HOME IS WHERE THE HEART IS – One prefers one’s home to all other places. Home is where one is most emotionally attached. Although the proverb has probably been in use since time immemorial, it has been attributed to Pliny the Elder (A.D. 23-79).
This tax blog specifically deals with our views on the topic of property insurance.
We typically won’t extend recommendations via our blogs unless we have used the services ourselves and can fully stand behind the company 100%.
Before we dive in, we wanted to extend a heartfelt thank you to one very special local business, Brightway Insurance brokerage of Julington Creek, owned and operated by Mr. Dave Lego.
Dave is an amazing friend, colleague, and mentor. His roots in the insurance industry run deep.
If you are in the market for a new insurance policy or are simply needing a review of your existing one, why not give Dave a quick call at (904) 217-7624, you will be happy you did!
One more thank you to a couple of awesome people that made our move happen:
~Jane Evans of Florida Homes Realty & Mortgage LLC – (904) 993-3001
~Josh Downing of Bank of England – (904) 962-3557
How Our Property Insurance Story Begins
When we set out to move from New Jersey all the way down to Florida, we were truly challenged with many obstacles. Nothing we were not able to handle, although, as one could imagine, there were so many things that could have went wrong in the process.
People often ask us why we moved down south and before we answer, Angie and I turn to one another, simultaneously smile, revert our attention back to our audience, politely exclaim, “many reasons” and then we close with something humorous, “the low income taxes (Florida has no personal income taxes)”.
It was April 16 of 2017, and coincidentally enough, the office and personal rental leases were coming up for renewal. Back then, we wanted to settle down with our very own home in order to partake in the American dream. After all, the entire point of us moving out of Brooklyn, New York to northern New Jersey two years prior was to experience for ourselves, what the suburban lifestyle is all about and to have less of the hustle and bustle in everyday city living.
Living in Brooklyn, paying an astronomical amount of money to reside in a tiny apartment and to commute for three hours a day did not make sense to us any longer. The never-ending noise pollution, high cost of living, and run-down environment wasn’t a life we felt we wanted. Like many children of newly immigrated individuals, we had very little choice as to where we grew up. All we knew is that we wanted a change and a better way of life for ourselves as well as for our children. The first chance we had, we jumped on it, never looking back.
Back to the move. I am still amazed to this day that we were able to accomplish so much in so little time. The entire process took us around 45 days, soup to nuts. We decided to move right after the tax season 2016 ended in mid-April of 2017 and flew down to house hunt in mid-May. We closed on our new home and moved in on July 2nd. Wow – talk about fast!
In the haste of planning everything out, driving/flying back and forth multiple times, to gathering endless documents for the loan application, and finally closing and working moving magic, we were at the complete mercy of our new environment. Throughout the entire process, we were fortunate to work with amazing people that helped guide us, from our real estate agent to the banker, these folks orchestrated it all in order to make everything as seamless and as efficient as possible. Their hard work and dedication were a true blessing and we cannot express enough gratitude.
Life doesn’t come with an instruction booklet, and never having owned a home and having lived in apartment buildings our entire lives, we had a bit of learning to do.
Our Takeaways on Property Insurance
We can sit here for hours typing up a lengthy discussion on the mechanical intricacies of homeowners’ insurance and discussing various types of coverages, named perils, coinsurance and so on. We feel that discussing some basics on “what to look out for” and “what to consider” will deliver more value to our readers.
Here is what we have learned firsthand along the way, hopefully this will help you in your life journey as well.
1. Investigate the insurance carriers’ rating and recall that not all “A” ratings are created equal
2. Have your policy reviewed before you sign a new policy, and again before you renew
When we moved here in a flurry, we grabbed any insurance agent we could find as we were moving so quickly with everything, we had little time to investigate all the options available. After all, hurricanes haven’t come through Saint Johns County in over 60 years, what can possibly go wrong, right? WRONG! Sure enough, Hurricane Irma came right on through, mere weeks after our move-in date.
