Insurance

ice-dam.jpgHaving spent the entire weekend in a feeble attempt to shovel the snow and bludgeon the one foot thick ice dams off my roof, I’ve bit the bullet and hired a professional. No use risking life and limb, and doing a third rate job. I also have a nice one inch crack along my family room ceiling, no doubt caused by the huge ice damn above it.

My Facebook stream is filled with pleas from homeowners about ice dams and related winter snow and ice damage. I’m also hearing stories about price gouging on roof snow and ice removal. (According to Sudbury Realtor Gabrielle Daniels Brennan, you should be paying only between $300-$800, max.)

So, time to call in the professionals, and dust off my trusty Massachusetts homeowner’s insurance policy to see what’s covered and what’s not.

Ice Dam Insurance Coverage

Very few insurance policies cover ice dam or snow removal from your roof or anywhere else on your property for that matter. However, interior or exterior damage caused by an ice dam on your roof is typically covered. As with any insurance claim, call the claims department immediately and take photos of the damage.

Ice Dam Treatment & Prevention

In the short term, there are a couple things you can try.

  1. Try to remove snow from the roof but only if it can be done safely. A roof rake or push broom can be used but may cause damage to the shingles. If it’s not possible to remove the snow safely, call a professional like I did.
  2. Chisel grooves into the dam to allow the water behind it to drain off. This is a good emergency measure, especially if rain or a sudden thaw is coming. Be careful not to damage those shingles!
  3. Fill an old pair of your wife’s pantyhose with calcium chloride snow melt and lay it across the dam. I’m not kidding! I did this over the weekend and it seemed to work. It will help to melt the dam and also keep that area of the roof clear. DO NOT USE ROCK SALT! It will stain the roof and siding. It is best for small dams or prevention. It’s also a good idea to scrape the snow off the roof first.

To prevent ice dams in the longer term, keeping warm air from escaping into the attic is the first course of action. In addition to helping resolve ice dam issues, it will result in a more comfortable and less expensive to heat home.

Frozen Pipes Insurance Coverage

Not all companies pay to have frozen pipes thawed by professionals. Some will though. Most policies cover pipe replacement and water damage. The coverage may not apply if you turned the furnace off for the winter without winterizing the house and its contents.

Frozen Pipe Prevention

Frozen water in pipes can cause water pressure buildup between the ice blockage and the closed faucet at the end of a pipe which leads to pipes bursting at their weakest point. Pipes in attics, crawl spaces and outside walls are particularly vulnerable to freezing in extremely cold weather. Holes in outside walls for TV, cable or telephone lines allow cold air to enter the house.

To keep water in the pipes from freezing, take the following precautions:

Fit exposed pipes with insulation sleeves or wrapping to slow the heat transfer. The more insulation the better.

Seal cracks and holes in outside walls and foundations near water pipes with caulking.

Keep cabinet doors open during cold spells to allow warm air to circulate around pipes, particularly in the kitchen and bathroom.

Keep a slow trickle of water flowing through faucets connected to pipes that run through and unheated or unprotected space. Drain the water system especially if your house will be unattended during cold periods.

Interruption of Services

If you lose power during a storm, an all-risk homeowner’s policy usually pays for spoiled food, repairs to damage caused by loss of power, and appliances damaged by the outage. Many policies also will pay for shelter when you lose power for extended periods during the winter. If you lose heat and fail to take steps to prevent pipes from freezing, your policy may not cover the resulting damage.

Additional Resources

Nadine Heaps, Purple Ink Insurance. Nadine is an experienced homeowner’s insurance agent who can answer your questions on coverages.

I’ll Be (Ice) Dammed, The Massachusetts Mortgage Blog by David Gaffin

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Reports are now saying that Hurricane Earl’s track has changed and will hit Massachusetts and especially Cape Cod & the Islands harder than expected. David Gaffin, of Greenpark Mortgage and the Massachusetts Mortgage Blog, is kind enough to let us re-post this article about safety information and insurance claims in preparation for the storm surge.

