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Tuesday, June 15, 2004

Lessen Your Risks, Understand Your Insurance Policy Before It's Too Late

by Phoebe Chongchua

Firestorms have ravaged various parts of the country. Some of the most widely publicized and destructive fires have charred California. But now, in the aftermath, fire victims are storming Sacramento looking for insurance reform. Hundreds of people who have lost their homes are now battling their insurance companies.

It's a warning for all of us to seek clarification if we don't understand our insurance policies, before a disaster strikes.

In May, nine San Diego, California residents and firestorm victims went to Sacramento to support five bills that were developed as a result of the Southern California wildfires and are being presented together under the Homeowner's Bill of Rights.

The bills deal with policy renewal, disclosure of broader insurance coverage, longer periods to repair or rebuild or replace their homes, establishment of a uniform measurement of "actual cash value," and depreciation of labor costs.

One bill would give the California Department of Insurance authority to sponsor a mediation program to help expedite conflicts between Southern California wildfire victims and their insurance carriers.

"These bills won't directly, except for the mediation bill, help the people who lost their homes in the fires of last year, but they will help people in the future. So it's a tremendous show of humanity that all these people are taking time to help people not have to go through what they went through personally," said Gary Gartner, Deputy Press Secretary for the State Insurance Commissioner, John Garamendi. Garamendi is sponsoring the bills that were initiated by four democrat legislators. Gartner says the Commissioner is optimistic that the fire victims' support will help the bills pass.

While the bills are making their way through the legislative system, many homeowners are reeling in confusion.

California resident, Dian Black, whose home suffered water damage after a San Diego fire, says wording, such as when the term replacement is used, isn't clear in policies. "[Fire victims] are under the impression that they are 100 percent covered," said Black.

But like many fire victims, Black discovered her insurance coverage wasn't adequate.

Pete Moraga is a spokesperson for the Insurance Information Network of California -- a nonprofit, non-lobbying, media-relations organization that is supported by the property-casualty insurance industry.

"The wording of policies is governed by state statute, which means that we're governed by law as to the name and the way that they're marketed," said Moraga.

There are three different types of homeowners' insurance policies. One is an actual cash value. That one represents an insurance payout that would take into consideration any depreciation of the structure and depreciation for contents.

The replacement cost policy does not take into consideration depreciation but it is bound by limits of the policy. "So if you buy $200,000 worth of coverage that's the limit of the policy," said Moraga.

The guaranteed replacement policy operates without any type of limit on the policy. But according to Moraga, this type is rarely offered or sold in California.

Many fire victims are also criticizing insurance companies for what they say is an extraordinarily lengthy time for the processing of their claims. But Moraga points to a recent survey the organization conducted, "As of April 12th we did a survey that represents 66 percent of the homeowner insurance market in California and by April 12th we had already completed 84 percent of all of the claims from our survey sample. So out of 12,902 residential fire claims 10,811 had been completed by April 12th," said Moraga.

It's no doubt that legislative fuel to reform homeowner insurance policies has been ignited; now it's just a matter of time to see if it'll keep burning through Capitol Hill.

Insurance Tips:

Home security alarms, smoke detectors may give you a discount on your policy.

Take inventory of your household items -- it's best to write down and photograph and/or videotape, then keep in a fireproof place.

Write down the serial numbers and the value of your personal property.

Review your policy and ask your agent for clarifications.

Be prepared to be charged more if you have an in-ground pool or trampoline.

Consider having an appraisal of your more unique personal property such as heirlooms, expensive antiques, jewelry and more.
Published: June 15, 2004

Phoebe has nearly 20 years of experience in the broadcast and print industries. She is a realtor with Prudential California Realty and is a real estate reporter for The Coast News in San Diego, California. Phoebe worked for KGTV/10News in San Diego as a Newscaster, Reporter and Community Affairs Specialist for more than a decade. Today, Phoebe writes, sells and speaks on real estate. Visit her web site: www.phoebechongchua.com or call: 858.259.3646 or email her at mail@phoebechongchua.com for more information.

Copyright © 2004 Realty Times. All Rights Reserved.