Luckily, we were not impacted as we are not located in a flood zone and were fortunate enough to escape wind damage. To our horror, the roof façade did pop out of place and we did need assistance from a roofer to place it back in. The roofer was nice enough to look over the roof for hurricane damage and preform the minor fix at no charge.
Here was the issue. When contacting the insurance agency about the façade, we discovered that we had a 2% of the home value as a hurricane-related deductible. Assuming a home value of $350,000, that would be a $7,000 deductible. Had something serious taken place, the cost on a complete roof replacement could be anywhere from $12,000 to $17,000, our out-of-pocket would be $7,000, and the rest would be covered by the insurance carrier. What we did not know was that insurance companies do offer policies where a hurricane-related out-of-pocket deductible can be set up to a limited amount of $500 or $1,000. Huge difference, either 2% of your home value ($7,000) or $500/$1,000, which one would you rather pay if your entire roof needed replacement? Easy now looking back, but it was all news to us at the time and we were quite literally shocked to find all of this out after-the-fact.
Learning all of this, we weren’t happy at the very least. To add insult to injury, before the first-year anniversary of the homeowners’ policy came due, we received notice of an increase in annual premium. This was the final straw; it was time we searched out someone else’s professional opinion and guidance.
By the mere stroke of luck, someone on NextDoor.com recommended Dave Lego. Dave’s team uncovered that not only was our deductible too high for the dollar we were spending per year, but parts of our home were not covered at all. These are called gaps in the insurance policy. Can you imagine the risk we were facing? After all the investment of time and money, the consequences could have set us back years of hard work, all from a simple oversight, moving too fast and for not double checking the professionals we handed our trust and home to.
With Dave’s help, we were able to lock in a comparable annual premium we were paying beforehand, but with adequate coverage and a new low deductible.
3. Flood insurance is not part of homeowner’s insurance
In places like Brooklyn, New York, speaking of flood, unless the home is directly on the waterfront, would be the same as speaking of the great flood in the Noah’s Ark story – ancient history that’s not likely to happen in our lifetime. Well, the flood did happen and if I did not see it myself, I would not believe it. Hurricane Sandy came and left full devastation with it, creating mass flooding throughout the area. It’s incredible to see for yourself just how much damage a few inches of water can cause to your home.
In places like Florida, floods are more likely to happen as Florida is mostly flat land. Please make sure that you get a flood coverage, it’s inexpensive because it’s generally backed by FEMA and can potentially save you thousands.
4. Review if the insurance carrier is still issuing or renewing policies
There may be multiple reasons for this, from a force of nature fast approaching to simply bad business line. Be on the lookout for this one, because if something were to arise and you needed coverage, the insurance company may not be there backing your property.
5. Do not focus on price – focus on value
We all should be price conscious in all aspects, however, with certain costs, price should not be the ultimate deciding factor. One should not pick a cheap doctor, lawyer, or tax accountant (shameless plug), neither should one focus on the cheapest insurance one can find on the market in order to save on costs.
Getting dirt cheap homeowners’ insurance may mean that:
you do not have enough replacement value built into the policy
other property damage is not covered
deductibles may be too high
collecting on your policy may be a challenge
6. Do not overlook home warranty insurance to help cover routine repairs and issues that may arise
Unless you are very handy, and even then, it is best to investigate this type of insurance coverage, as it will surely help in the future. Home warranty insurance covers appliances, air conditioner unit, water boiler, or even a plumbing job. Some of these routine repairs or complete replacements would be very costly without the coverage.
For a small monthly premium, you can stand to save yourself quite a bit of cash. We have used home warranty insurance ourselves and saved thousands of dollars in repair and replacement costs by utilizing it when needed.
Even if you own a newly constructed home, we would still strongly suggest investigating a reputable home warranty company and consider this as a way to add additional protection and peace of mind.
7. Do not trust the very first professional you meet for just about anything
It is fine to double check and explore all the options laid out in front of you, and don’t forget to shoot out as many questions as needed until you are fully satisfied with the answers you receive.
8. Lastly, do your research folks, insurance needs vary greatly from state to state, so, come prepared, and do your homework first