Homeowners Beware: With housing values plummeting, the most important protection is to have the proper amount of homeowners insurance

We use the term “insurance to value” to denote that the dwelling limit in the homeowners policy is tied to replacement cost (and not to resale value). Soucy Insurance periodically analyzes replacement-cost trends and suggests adjusting the insurance value of a home.

The pace of existing-home sales dropped more than 8 percent from January 2008 to January 2009, reported the National Association of Realtors. In fact, home values declined for 76 percent of all U.S. homes during 2008. According to the U.S. Census Bureau and Department of Housing and Urban Development, the rate of new-home construction is now at its lowest in 50 years.

What’s not going down, though, is the cost of rebuilding and repairing houses. Construction costs rose by more than 4 percent between 2007 and 2008, according to a report in Best’s Review magazine citing Reed Construction Data figures. Rising reconstruction prices are contrary to the economic news of recent months. And it’s contrary to consumers’ expectations that lower home values should mean lower homeowners coverage is needed.

What’s more, homeowners are already cutting back on insurance expenses. Nearly one in four households already have changed their insurance coverage in the past year to reduce costs, according to a recent survey by the Independent Insurance Agents & Brokers of America (the Big "I") and local Trusted Choice® member agencies. With these conflicting pressures, what should a homeowner do? The first thing: Recall what homeowners insurance is designed to do.

Insurance should "make whole" the policyholder after loss or damage to the home from an unforeseen event such as a fire, lightning strike or windstorm. In the case of rebuilding a home, "making whole" means rebuilding the same or similar structure.

When a home is damaged or destroyed, there are several issues that factor into its repair or replacement cost:

• Debris must be removed and discarded.
• Lumber, concrete, and other building materials are in demand on the worldwide market, even if demand is slumping in the United States.
• Building materials are purchased for just one home, not on a large-scale basis as for most housing developments.
• Fuel costs, a big part of construction costs, are higher than just a few years ago.
• Natural disasters in the U.S. have left a shortage of building materials and labor in certain areas.
• Homeowners want to get back into their home as quickly as possible, and speed drives up costs.

You should always check with your Soucy Insurance agent to see that your insurance program reflects current economic conditions.

Is your business protected by flood insurance?

Recent hurricanes have raised awareness of the amount of damage to homes and businesses caused by flooding. But did you know that the typical commercial property policy has a standard flood exclusion stating that the insurer will not pay for water damage, caused by:

• Flood, surface water, waves, tidal water or overflow of any body of water, or spray from any of these, whether or not driven by wind.
  
  
• Water or water-borne material which backs up through sewers or drains, or which overflows or is discharged from a sump pump, well or other system that is designed to remove subsurface water which is drained from the foundation area.
  
  
• Water or water-borne material below the surface of the ground, including water which exerts pressure on, or flows, seeps or leaks through any part of a building, sidewalk, foundation, driveway, swimming pool or other structure or water that causes earth movement.

To protect your business from flooding you must purchase a separate flood policy or a flood endorsement. Speak to your Soucy agent today for more information.

Why you need to put your home and car insurance together

First and foremost, you will be working with a local agent right here in your community, where you can simply pick up the phone or even stop in to our office and get an answer.

Besides the obvious convenience of getting a discount on premiums, you can find some major hidden benefits from having both types of insurance together.

Save Time
Having multiple policies in one place can cut down on time spent filing claims. For example, a typical break-in and theft from a car would involve both your auto insurance and your homeowners insurance. Any items in the car, such as CDs, books, a jacket, and toys that are not part of your car, would be covered by the home insurance. If the built-in stereo is stolen, it's covered under the auto insurance. If both your policies are in the same place, one explanation to one claims person would take care of everything. You would not need to find the contact information, wait for returned calls, recount the story multiple times, and remember different file numbers for one incident.

Save Money And Cut Down On Paperwork
Having home and car insurance together will also cut down on paperwork, time and money. It just makes life easy when you know things are simplified and all together.

Some companies even offer extra coverage as an incentive to combine insurance. You may find additional options like lock replacement and rental reimbursement, which can be very valuable should you need them, and typically are not offered in standard policies.

Only One Renewal Schedule
To save time and possibly money, you should consider getting your home and car insurance on the same renewal schedule. It's much more efficient to have both quoted at the same time than to do each one separately at two different times in the same year.