When a Hurricane is Headed Your Way

Careful preparation and planning before a storm arrives will help minimize damage, loss and grief.  The following is a short listing of what could be done to prepare yourself and your family during this season.

Pre-Planning:

Obtain information on flood zones and evacuation shelters.  in some area, these can be found in your telephone book or online.

  • Plan an evacuation route to the nearest shelter or “safe” area and keep a map handy.  During emergencies, shelter locations be also be announced on the radio.
  • Replenish emergency kits and supplies.
  • Secure important documents from possible damage or move to a safe location.
  • Develop a list of important phone numbers.
  • Develop a plan to secure loose objects around the house; trim branches and trees.
  • Ensure that your pets have collars and identification tags.

Prior to the Hurricane:

Secure all loose objects outdoors.

  • Secure all windows using plywood.
  • Fill your vehicle with fuel.
  • Charge all batteries (i.e. phone, lamps, flashlights, radios, etc.)
  • Listen to the emergency broadcasts of the storm.
  • Be prepared to evacuate with emergency supplies to a predetermined location.

During the Hurricane:

Stay in doors and away from windows.  Keep to the center of the building on the ground level.

  • Listen to the emergency broadcast on the radio or television.
  • Turn off all electrical devices and appliances that are not needed.
  • Stay away from coastal waters, rivers, streams or other flooding areas.
  • Do not try to cross flooded areas with your vehicle.
  • Listen for instructions from emergency officials when the storm is over.

Emergency Supplies and Kits:

First aid kit and personal medications

  • Drinking water
  • Ice Chest
  • Lighter, matches and candles
  • Clothing, personal toiletries
  • Sleeping bags and blankets
  • Portable radio and flashlight
  • Extra batteries
  • Non-perishable foods
  • Manual can opener
  • Important documents
  • Quiet games, books, or toys for children

Here are the carrier’s phone numbers:

Acadia Insurance (800) 691-4966
AIG (Global Energy) (877) 743-7669
AIG (Private Client Group ) (866) 642-5246
Andover Companies: Cambridge Mutual & Merrimack Mutual (800) 225-0770
Chubb Group (800) 252-4670
Commerce (800) 221-1605
Fireman’s Fund (888) 347-3428
Great American (888) 882-3835
Guard Insurance Group (888) 639-2567
Hanover Insurance (800) 628-0250
Hartford Insurance (800) 327-3636
Hingham Mutual (After hours claims) (800) 972-5399
Mass. Property Insurance Underwriting (800) 851-8978
Trident (After hours claims) (800) 288-2502
Tower (877) 365-8693
Quincy Mutual (800) 490-0047
Safety Insurance (800) 951-2100
Selective Insurance (866) 455-9969
Splash Program (Emergency Pollution related claims) (866) 577-5274
Splash Program (Emergency Non-Pollution related claims) (800) 746-3835
Travelers Personal lines:
(877) 425-2466
Commercial:
(800) 832-7839
Utica National (800) 216-1420
Vermont Mutual (After hours claims) (800) 445-2330
Zurich/Maryland (800) 565-6295

I would like to thank Gary Nagle (781)-235-0502 of Corcoran and Havelin Insurance in Wellesley, MA for sending me the following Hurricane Safety and Preparedness list along with the telephone numbers of the major Homeowner Insurance carriers for Massachusetts.

If you do not currently have homeowner’s insurance please do not call today to get any, as the carriers will not write coverage until after the storm passes.

Please use this well and be safe on this long holiday weekend.

By the way readers, should you be closing on a purchase or refinance after the storm passes and the Feds declare a Federal Disaster Area, be prepared to have a re-inspection of the property before closing.  This is considered to be an Act of God and as a result the borrower will be required to pay for any re-inspection fee.  These re-inspections range from $125 to $200.  You will receive notice from your lender and re-disclosures prior to closing.

