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Why You Need Extra Coverage for Natural Disasters

Bookmark and Share You rely on your homeowners' insurance in the event of a theft, vandalism or damage. It might not cover your home and possessions during a natural disaster, though. Learn more about natural disasters and why you need extra coverage.

What is a Natural Disaster?

Several types of weather events are considered natural disasters. They include floods, hurricanes, tornados and earthquakes.

Does Homeowners' Insurance Cover Natural Disasters?

Your standard homeowners' insurance policy may cover natural disasters. This is especially true if you live in an area prone to a severe weather event. However, most standard homeowners' insurance policies do not cover natural disasters.

Read your policy carefully to discover what coverage you have. In certain cases, your policy may cover flooding caused by a severe rain storm, for example, but not from tidal surges. You may also talk to your insurance agent for details.

Why You Need Extra Coverage for Natural Disasters

Natural disaster insurance supplements your homeowners' insurance policy. It goes into effect if a natural disaster strikes. Not only does it give you peace of mind, but it can save you thousands of dollars.

How to Purchase Natural Disaster Coverage

Before you buy supplemental disaster coverage, check the policy and answer these four questions.  

  1. Are you eligible?

    A natural disaster insurance policy may only be available to at-risk home owners who live in areas that are affected by natural disasters. For example, you might only be eligible for flood insurance if you live in a flood plain. Contact your state's insurance commissioner, the Federal Emergency Management Administration (FEMA) or the National Flood Insurance Program (NFIP) for information on the most common natural disasters in your area. That information helps you determine if you're eligible for natural disaster coverage.

  2. Is the timing right?

    The best time to buy natural disaster insurance is before a disaster strikes. Most policies have a waiting period, and they will not cover any damages, repairs or replacements if a disaster happens within that time frame.

  3. Does the premium fit your budget?

    The cost of a natural disaster policy varies based on your home, where you live and the disaster against which you insure your home. That policy could save you thousands of dollars if a natural disaster strikes, though. Evaluate your budget and your needs then compare several different policies to find the right one for your budget.

  4. Is the company reputable?

    When choosing extra coverage for natural disasters, evaluate the insurance company. A.M Best is one website that gives insurance companies a rating. A higher rating signals greater financial stability.
When you understand natural disasters and why you need extra coverage, you're ready to start shopping. Contact your insurance agent to buy the policy that's right for you.

How Does Defensive Driving Lower Insurance Rates?

Bookmark and Share A variety of factors, including accidents and citations, affect your auto insurance rates. Learn what is defensive driving and how it can lower insurance rates as you stay safe and save money.

What is Defensive Driving?

Every time you get behind the wheel, you face threats from other drivers, inclement weather and other challenges. Defensive driving defines the safe driving practices you use to avoid accidents or other incidents on the road.

How Does Defensive Driving Lower Insurance Rates?

Insurance companies assign a rating to each driver based on risk. Age, gender, marital status, address, driving history and other factors affect your rates, and expect to pay more if you're in a high-risk category. That includes young and old drivers and anyone you has received citations for reckless driving or a DUI.

While a speeding ticket can raise your insurance rates by as much as 20 percent, your insurance company might give you a discount if you take a defensive driving course. It proves that you're up-to-date on safe driving practices and better prepared to avoid accidents or citations.

How Defensive Driving Courses Lower Your Insurance Rates

During a defensive driver class, you'll receive a refresher course in safe driving practices.

  • Review your state's driving laws.
  • Practice passing other cars safely.
  • Understand when and how to yield properly.
  • Learn how to handle skids.
  • Familiarize yourself with new technology like anti-lock brakes or rear cameras.
  • Discover how to avoid common distractions and keep your eyes on the road.
Defensive driver courses can last from four hours to several months and be conducted online or in a physical classroom setting. They cost between $20 and $100. Check with the National Safety Council, AAA, AARP or a local retirement community for a class near you.

After you successfully pass the defensive driver class that's approved by your state and accepted by your insurance company, provide the certificate of completion. You may also be required to remain accident-free and avoid citations for a certain amount of time to qualify for the discount.

Young drivers between 16 and 25 years of age may save up to 15 percent annually after successfully taking and passing a defensive driving class. Drivers over 55 may receive a five percent savings. The discount varies by insurance company, so check with your company for details. Also, ask your insurance company if you can renew your training and your discount every three years.

When you discover what is defensive driving and how it can lower insurance rates, you improve safety on the road and save money. Talk to your insurance agent about a defensive driver course and how it can benefit you.

Extreme Weather: Consider Flood Insurance

Bookmark and Share Don’t wait until the weather forecast calls for prolonged heavy rains before buying flood insurance. While this practical insurance can be purchased anytime, the policy does not take effect for 30 days. As the most common natural disaster in the country, flooding ruins millions of dollars of homes and property every year. Even so, flooding is not commonly covered in your typical homeowner’s insurance policy, making it necessary to purchase additional coverage for this costly, devastating disaster.

