schmidt Agency), new independent agencies with older roots (Truinsure - formerly the Ken Stone Agency, Security Insurance - formerly Insure North of Blackduck and Farmers Union Insurance – now a hybrid but formerly an exclusive agency) and new offices which have sprung up locally in recent years (Greater Midwest Insurance, Headwaters Agency and Big Horn Insurance Services).
Local exclusive agencies
An exclusive agency is different from an independent agency in that it primarily represents just one insurance company. While this obviously narrows the agency’s breadth of offerings, it also enables the agent to dig deeper and become an expert in the offerings of the company he or she represents.
Probably the best known exclusive-agency carrier is State Farm, who also happens to be the largest Home & Auto insurer in America. Approximately ten years or so ago, Sara Labraaten took over a local State Farm agency from a retiring agent and has since grown it into the second ranked State Farm agency in the country. In a recent Minnesota trade publication, Sara stated that her keys to success are simply practiced the well-known basics of hiring the best staff, marketing extensively and treating customers the way she would want to be treated. The Sara Labraaten Agency is located on Bemidji Avenue just north of Library Park and can be reached at 218-444-2400 or online at www.sarahsagency.com. The other local State Farm agents are long-time agent Mark Gazelka and newer agent Jake Blumn.
Another well-known local exclusive agency brand is American Family. Shannon Miller took over for a retiring agent several years ago, and has since built his business to the point of receiving top countrywide honors among all American Family agents countrywide two times in the past eight months. Miller & Associates is located in front of the Paul Bunyan Mall and can be reached at 218-751-5351 or online at www.agent.amfam.com/mn/bemidji/shannon-miller/. Todd Gabrelcik is the other local American Family agent.
Other exclusive agencies in Bemidji include Farmers Insurance agents Jerry Downs and Brad Caspers, Country Financial agents Chris Lehman and Scott Turn, Federated Insurance agent Mike Anderson and AAA agent John Kovach.
We hope that you have found this post informative and helpful in your review of your local insurance agency options. We've tried to make this list comprehensive; so please let us know if we unintentionally missed anyone. As always, we welcome your questions and feedback.
If you are a first-time home buyer, you may be hearing the term “escrow account” for the first time and wonder what it means. An escrow account is bank account held in your name and for your benefit by your mortgage company. Every month when you make your mortgage payment, part of that payment is deposited into your escrow account. The escrow account is then used to pay your Homeowners insurance and your property taxes when each become due.
An escrow account is first established when you close on your mortgage. At this point, part of your closing costs will be to pay for the first year of insurance, unless you pre-paid that premium. Added to closing costs will also be a reserve that is deposited into your escrow account, partially for the next property tax payment that is due and partially to provide a buffer in case taxes or insurance rates rise.
Starting with your first mortgage payment on your new home, you will be paying one-twelfth of your annual insurance premium, which will then sit in your escrow account until your policy renews a year later. In this manner, basically you are always paying your Homeowners insurance one year ahead. Similarly, your monthly payment also includes one-twelfth of your annual property tax bill, which will also be held in your escrow account until the next tax due date.
It is very important to understand that while your monthly principal and interest payment may be fixed for the life of your loan (as long as you continue to pay on time), the additional amount going to your escrow account is very likely to change down the road. This is because property taxes and Homeowners insurance rates do change over time – unfortunately going up more often than they go down. If amount due changes for either, your mortgage company will have to also adjust the monthly amount they collect from you. This means that your total monthly mortgage payment will not always stay the same as time goes on.
While an escrow account is not required for every mortgage, many special mortgage programs do require it, including programs often utilized by first time homebuyers. If you are not using a special mortgage program then your relative level of risk will determine if the escrow account is mandatory. For example, an escrow account is usually required when paying less than twenty percent down.
Why do mortgage companies want an escrow account? It’s because your home is the collateral for the loan they make you. Meaning that if you don’t continue paying they can recoup their loss by foreclosing and then selling your home. But if they had to foreclose and then found that that the home was damaged and you didn’t have insurance in force - or they found a tax lien against your home because you didn’t pay your property taxes when due - this would affect their ability to recoup their loss after foreclosure.
