Why is the dwelling limit on my homeowner’s policy so much different and lower than the real estate (market value) of my house?
The real estate or market value of your home is an amount based on the value of the land, the structure of the home, the location of the property in terms of neighborhood, view, proximity to shopping, freeway and other factors. The dwelling limit of your policy reflects only the estimated cost to rebuild the dwelling, because the land and location would not be destroyed if there was a fire or other covered loss.
How can I save money on my homeowner’s insurance?
There are several ways:
• Buy your home and auto insurance from the same insurance company. Compared to any other discount available from an insurance company, this is by far the largest discount offered.
• Shop around. Be sure to get quotes from an agent who represents at least five insurance companies. Most often these agents are independent, like Farallone Pacific, and represent a number of companies. Buying insurance from an agent that represents only one insurance company or from a company representative selling just their company’s product over the phone or internet can cost you much more.
• Raise your deductible. The quickest way to save big money on your home insurance premium is to increase your deductible to the highest amount you can afford. The days of filing small claims are long gone. If you file frivolous or small claims, you will see your premium increase drastically—or you may lose your coverage all together.
• Improve security and safety. Most homeowners are receiving a 5% discount just for having a smoke detector, dead bolt locks and a fire extinguisher in the home. You can cut your premium even further by installing an alarm system—and your discount could be as high as 15% for an alarm that monitors burglary and fire.
How do the homeowner’s policies sold by Farallone Pacific differ from other homeowner’s policies?
Our policies provide various levels of coverage, customized to meet your specific needs. We partner only with top rated insurers, giving you the option to choose from a variety of well-known and respected insurance companies.
A homeowners policy purchased from Farallone Pacific generally includes five important coverages that offer you better protection than what other insurers offer:
• Replacement Cost Coverage on the dwelling with an extended cap of 200%. Most insurers provide only a 125% cap on the dwelling limit. This cap allows for a higher maximum payout if the dwelling limit on the policy is inadequate to cover a total loss.
• Building Ordinance/Code Upgrade Coverage with 100% of the dwelling limit. Typically, insurers provide just 10% of the dwelling limit. Even a home built 20 years ago will need more than 10% to cover the differences in new construction versus old construction.
• Water Back Up of Sewers and Drains Coverage with 100% of the dwelling limit. Most insurers provide no coverage.
• Personal Injury Coverage with 100% of the liability limit. Most insurers provide no coverage.
• No Dollar/No Time Limit for Additional Living Expense Coverage. Typical insurers provide a limit of 20% of the dwelling limit or limit coverage to 12 months.
I’ve purchased a condo—what insurance do I buy?
When you own a condominium, your insurance needs are different than other homeowners. The condo association has purchased a master policy to cover common areas like the exterior building and walkways, but you are very likely responsible for insuring your individual unit. You need to be certain that items inside your condo are insured, including appliances, counters, cabinets, flooring, fixtures, etc. as well as your personal possessions and your personal liability.
Condo owner policies are affordable—the insurance premium depends on the individual features of your condo unit and the value of your possessions.
When shopping for condo owners insurance, here are the key elements to consider:
• Dwelling Limit. Purchase a dwelling coverage limit that will fully cover the cost to rebuild the interior of your condo.
• Personal Property Limit. Purchase a limit for your possessions that will allow you to replace items at today’s cost. Policies include a replacement cost feature, so calculating how much it will take to replace the contents of your condo based on the new price of your items is essential.
• Additional Living Expense. It is no secret California has a high cost of living (over 10% higher than the national average). Purchasing a condo owners policy that is “unlimited” in potentially meeting the needs of your living expenses is important. If your condo sustains a loss and you can’t live there for many months, you’ll want to be able to maintain the same standard living in another location.
• Personal Liability Limit. Select a liability limit that reflects your level of assets. If you don’t have enough liability insurance, the responsibility to an injured party will shift from the insurance company to you—as soon as the limits on your policy are exhausted. If a court rules that you are responsible for damages for injuries you may have caused to another person, not only could you lose any assets (may need to sell them to pay for these damages), but also you put your future assets and wages at risk. Bottom line: protect your current assets and a portion of your future assets and wages.
• Loss Assessment Coverage. If you are asked by your association to share in an uncovered liability or property damage loss, you may have significant out-of-pocket costs. A typical policy includes $1,000 of loss assessment coverage. Policies sold by Farallone Pacific include loss assessment coverage up to $50,000.
When my house is destroyed, what happens after the fire?
The unthinkable has happened; your house is now a pile of wood, debris and ash. You’re trying to collect money for the personal possessions you had in the house, but the insurance company is telling you they need an inventory of those items.
You’ve been given a sheet of paper for every room in the house, and the adjuster has said he can’t make a payment until you complete these sheets. You think to yourself “this is going to take forever and I can’t remember everything I had.” The next question that crosses you mind is “how can the insurance company do this to me?”
When it comes to paying damages, an insurance company is obligated to pay for personal property that you owned and lost at the time of the fire, but you must be able to provide a list of what was lost. Depending on the value of the item, you may also need to show proof that it existed. Do you or your family/friends have any old photos or video taken at your house that you might be able to use to help create a list of items you owned? How about obtaining copies of bank statements or credit card bills to see what you’ve purchased over the years?
For future reference, it is a very good idea to keep an up-to-date inventory in a secure place, away from your home. One of the most frustrating regrets we hear after a fire is that the majority of their documentation was “in the house.” Two helpful tips:
With a little bit of work ahead of time, you can save yourself countless hours later on and help make sure you receive fair compensation in the event of a fire.
What does the bodily injury and property damage liability mean on an auto policy?
This coverage protects you in case you unintentionally cause bodily injury, including death, and/or property damage to others and become legally obligated to pay damages. For bodily injury, the injured person is entitled to payment for both special and general damages. Special damages include: medical bills, lost wages from work, and the costs to repair damaged property. General damages include: pain and suffering, mental anguish, and similar losses.
Who is considered a California Good Driver?
A California Good Drive is a person who has been continuously licensed to drive for at least 3 years, and who has no more than 1 non-injury accident or 1 ticket in the past 3 years.
I’ve asked for an auto insurance quote and an agent at Farallone Pacific told me she thought my limits of liability are too low on my current policy. What does this mean?
Having liability limits lower than $250,000 per person/$500,000 per accident for bodily injury and $100,000 for property damage could put your financial security at risk if you cause an accident. If you are not just “starting out in life” and you have a good job/income and own a home, protecting your income and assets (as well as future assets and income) is important.
In California, you generally can’t file bankruptcy on a personal injury judgment, so once your auto limits of liability are exhausted after an accident, you are personally responsible. If you don’t have cash on hand to pay, then you would need to liquidate your 401k, investments or savings or sell your home to cover the amount owed to injured party. At Farallone Pacific, we recommend purchasing limits of liability that will adequately protect your assets and income.
What is umbrella insurance?
Umbrella or excess liability insurance provides liability coverage over and above the liability and property damage limits of a home, renters or condo owners policy, automobile policy and any other policy for personal liability. An umbrella is a safety net or extra liability insurance that starts paying losses after the basic policy limits are reached.
You can buy Umbrella coverage as an additional policy or as an endorsement to a home/renter/condo or auto policy, depending on the insurance company. You also have the option to purchase a completely separate umbrella policy through an insurer which provides this coverage independently.