Allowing your homeownerâ€™s insurance policy to lapse can be a costly mistake.Â This is a lesson oneÂ South Florida real estateÂ owner learned the hard way when he received notice that his annual plan would cost $18,000.
Mark Kunzelmann, a North Palm Beach homeowner, let his homeownerâ€™s insurance policy lapse â€“ a policy that is required by the lender.Â In the event that such a thing occurs, the lender is legally allowed to secure a new policy, passing the cost onto the borrower.Â In this case, Kunzelmannâ€™s policy went from $2,500/year to $18,000/year!
While the ethics of such an exorbitant increase are certainly questionable â€“ especially considering the fact that this amount included an 11 percent commission payment from the insurance company to the lender â€“ the focus of this blog will be on prevention.
Home insurance premiums are increasing an average of 10 percent each year, so when it comes time for you to renew yours, make sure you shop around.Â Donâ€™t base your coverage amount of the appraised value of your property, since this value includes land.Â Rather, base it primarily on the value of your home and make personal possessions secondary.Â If youâ€™re not sure what the value of your home is, review your tax record â€“ your home assessment should be listed separately from land.
After you decide on the coverage amount, make sure you have a full understanding of what the policy covers.Â Too often, homeowners donâ€™t find out the limitations of their plan until they file a claim.Â Needless to say, this isÂ notÂ the time you want to learn that something you thought was covered will not be covered after all.
Stay on top of your deductible.Â Insurance companies are notorious for changing these amounts without giving you prior notification, so do your due diligence to ensure that you are not caught off-guard.
Last, but certainly not least, keep your homeownerâ€™s insurance policy documentation organized and secured in a fire-proof box.Â Conduct a home inventory â€“Â www.uphelp.orgÂ is a great site to help you with this â€“ and pair the inventory worksheet with receipts, photos, etc. in your storage unit.
If you would like to sell a home in Miami orÂ search for homes in Miami, contactÂ Frances Khawly and the Khawly TeamÂ â€“ Miamiâ€™s Real Estate Specialists.Â With over 25 real estate certifications, a full-time team of knowledgeable professionals and hundreds of happy clients, you can trust that the sale or purchase of your Miami home is in good hands.