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Rhode Island Towns Report Home Sales Brisk, Slowing Only Slightly

by Blanche Evans

Higher interest rates and interest rate hike fears are beginning to weigh on homebuyers nationwide, but Realtors in Rhode Island towns report that sales are still brisk, even as they begin to slow due to overinflated home prices.

Smithfield

"This is a very nice town located in the center of Rhode Island," says Realtor Dave Miles, "and it has great highway access."

Observes Miles, "The market is still showing great strength even though it has slowed just a little and interest rates have jumped. A leading economist indicated that there was no need to worry about a housing price bubble with interest rate rising because he said 'We're already past a contraction in payroll employment, and jobs and income are in a growth mode so prices won't contract because the real economy is coming on strongly.' The increasing value of homes has had some effect in slowing the market, but well-priced homes still sell very quickly and many times for more than the asking price. Homes that are improperly priced will not see great activity and mostly will stay on the market until the asking price is lowered to reflect true market value. What these homes actually do is help sell the homes that are well priced."

Narragansett

Says Realtor Althea Rothmeyer, "We have excellent schools and beautiful Beaches. It's a good community for property investment. Rhode Island property owners are still reaping healthy returns-on-investment according to data released by the Rhode Island Association of REALTORS (RIAR). The median single-family home sales price was 11.9 percent higher than that of the same period last year."

Warwick and Cranston

"Warwick and Cranston are suburbs of Providence," says Realtor Steve Gillikin, "The major airport for Providence is located in Warwick. The cities for the most part are very urbanized with many smaller homes on smaller lots along with most of the major shopping in the state located in both cities. Western Cranston however is still rural with some existing farmland, but now mostly new subdivisions with larger homes in a higher price range. For those working in and around Providence as well as commuters from Maryland, most buyers find both of these cities very affordable with access to highways, shopping, the airport and also bordering Narragansett Bay for boating."

Gillikin advises, "Homes are not selling nearly as quickly as they were last year. There still is a great demand, and interest rates are still at an all time low, however the asking prices on some new listings are as high as 40 percent over the average selling price of similar recent comparable sales. In the suburb communities of Warwick and Cranston, right now there are 402 listings with an average asking price of $341,244. These listings have been on the market an average 44 days. There are 491 pending sales under contract with an average asking price at the time of the sales contract $255,722. Almost $100,000 under the average list price of those not sold. Those pending sales have been on the market an average 44 days. Finally, there have been 526 closed sales so far this year with an average selling price of $238,200 and on the market an average of 51 days until a contract was signed. That is a huge gap between average asking prices and average selling prices. Selling prices were up 22.37 percent in Warwick in 2003 over 2002 and 21.68 percent in Cranston.

He warns, "The inventory of available homes for sale is increasing and many buyers are pulling out of the market for now because they just can't afford it or are just plain refusing to pay the high asking prices of some sellers. Buyers were having a tough time finding a decent home at a price they could afford. Some have been looking for over a year. Good single family homes priced under $250,000 are almost nonexistent. Even multi-family homes that just two years ago were selling for $120,000 are now on the market for more than double that price. In most cases, neither rents nor buyers income have remotely kept up with the asking prices and with a rise in interest rates, more and more buyers are driven out of the market. In my opinion, prices have reached a peak. Home prices are getting out of reach of average Rhode Islanders' personal income."

Published: June 15, 2004

Blanche Evans is the publisher of Agent News and the associate editor of Realty Times, the Internet's largest independent real estate news service. She is the author of two best-selling real estate books: The Hottest e-Careers In Real Estate, Real Estate Education Company, an Internet marketing primer for real estate professionals, and homesurfing.net: The Insider's Guide To Buying And Selling Your Home Using The Internet, Dearborn, a consumer homebuying and selling guide. In 2000, she was recognized by the editors of REALTOR(r) Magazines as one of the "25 Most Influential People In Real Estate," and in 2003 when the "Most Influential" list was updated, she was recognized as one of nine "Notables." She is also a frequent contributor to "Your Money" on CNN fn.

Copyright © 2004 Realty Times. All Rights Reserved.

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