Realtors with the Silicon Valley Association of Realtors have been keeping abreast on their clients' insurance needs, including the latest laws affecting homeowners insurance.
"As Realtors we like to keep up to date on any changes that might affect our client's transaction. We look to our affiliate members to provide us with information that is relevant to our clients' needs," said Joanne Fraser, president of the local Realtor association.
Fraser said recently, Realtors were reminded that effective July 1, sellers of property located in a high or very high fire hazard zone must disclose to a buyer that they have completed a home fire hardening and defensible space advisory disclosure and retrofits to bring the property in compliance. She noted, "We advise buyers to always check if they can get insurance and the terms of coverage before purchasing property anywhere, especially in high fire zone areas."
Last week, State Farm Insurance agent Laura Peterson informed Silicon Valley Realtors that it is a volatile market for insurance right now, as some insurance companies are not renewing policies and many companies have increased rates in order to stay solvent. Average rate increases in the state of California are about 6 percent. In parts of San Jose, rates are up 10 percent and in Los Gatos, some rates have increased 20 percent.
"Homeowners should review their homeowner policies to make sure their home is insured properly and has appropriate and adequate coverage. They should consider the rising costs of construction and materials to rebuild if the home is ever damaged," said Peterson.
For personal property coverage, Peterson advises homeowners to videotape or photograph items in every closet and room. She said a homeowner policy usually has loss of use clause. Homeowners should review the dollar limit. Peterson added because of rising costs, policy deductibles are higher and typically range from one-half to 1 percent of the dwelling amount.
Farmers Insurance agent Kyle Chuang spoke on the benefits of liability coverage, specifically personal liability coverage. Personal liability coverage within a homeowners policy provides coverage to pay for claims of bodily injury and property damage sustained by others for which you or covered residents of your household are legally responsible. Chuang shared a case where this coverage helped a client whose dog bit someone. The case was settled for $120,000. The company renewed the client's insurance but removed dog liability coverage.
Chuang explained umbrella insurance is a "liability extension" over existing underlying liability coverages, such as bodily injury/property damage liability in an auto policy or personal liability in a homeowners policy. One must have a qualified underlying liability coverage in place and exhaust it before the umbrella coverage kicks in. If the underlying liability coverage excludes or denies a claim, the umbrella will not kick in.
Chuang gave the example of a homeowner operating a childcare business at home. "This liability risk might be excluded from the homeowner's personal liability insurance. Thus, an umbrella policy will not pick up the risk either."
Another example is getting into a tragic accident while driving your personal car for business delivery service. Business delivery is not typically covered under personal automobile liability coverage, so the umbrella coverage will not pick up the risk.
"The bottom line is if the underlying policy excludes the claim, the umbrella will not extend the additional liability. As in the dog bite example, if the insured was required to sign an 'animal liability exclusion' form in order to renew their home policy, since the animal liability is now excluded, their umbrella will not pick up the risk either," explained Chuang.
Chuang also advises homeowners to be careful of the kind of insurance they purchase because there are stripped-down policies that force consumers to add coverage and this can get expensive.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.