If you are in a high-risk flood zone, a federally regulated lender will require a would-be borrower to buy flood insurance in order to qualify for a mortgage loan. To satisfy the lender, flood insurance must be purchased in an amount that sufficiently covers the loan.

A homeowner should also buy flood insurance if he or she resides in a flood plain with no failsafe controls, such as a dam. Flood policies even pay off if the President does not declare the area a federal disaster area, which can prove to be invaluable. Because the nation’s Chief Executive Officer rarely issues such a declaration, protecting yourself is extremely important. Besides, you have to repay the federal aid you receive for home repairs related to a natural disaster so providing your own protection is the only way to ensure financial recovery suffered from flooding.

Not all homes qualify for flood coverage. For instance, flood insurance for beachfront or ocean-side property may not be available for the obvious reasons.

The Federal Emergency Management Association (FEMA) reports that more than 20,000 communities have agreed to tighter zoning and building measures to control floods. Residents of these communities can buy flood coverage from the National Flood Insurance Program (NFIP), which FEMA oversees. As of 2009, NFIP had 5.7 million flood policies inforce nationwide.

Premiums for flood insurance vary widely, depending primarily on individual risk. In determining price, flood insurance underwriters consider several factors including the property’s elevation, proximity to bodies of water, and whether the dwelling has a basement. Flood insurance is available to homeowners, renters, condo owners/renters, and commercial owners/renters.

Call out office today! We'd be happy to assist you through the murky waters.

Risks Involved with Purchasing a Foreclosed Property

Bookmark and Share Most Americans have seen ads on television for get-rich-quick seminars that teach novice investors the secrets of making money from housing foreclosure sales. In spite of all the hype, successfully buying and selling foreclosed real estate requires research, money, knowledge, experience and time. Furthermore, buying foreclosed real estate is not without risk. If you plan to try your hand at this type of investing, you need to be well-versed in foreclosure basics.

Foreclosure is the legal recourse lenders or governmental agencies have to recoup money owed them because a property owner failed to make payments. The lender/agency can take the house and sell it to satisfy the debt. Generally, the reasons for foreclosure include:
  • Non-payment of a mortgage/home equity loan.
  • Inability to meet a balloon payment.
  • Failure to pay property taxes.
  • Inadequate insurance coverage for the property.
  • Inability/failure to maintain the property.
The foreclosure process involves three stages:
  • Pre-foreclosure - This is the period between the time the homeowner stops making payments and when the land is put up for sale at auction. Investors typically deal with the homeowner during this time.
  • Auction - This is when the property is taken from the homeowner and sold to the highest bidder. Either the county sheriff or a trustee handles this phase, depending on the state.
  • Real estate owned (REO) - If no one buys the property at auction or if the lender is the highest bidder, the home becomes "real estate owned" by the bank. Banks usually sell REO properties on the open market through a real estate agent or third-party marketing company.
The most common method of buying a foreclosed property is during a sheriff's auction or trustee's sale. These auctions are held on a weekday morning. Investors cannot pay with credit cards, personal checks or IOUs, and they must make a sizable deposit or pay the entire sum for the property on the spot. Typically, potential buyers are not allowed inside the house before bidding begins. The only information prospective buyers have on which to base a purchase decision is what is available through public records searches and a curbside appraisal.

A second risk in sheriff's auctions and trustee's sales is that the homes are not guaranteed to come with a clear title. This makes the title search a critical, necessary part of your public records research. If a previous owner with a valid claim surfaces at a later date, you can lose everything you invested.

Also, homes sold at auction sometimes have liens that weren't erased by foreclosure, such as an IRS debt, that could wipe out any profit you thought you would see from the resale of the property. Procedural errors and court rulings also could stop a foreclosure sale after you have invested time and money. Furthermore, some states have a statutory redemption period, during which time the original homeowner can repay what is owed, regain ownership and leave you with nothing.

Despite all of these potential drawbacks, buying an auctioned home isn't always a perilous undertaking. Homes foreclosed by reputable lenders who are the first lien holders can be a fairly safe investment. If the deal is completed properly, and you have title insurance, there's an excellent chance of getting a good title. Properties foreclosed by a government agency, such as the Department of Housing and Urban Development or the Veterans Administration, present less risk. These auctions are conducted online through a marketing company.

Buyers are permitted to examine the homes in advance, conduct inspections and obtain title insurance. The biggest drawback to government auctions is the limited availability of homes. Consequently, available properties attract a large number of interested buyers, which makes it a very competitive market with prices only slightly discounted off current market value.

If you are considering the idea of investing in real estate through buying foreclosed properties, prepare yourself by learning the ins and outs of the process and legal issues, and gathering whatever information you can on the property and parties involved. In doing so, you'll help to minimize the risk that is inherent with this type of investment.