If an escrow account is not required by your mortgage company, you may have the choice to opt in or opt out. Many people do voluntarily opt in as a matter of convenience, to avoid having to come up with large chunks of money two or three times a year when taxes and/or insurance become due. (While most Homeowners policies do provide a monthly payment option, property taxes are typically due in the two installments in the spring and fall.)
Never forget that the funds in the escrow account belong to you. If you pay off your mortgage, any balance in the account will be refunded to you.
One final word: Although your mortgage company may stay in control of paying for your insurance, you are still in control of selecting insurance; you get to choose your carrier, coverages and deductible, subject to their basic requirements. You also have the right to change your insurance provider down the road if you so choose.
Having water in your home is great when it stays in its proper spots – within your pipes, toilet, sink or tub. But water can quickly create a lot of damage and cleanup expense in your home if it gets let loose. My clients often ask me if their Homeowners policy covers water damage. The answer is that it all depends on where the water came from.
Water damage could come from a leak in a water line (usually covered) or from a leak in your roof (usually covered) or from seepage in through basement walls (hardly ever covered) or from flooding of normally dry ground (virtually never covered without separate Flood insurance). It can also come from water that backs up from sewers or drains or overflows from a sump pump, and that is what we want to discuss in today’s post.
Most standard Homeowners policies do not cover water backup or sump pump overflow automatically. Typically, this is an option that you can add for additional premium. Most carriers will allow you to specify how large of a limit you’d like for this coverage, often in $5000 increments. Depending on your insurance company, the first $5000 in coverage may cost $25 to $100 per year, with higher limits going up from there. (Some carries only offer up to $5000 to $10,000 in coverage, while others offer maximum limits significantly higher.)
Many people in our area live in the country and rely on septic systems. We all know that septic systems sometimes freeze, especially in years where there is not sufficient snowfall to build up a good layer of insulation on top of the ground. If your septic freezes, your sewage may have no direction to go but back into your house, coming out through a toilet or other drain opening.
If you live in town, there could be a blockage that results in your sewage (along with the sewage of all your neighbors) backing up into your house as well. It has been my observation that the city may not be willing to pay for your cleanup or water damage, and you may be on your own if you don’t have the Water Backup option.
If you have a sump pump in your basement, this identifies another possible risk. The job of that pump is to remove ground water that has found its way into your basement. If the pump fails mechanically, loses power or is overwhelmed by extra water during a rainstorm or wet season, you could have quite the mess in your basement. If you have finished basement flooring or walls, your loss could easily be in the thousands of dollars for the repairs.
If you have a water or sewer backup or overflow in your home, the first step is to get everything dry and clean. Many homeowners will try to this themselves – maybe with a shop vac combined with household-grade fans. Unfortunately, this method is often insufficient to dry out flooring or walls, but sometimes homeowners aren’t aware of that until later when mold develops. The best thing to do in this situation is to call in a water restoration company, who can check for moisture content in walls and floors and has the proper equipment to get things dried out right. If dollars is tight, having insurance coverage to pay for this professional assistance can be huge.
Once you do get things properly dried out, there may be flooring, sheetrock and more that needs to be removed and replaced. Again, this can get quite expensive if you didn’t have Water Backup coverage on your policy.
The Water Backup coverage option can vary somewhat from carrier to carrier, but usually it will cover water damage from both the backup of sewers or drains and the failure of your sump pump if you have one. We encourage you to consider adding this valuable protection to your Homeowners insurance policy.
The 6-8 weeks between an accepted offer and closing on a home can be a whirlwind of activity for you as a home buyer. There’s the inspection to go over and negotiate, water and septic inspections, appraisals, documents and more documents, unexpected fees that need to be covered at closing. Perhaps you don’t even think about insurance until the last minute, when your mortgage company reminds you. At that point, it might be tempting to quickly call around to a few insurance agents and blindly accept the lowest quote you receive.
If you happen to be buying is a mobile (i.e., “manufactured”) home, this could be a critical mistake on your part. Unlike insurance for stick built homes, there is very little degree of standardization among mobile home policies. Since you generally get what you pay for, if you take the lowest quote, you may be blissfully unaware of how inferior the coverage is that you selected.