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We are pleased to have yet another guest blogger: Debra McPhee, CIC, CPCU, Owner of Suburban Insurance Agency of Holbrook, MA, and a very qualified Massachusetts Flood Insurance Agent. Debbie is here to write about flood insurance, a timely topic given the recent March floods.

A flood can devastate your home and your financial security. Any flood—even a small one—can cause thousands of dollars in damages.  Even homeowners in low to moderate-risk zones are at risk. Up to 25% of all flood claims come from people living outside high-risk zones.

Flooding happens anywhere including right here in Massachusetts. Just recently, floods hit nearby towns. People discovered the hard way that when it comes to floods, no one is safe.  You don’t have to live near a major waterway to be flooded. Sudden severe storms can cause flooding. Just because it has never flooded in your area, doesn’t mean it won’t.

You might think that your Homeowners insurance covers flooding, but it doesn’t. It covers all kinds of things, but not flooding.  Flood insurance gives your home that crucial layer of protection your Homeowners insurance doesn’t provide.

What Is The Definition A “Flood”?

In simple terms, a flood is an excess of water on land that is normally dry. Anywhere it rains, it can flood.  A flood is a general and temporary condition where two or more acres of normally dry land or two or more properties are inundated by water or mudflow. Many conditions can result in a flood: hurricanes, broken levees, outdated or clogged drainage systems and rapid accumulation of rainfall.

Myth: Flood Insurance Costs Too Much

You might be surprised how inexpensive it is. The average flood insurance policy costs less than $570 per year. Most homeowners live in a moderate-to-low risk area and are eligible for coverage at a preferred rate with building and contents coverage for one low price. In fact, building and contents coverage starts at just $119 per year. If you live in a high-risk area, a standard rated policy is the only option for you. It offers separate building and contents coverage.  If your home is in a high-risk flood area and you have obtained a mortgage through a federally regulated or insured lender, you are required to purchase a flood insurance policy.

How to Purchase Flood Insurance

Flood Insurance is written through the National Flood Insurance Program (NFIP), a federal program authorized by FEMA.  Flood insurance is available to homeowners, renters, condo owners/renters, and commercial owners/renters. You need to contact a Massachusetts Flood Insurance Agent for a quote and/or application (all policies written by the NFIP are written through insurance agents).

Typically, there’s a 30-day waiting period—from the date you purchase the flood insurance—before the policy goes into effect. The waiting period, however, does not apply to a new home purchase or refinancing of a mortgage if the mortgagee requires flood insurance.

What is Covered by Flood Insurance – and What’s Not

The following is a summary of items covered and not covered by flood insurance.  For specific details as to what is covered, you have to refer to the actual policy.Massachusetts flood insurance agent

What’s covered under Building?

  • The insured building and its foundation.
  • The electrical and plumbing systems.
  • Central air conditioning equipment, furnaces, and water heaters.
  • Refrigerators, cooking stoves, and built-in appliances such as dishwashers.
  • Permanently installed carpeting over an unfinished floor.
  • Permanently installed paneling, wallboard, bookcases, and cabinets.
  • Window blinds.
  • Detached garages for up to 10% of the building limit; other detached buildings require a separate Flood policy

What’s covered under Personal Property?

  • Personal belongings such as clothing, furniture, and electronics
  • Curtains.
  • Portable and window air conditioners.
  • Portable microwave ovens and portable dishwashers.
  • Carpets not included in building coverage
  • Clothes washers and dryers.
  • Food freezers and the food in them.

What’s never covered by flood insurance?

  • Damage caused by moisture, mildew, or mold that could have been avoided by the property owner.
  • Currency, precious metals, and valuable papers such as stock certificates.
  • Property and belongings outside of a building such as trees, plants, wells, septic systems, walks, decks, patios, fences, seawalls, hot tubs, and swimming pools.
  • Living expenses such as temporary housing.
  • Self-propelled vehicles such as cars, including their parts.