So I repeat: Buyer Beware.
Issue Number One: How much coverage will apply to your dwelling? While it’s standard for stick-built home policies to insure your house for its estimated cost to rebuild (i.e., “Replacement Cost coverage), many mobile/manufactured home policies are written for “Actual Cash Value”, which means they insure the dwelling only for its current depreciated value. This means that if your home burned down, you’d have to go out and try to find another used mobile home in acceptable condition to move onto your property. Perhaps you’d find this level of coverage satisfactory and perhaps not, but it is important to know if that’s all the insurance you are buying.
This brings us to a second area of concern: Will you get paid enough to cover repairs after a smaller loss? Not if you purchase a Actual Cash Value policy. With Actual Cash Value coverage, the cost for covered repairs will be depreciated. As an example, let’s say a water line in your home breaks and it will cost $3000 to replace damaged flooring. Your insurance company assesses $900 in depreciation on top of your $500 deductible, paying only $1600 and leaving you to come up with $1400 for the new flooring. How happy will you be with this claim?
Actual Cash Value policies are virtually unheard of these days for stick-built primary residences, but they are quite common when insuring manufactured homes. Another point of caution is that some carriers sell policies that start out at Replacement Cost but then switch to Actual Cash Value after the home reaches a certain age – maybe 10 or 15 years old. While they disclose this coverage reduction in the renewal documents, I’m guessing many people either miss it entirely or don’t understand the how this change will affect them.
This is may be a good point to note that even with a true Replacement Cost policy, coverage on roofing shingles may be depreciated after the shingles reach a certain age (often 15 years old). While I don’t find this overly desirable for the average homeowner, it may be hard to find Replacement Cost coverage on your mobile home that doesn’t include this restriction.
Another area of concern comes to the amount and type of coverage for your personal property. Let’s say you are buying a 1200 square foot home. If only the home were stick built, it’s likely your policy would come with at least $100,000 in Replacement Cost Personal Property coverage. But the average policy for a 1200 square foot mobile home might only cover $10,000 to $30,000 for your personal property.
Also, if you aren’t careful, you could end up with Actual Cash Value Personal Property coverage on your manufactured home policy. This means any claim you file would be subject to depreciation. While some items such as jewelry or collectibles may actually increase in value over time, much of your personal property may be worth pennies on the dollar compared to what it will cost to repurchase it in the store. I can pretty much guarantee you that if don’t have Replacement Cost coverage for your personal property, you are going to be very disappointed and frustrated come claim time.
Another thing I often see in mobile home policies is very restrictive limits for certain types of personal property. For example, maybe the policy only covers up to $1500 for sporting equipment or only $2000 total for all electronics (including computers, TVs, cameras, mobile devices, etc.) While all Homeowners policies do limit some categories of items, the examples I just cited are much more extreme that anything you’re likely to find on a standard “stick-built” Homeowners policy. Worse yet, you’re not likely to even know about these limits, unless either read the full policy contract or are working with an agent who points them out.
It’s not that uncommon in the north country to see an older, dinky single wide mobile home with a huge beautiful shop right next to it. If you’re not careful, you could end up with only $5000 to $15,000 in coverage for that shop. Also, many manufatured home policies may deduct depreciation for any claims to the shop – in some cases even if you have Replacement Cost coverage on your dwelling!
These are not the only issues you may find in some mobile home policies, but they are certainly enough examples to highlight why it is important to be careful about what policy you buy for your mobile home. If you do choose to go with the lowest quote you receive, you should do so with the understanding that you may be receiving vastly inferior coverage to other options that might cost somewhat more.
One of the ways I try to provide better value as an agent is by sitting down with clients who are buying a new insurance policy and reviewing their options and highlights of the coverage which comes with the policy they are buying. I’d suggest that working with a professional, knowledgeable agent who will take the time to explain what you are buying is very important when you purchase coverage for your mobile home.
It is important to understand the difference between carrying Replacement Cost and Actual Cash Value coverage on your roof shingles. This difference in coverage may make a big difference in how much your policy pays if a storm comes through and damages your roofing.
The basic concept of Replacement Cost coverage is to be paid the full cost to repair or replace, minus your deductible, assuming you actually do repair or replace the damage. Let’s say you have twenty year 3-tab shingles installed nine years ago. A storm comes through and damages them, and your insurance company agrees that your entire roof needs to be replaced. You get a contractor bid for $7000 to do the job. Your Homeowners policy features a $1000 deductible. With Replacement Cost coverage, when you replace your shingles you will be paid $6000 ($7000 loss - $1000 deductible).
The concept of Actual Cash Value coverage is different. It subtracts for depreciation, calculating how much of the life expectancy of the material is used up. Using our example above, with Actual Cash Value coverage, if the claim adjuster assesses 45 percent depreciation (5 percent per year times 9 years), you would be paid $2850 ($7000 loss - $3150 depreciation - $1000 deductible) instead of $6000. That’s a big difference, wouldn’t you say?
The difference could become even more dramatic as your roof ages. If those shingles were 15 years old instead of 9, an adjuster calculating depreciation at the rate of 5 percent per year would subtract 75 percent depreciation – reducing your insurance payout to a mere $750 ($7000 loss - $5250 depreciation - $1000 deductible)!
In the spirit of full disclosure, I should mention that I have sometimes seen adjusters be a little lenient on depreciation percentage, not always assessing a full 5 percent a year on twenty year shingles. Also, architectural shingles which have been popular for a few years now often have a longer life expectancy of sometimes 30 or even 40 years; we’d expect to see a lower yearly depreciation rate on these type of shingles.
But my point is that the concern with applying a deduction for depreciation to shingles is how quickly they do depreciate. While certain types of siding may last a lifetime, most asphalt shingles installed 20 years ago in our region are ready to be replaced, meaning that they have little “actual cash value” remaining.
The idea behind Actual Cash Value coverage is that you, as the homeowner, should be planning for and saving for replacement of your shingles as their age progresses towards expected life end. So if you have twenty year shingles which you estimate may cost $8000 (with inflation) to replace at 20 years of age, you should put aside $400 each year so that when they turn 20 you have the $8000 needed to replace them.
For a Homeowner practicing this savings plan, Actual Cash Value will work just fine, as it will supplement your existing savings to replace your roof earlier than expected due to storm damage. However, those of us living in the real world realize that very few people actually budget and plan in this manner. For the rest of us, the sudden need to come up with $4150 or even $6250 towards an unexpected $7000 roof replacement may not be convenient, easy or even possible.
I say all this to suggest that some readers of my blog may not even be aware of what kind of coverage you have on your roof. Many Homeowners carriers are selling “Replacement Cost policies” with endorsements added which restrict the roof shingles to Actual Cash Value. So you may think that you have Replacement Cost coverage on your roof when in fact you do not.
Some insurance carriers may start you out with Replacement Cost coverage on your roof but then add an Actual Cash Value restriction at a later renewal, once the roof reaches a certain age (10, 15 or 20 years old, as examples). While they normally disclose this in the renewal documents they send, many policyholders may not read their renewal information or, even if they do read it, they may not really understand the ramifications of what they are reading.
For these reasons and more, I contact my clients every year and offer them an annual review. Meeting your agent once a year for a quick review of your insurance coverage is an important part of both making sure your insurance keeps up with your changes and making sure you keep up with your insurance changes. When your agent contacts you to encourage this meeting, set aside a few minutes to do it. If you don’t have an agent that offers this kind of service, maybe it’s time we talk.
What to look for in homes several decades old
There are many things to like about an older home, but sometimes dated construction presents unique insurance issues and concerns. If you are house shopping and looking at older homes, there are some things you can look for with regard to insurability.
I strongly believe that a home inspection by a qualified professional is a good use of your money as a home buyer, especially the older that the home is. This inspection will answer many of our insurance questions listed below. However, before reaching the point of paying for this inspection, you can also do your own pre-inspection while still in the screening phase of your home buying experience.
One of the first things an insurance company looks at is the age and condition of the shingles. Many shingles installed 15 years ago are beginning to defect, and there aren’t too many 20 year old roofs in our region that are still in good condition.