    Debra McPhee, CIC, CPCU

Limitations to coverage in a basement

  • Coverage in a basement is very limited. It includes cleanup expense and items such as furnaces, water heaters, washers and dryers, air conditioners, freezers, utility connections, and pumps.
  • There is no coverage for the contents of a finished basement and improvements, such as finished walls, floors, and ceilings.
  • Personal property located in a basement is not covered.

Please call me, Debra McPhee, CIC, CPCU at Suburban Insurance Agent at 781-767-3300 and let’s talk about your flood insurance needs. Don’t let a flood wash away your financial future.

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Congress gave home buyers some good news before the July 4th holiday weekend.

Home Buyer $8,000 Tax Credit Deadline Extended to September 30

Congress approved late Wednesday an extension to the June 30 closing deadline for the home buyer tax credit, hours before it was set to expire. The move will give would-be buyers who signed a purchase agreement by April 30 more time to close on those deals and receive the credit that is worth up to $8,000. The new deadline is Sept. 30.

The Senate approved the measure unanimously on Wednesday, one day after the provision sailed through the House of Representatives with little opposition. The President is expected to sign the measure soon.

More: Wall Street Journal

Flood Insurance Program Restored

Even better than the tax credit was Congress’ move to restore funding for the federal flood insurance program which had run out of money on May 31. Perhaps Congress read my prior blog post on this situation!

The Senate has passed the funding extension until September 30, 2010. This will allow transactions to move forward. The bill is retroactive and covers the lapse period from June 1, 2010 to the date of enactment of the extension. It’s a short term fix, but it will get closings completed for homes in flood zones. Congress will have to revisit this in September.

More: P&C National Underwriter

Have a happy and safe Independence Day Weekend everyone!

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Update: Congress Restores Funding to Flood Insurance Program Through Sept. 30!

I recently had a closing on a property in a flood zone almost fall apart because, unknown to everyone, Congress decided to let the federal flood insurance program run out of money. After doing some research, I was dismayed to learn that since the program expired May 31, home buyers have been unable to buy or increase their flood insurance coverage, and many lenders are unwilling to close on properties in flood zones until the program comes back online. When, or if, that may occur is anyone’s guess. Luckily, in my transaction we were able to transfer the seller’s existing policy to the buyers so the deal closed. But others aren’t so fortunate. Researchers estimate that for each day the program remains in limbo, approximately 1,400 closings for home purchases must be delayed, according to the National Association of Mutual Insurance Companies in Washington.

The National Flood Insurance Program Runs Out Of Money

Flood insurance is funded through the federal National Flood Insurance Program (NFIP). Congress appropriates funding for the program, but it inexplicably allowed the program to lapse for the fourth time in a year when lawmakers took the Memorial Day holiday without extending coverage.  This lapse comes at a precarious time for lenders, owners, and buyers alike as forecasters are predicting a tumultuous hurricane season and buyers are pushing to close quickly in order to qualify for the first time home buyer’s tax credit.

Consumers with existing policies will not be affected and therefore will not see any interruption in their payments, said Rachel Racusen, a spokeswoman for the Federal Emergency Management Agency.  However, renewals or increased coverage requests will not be processed unless Congress decides to renew the program. This means most closings on flood zone properties are in limbo until the program funding is restored.

Flood Insurance Tips

If you are selling or buying a property in a flood zone, you need to deal with this situation well in advance.

  • Buyers and their Realtors need to verify whether the property is in a flood zone in the first place. Here is the link to the FEMA Flood Zone Maps. Lenders will require a flood zone certification, but with the program out of money, you need to know way ahead of time.
  • Buyers need to address flood insurance with their lender right after they decide they want to purchase a flood zone property.
  • Sellers should contact their insurance agent to see whether their existing policy can be transferred to a new buyer.
  • Contact your Congressperson and tell them to restore the flood program funding! (Good news, Congress appears to be considering a bill to restore funding).

Thanks to Patrick Maddigan, Esq. and Suffolk Law student Katherine Garavaglia for assistance with this article.

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While folks here in Massachusetts are finally drying out from the Big Flood of 2010, it’s clear that it has negatively impacted the spring real estate market, and will have repercussions for years ahead for buyers and sellers of affected properties.