Many insurance companies may limit or reduce coverage for the shingles if they are older than 15-20 years. Roofs older than 20 years (or any roof in poor condition) may even make the home uninsurable with many carriers.
From the ground, carefully look over the visible shingles. Are they all lying flat or are any raised or curling at the edges? Is there moss or lichen growing in areas? Are there gaps where shingles appear to be missing? Do the shingles appear fresh and new or thin and weathered? Also ask the seller about what year the shingles were last replaced. (Your home inspector may also estimate this for you.)
The heating system
Not only will the type and age of the heating system affect your monthly budget as a homeowner, it may also affect the type and cost of insurance coverage you can obtain. And even more importantly, an old furnace can be a safety hazard. Insurance companies typically want furnaces to be no older than 25 or 30 years, with newer models preferred and often rewarded with a discount.
Many sellers can provide information on how old their furnace is. While walking through the home, you can also look for a label on the furnace saying when it was installed – or just generally look at how new it looks. Either way, your home inspection should provide you a pretty good idea of the age and condition of the furnace.
The electrical system
Most insurance companies will want to know whether the home is entirely on circuit breakers (desirable) or if it is partially or wholly on fuses (not as good). They may also ask what the electrical amperage is – at least 100 amps being desirable. More generally, if the home is older than 30-40 years, they often want to confirm if the electrical has been entirely modernized; so they may ask if a whole or partial update has been done and when.
When you tour the house, head down to the basement (if applicable) and find the breaker box. First, you are looking to see if the service is controlled by circuit breakers (which can be switched on and off) or if there are fuses (knobs which can be pulled out and replaced). Secondly, check for a stamped number on the main breaker (usually at the top) or on the main fuse which turns on and off the whole house – this is most typically the size of the home’s electrical service. From the basement, also look around and above you at the exposed wire to see if it all looks modern and in good condition and order.
As you walk around the house, look at the outlets to confirm if they are all modern three-prong. (Two prong outlets are a sure sign of outdated electrical.) Also, check kitchen, bathroom and garage areas for GFCI outlets. (They have on/off buttons on them, often with a small hole for a light.)
If your walk through or your home inspection finds old or outdated electrical, you should probably plan on budgeting for an update soon after buying your home. Not only is older electrical harder and/or more expensive to insure, but it can also be a safety hazard for you and your family.
The plumbing system
Water damage from broken or leaking pipes or plumbing fixtures is one of the most frequent kinds of Homeowners insurance claims, and these losses usually run in the thousands of dollars. So, if the home is older than 30-40 years, insurance companies often want to ensure that the home has modern plumbing throughout.
While you’re down in the basement, look at the types of plumbing that are visible. For water lines (the small pipes), copper or PEX (white, red or blue flexible plastic tubing) are the modern options. For waste lines (the larger diameter pipes), white plastic PVC is the modern material of choice. Metal plumbing lines other than copper are a sign of older plumbing. If the home doesn’t have a basement, you can also check under the sinks for pipe materials. Either way, you can also look there to see if fittings and connections appear newer and in good repair.
Exterior siding and trim
Many older homes have been meticulously maintained and cared for, but others may be generally in good condition but need a little TLC. While newer homes tend to often use low-maintenance siding and trim products, older homes were often sided and/or trimmed with painted wood. Over time, the paint may begin to paint and peel and rot can also occur.
Walk around the outside of the home looking closely at the condition. If the siding seems fine, pay special attention to the trim around windows and doors and under the eves – these are often the first problem areas.
Depending on the insurance company, a small amount of paint peeling in one or two areas may not be a deal-breaker, but the more condition issues you see, the more likely preferred carriers may balk at providing your insurance.
Other exterior condition issues
Insurance companies also look for cracks or crumbling in the foundation. They look for cracked, chipped or uneven steps or sidewalks. They are also going to look the condition of any outbuildings. Condition issues with the roof, siding or trim (or worse yet, sagging in the roof or walls) of a detached structure may not only make it hard to insure, it can even effect the willingness of a company to insure your home at all, depending on the carrier.
Choosing a home to purchase is a major life decision, and we hope that these tips give you some insight and allow you to be a more educated home shopper, at least when it comes to the insurance ramifications of the home you choose.
As an independent insurance agency, we represent a number of different insurance companies, with different guidelines and expectations as far as insuring older homes. While most of the issues mentioned above will have an impact on what carrier and rate we can offer, we are able to offer some source and level of coverage for almost any home, subject to some rare exceptions.
Outdoor wood boilers have become quite common in the north country in recent years. With wood, people save a lot of money over a traditional heat source, and by locating their wood burner outside, they reduce fire danger and the mess associated with an indoor wood stove.
If you are considering installing an outdoor wood boiler, you may be wondering if and how it might affect your Homeowners insurance. The answer is actually that there is not one simple answer. Different insurance companies view outdoor wood boilers quite differently. Some insurance companies may not continue your insurance if you install one. Others may allow the boiler but increase your rates and/or provide certain guidelines that your system must meet. Still other carriers may not care at all that you installed the unit.
Given all the differences on wood boilers from one insurance company to the next, one of the advantages we have as an independent agency is having multiple insurance carriers available to find the right fit for our client's situation.
As I mentioned, some insurance companies may not allow your wood boiler irregardless of your setup and others might not care at all about the system, but I have put together a list of tips that may make it easier to insure your wood boiler, also enhancing the safety of your system at the same time:
Clearance is definitely going to be the biggest concern with many insurance carriers. While clearance requirements may not always be this stringent with every company, many carriers may require that your wood boiler be situated at least fifty feet away from your home, your outbuildings and any other flammables. Some carriers may also want to see a safe clearance from the location that you store the wood for the boiler.
Many insurance companies may want to make sure that your boiler has been tested to be safe by a testing laboratory, UL being the most common. Ask your wood boiler dealer if the unit is UL approved, or look for the UL circle or testing number on the unit's information plate.
Some insurance companies will be concerned about a "do it yourself" job to connect the water pipes in your house, bury and freeze-proof your water lines, etc. While this may not be a deal breaker with every carrier, the best thing you can do is have your new system professionally installed.
While you may have situated your wood boiler away from your buildings, there could still be a danger of a spark exiting the chimney and starting a grassfire, which could still threaten your structures. You can reduce this risk by installing a small device at the top of your chimney called a spark arrester. A spark arrester might cost between $15 and $50 and may be purchased from your wood boiler dealer, from a local supply store or online from popular retailers.
Some insurance companies require that your unit be situated on a solid concrete slab and may also require a concrete apron extend several feet to the front of your boiler.
If you are installing a new wood boiler system and have insurance questions, I'd enjoy hearing from you. Or perhaps you already have an existing wood boiler system and are having insurance issues. Either way, I invite you to contact me to discuss further.
We are pleased to bring the IMT Group on board at Pine Country Insurance. As an independent insurance agency, we choose to partner with a number of quality insurance companies who we believe will bring value to our current and prospective clients. IMT is a great regional insurance company who will strengthen the insurance options we can offer.
IMT provides value-driven Home & Auto bundles. For homes built in the last 50 years, they offer their signature GEM policy, which adds a variety of coverage features and enhancements to stand out from the average Homeowners policy. On their Auto policy, they add value with Identity Recovery, New Car Replacement coverage, coverage for a rental car during your claim, pet injury coverage and more. IMT also insures off road and recreational vehicles and watercraft, and they offer Personal Umbrella liability protection.
Headquartered in West Des Moines, Iowa, IMT's motto is "Be Worry Free with IMT". They write insurance products in Iowa, Minnesota and four other midwestern states. The IMT Group is rated "A" (Excellent) by AM Best, for its financial strength.
IMT was founded in 1883 in West Union, Iowa, then known as Iowa Mutual Tornado. IMT began by providing tornado insurance, growing to be the world's largest cooperative association in 1927. In the 1960s they began writing Homeowners and Auto insurance, shortening their name to IMT in 1970. They have a long and storied history of providing valuable insurance protection.
Ken Cobb is owner of Pine Country Insurance and has been active in the insurance industry for over 15 years. Meet Ken.
Coverage descriptions found in this blog are summaries provided for general educational purposes and cannot fully detail the terms, conditions, limitations or exclusions of a specific insurance policy. Please read your policy carefully.