Impact On The Market

As recently reported in the Boston Globe, realtors around the state have said the flooding caused canceled and delayed closings, final walk-throughs under inches of standing basement water, and postponements of listing homes for sale. Also, lenders are requiring re-inspections and second appraisals to ensure that homes haven’t lost significant value due to the flooding. This is unfortunate as we’re in the middle of the usual busy spring sales season, made even busier by the soon-to-expire $8,000 first time home buyer credit. (Hey President Obama, how about extending the credit for Massachusetts like you did for the tax filing deadline!).

Disclosure Dilemma

Sellers who’ve been affected by the flooding are asking themselves and their realtors how they should handle the inevitable question from buyers: did your basement flood? Under Massachusetts disclosure law, while sellers are under no obligation to volunteer information, they must answer truthfully to any question posed directly by buyers regarding the condition of their property. Real estate agents are held to a higher standard. They must affirmatively disclose any fact that may have a material impact on whether the buyer would purchase the property. You better bet that whether a home experienced water penetration is “material.”

So, realtors and sellers would be wise to come clean if a home was affected by the recent flooding. The key is how to present the flood damage in the best possible light. Which brings me to the next topic…

Get It Fixed, And Done Right

How did you repair the water damage, and are you taking any steps to prevent it from happening again? Tough questions, because this was a 50 or even 100 year storm event. A flooded basement two weeks ago may never get a drop of water again.

Regardless of whether you are now going to invest in a perimeter drain/sump pump system, homeowners should hire licensed contractors who will pull permits to repair all flood damage. Having it done right will prevent even greater headaches later in the form of mold, dry rot and the like. As my friend general contractor George Lonergan of Lonergan Construction points out, pulling permits gives  sellers the ability to show buyers that flood damage has been repaired correctly by licensed and qualified contractors with sign offs from the local building inspector.

Lastly, I want to point out to buyers that they shouldn’t simply walk away from a home which experienced flooding or has a sump pump system. Many properties in river watershed communities like Wayland, Sudbury, and Natick for example have historically been subject to flooding and wet basements. Seeing a well run and working dry basement system/sump pump/french drain is a good sign actually. What you don’t want is what looks like a dry basement which later floods and then requires a sump pump system later on.

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“Walls In” Condo Unit Coverage Required By Many Lenders

A HO-6 policy is like a regular homeowner’s policy, but for a condominium unit, and with a lot more extras. HO-6 insurance policies cover the interior of the unit and personal property inside–commonly known as “studs in” or “walls in” coverage.

HO-6 Now Required By Lenders

Under the new Fannie Mae (FNMA) and FHA overhaul of condominium lending guidelines, lenders are now requiring HO-6 policies for new condo unit purchases. Sounds like common sense, but HO-6 policies weren’t always required by lenders, and many condominium unit owners were under the mistaken impression that the master condominium insurance policy covered all damage to the interior of their unit as well as damage to furniture, appliances, etc. That isn’t so. In most cases, that master insurance policy covers common areas such as the hallways, roof, basement, elevator, boiler, and common walkways, for both liability and physical damage–but not the inside of units.

Coverages

HO-6 policy benefits include:

  • Coverage for damage to personal property such as furniture, computer equipment and clothing
  • Fill in the gaps of the master insurance policy and cover losses under master policy deductibles
  • Personal liability coverage
  • Interior walls and floor coverings coverage
  • Coverage for improvements or upgrades (most master insurance policies only cover the original condition and value of the unit).
  • Usually has small deductible and fairly inexpensive

Under the new lending rules, an HO-6 insurance policy must provide coverage for no less than 20% of the condominium unit’s appraised value.

High Deductible Protection

Another benefit of obtaining an HO-6 policy is that in certain situations, it will provide gap coverage caused by the often high deductibles on a master insurance policy. These days, condominium associations have been cutting costs by increasing their deductibles, anywhere from $10,000 to even $50,000. What’s more, condominium documents often provide that the unit owner is responsible for losses falling below the deductible. A well-tailored HO-6 policy will protect you in this situation. Here is a good article about the tug-of-war on deductibles.

Loss Assessments

HO-6 policies can also provide coverage for assessments applied an individual unit due to a direct loss to the condominium. The loss must be a “peril” covered under the unit owner’s individual policy, not be levied by a governmental agency, and not be related to earthquake damage. A standard condo policy typically includes up to $1,000 in loss assessment coverage. Additional coverage can be covered for a nominal amount.

The HO-6 policy is a must have for every condominium owner!

If you need an HO-6 policy, please contact my good friend, Kate Kissane at Morrill Insurance in Sudbury, MA. Email: k.kissane@morillinsurance.com or tel: 978-443-9912. 

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President Obama and the Federal Emergency Management Agency (FEMA) on Monday night declared a “major disaster” exists in Massachusetts due to rainstorms and flooding that began earlier this month and continues. The 7 affected Massachusetts counties are Bristol, Essex, Middlesex, Norfolk, Plymouth, Suffolk, and Worcester counties. Federal funds to homeowners in those counties affected by the recent flooding will be available. (Most flooding damage is not covered by standard homeowner’s policies, so this aid is very helpful to those hardest hit). The FEMA Massachusetts flooding resource page is here.

Also, the IRS and Mass. Department of Revenue announced tax filing extensions to May 11 are available to flood victims in the above affected counties. The extensions are automatic for all filers.

Very important:  If you are considering applying for aid, document all damage and repair efforts. Take photographs and video of the flooding and resulting damage. Keep copies of all receipts for sump pumps, air blowers/fans, equipment, contractors, plumbers, electricians, etc. Keep copies of all estimates for repairs. Basically, treat this as any other insurance claim.

The federal aid package includes:

  • Rental payments for temporary housing for those whose homes are unlivable. Initial assistance may be provided for up to three months for homeowners and at least one month for renters. Assistance may be extended if requested after the initial period based on a review of individual applicant requirements. (Source: FEMA funded and administered.)
  • Grants for home repairs and replacement of essential household items not covered by insurance to make damaged dwellings safe, sanitary and functional. (Source: FEMA funded and administered.)
  • Grants to replace personal property and help meet medical, dental, funeral, transportation and other serious disaster-related needs not covered by insurance or other federal, state and charitable aid programs. (Source: FEMA funded at 75 percent of total eligible costs; 25 percent funded by the state.)
  • Unemployment payments up to 26 weeks for workers who temporarily lost jobs because of the disaster and who do not qualify for state benefits, such as self-employed individuals. (Source: FEMA funded; state administered.)
  • Low-interest loans to cover residential losses not fully compensated by insurance.  Loans available up to $200,000 for primary residence; $40,000 for personal property, including renter losses. Loans available up to $2 million for business property losses not fully compensated by insurance. (Source: U.S. Small Business Administration.)
  • Loans up to $2 million for small businesses, small agricultural cooperatives and most private, non-profit organizations of all sizes that have suffered disaster-related cash flow problems and need funds for working capital to recover from the disaster’s adverse economic impact.  This loan in combination with a property loss loan cannot exceed a total of $2 million. (Source: U.S. Small Business Administration.)
  • Loans up to $500,000 for farmers, ranchers and aquaculture operators to cover production and property losses, excluding primary residence.  (Source: Farm Service Agency, U.S. Dept. of Agriculture.)

How to apply for assistance: Those in the counties designated for assistance to affected residents and business owners can begin the disaster application process by registering online at www.disasterassistance.gov/ or www.fema.gov or by calling 1-800-621-FEMA (3362) or 1-800-462-7585 (TTY) for the hearing and speech impaired. The toll-free Teleregistration numbers will operate Monday through Friday from 7 a.m. to 1 a.m., on weekends – Saturday and Sunday from 7 a.m. to 10 p.m., until further notice.

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