These Home Improvement Projects Can Raise and Lower Your Insurance Rates

If you’re updating your home, you may have to make updates to your home insurance policy, as well. When you increase the value of your home, such as by adding square footage or doing a major bathroom renovation, you need to make sure you don’t end up underinsured. Your current policy was designed to cover the cost of rebuilding, and it needs to reflect your home’s current value accurately.

Also, some home improvement projects can actually lower your premiums if they make you less likely to file a claim. By not upgrading your policy, you could miss out on these substantial savings.

Women setting the alarm on her home security system

Take a look at some home upgrades that will require modifying your insurance policy.

Home Improvement Projects That Increase the Value of Your Home

If you purchased your policy when you had laminate countertops and decided to upgrade to marble and high-end appliances, you added tens of thousands of dollars to your home’s value. But, if you don’t inform your insurance company, you’re left in a very vulnerable position if the worst happens and you need to file a claim. Purchasing more coverage protects the value of your home and ensures you get an adequate payout to replace any covered damage. The same is true for adding livable square footage by renovating a basement or building an addition.

If you add a pool, updating your insurance becomes crucial: swimming pools are a potential hazard. To have peace of mind, consider adding liability insurance included in your policy.

Upgrades That Can Lower Your Premiums

Your home insurance policy isn’t just calculated based on your home’s value. It also considers how likely you are to file a claim. Getting a new roof can help you qualify for a lower rate, especially if you have an older home. Roof damage from rain and snow is one of the biggest reasons that homeowners file a claim, and your roof is now better able to withstand extreme weather.

Upgrades to your security, such as a burglar alarm, are another potential investment that can lower your rate. Modernizing older heating, plumbing, or electrical systems can result in a discount if there’s less risk of fire or water damage.  

At Vargas & Vargas Insurance, we’ll be glad to give you detailed guidance about the right policy for your current home’s value.   

4 Things First-Time Homebuyers Won’t Ask about Home Insurance

As insurance agents, we get requests for quotes from first-time homebuyers all day long. It’s essential to remember that these folks aren’t insurance agents or realtors. They may not understand how home insurance works, what it covers, and why they need it. Many first time buyers will assume a home insurance policy is just like an auto policy.

Realtor explaining home insurance to first-time homebuyers

Vargas & Vargas Insurance is here to help! With this blog, we’re going to cover a few concepts every agent should be reviewing with first-time homebuyers.

1. What Is Replacement Cost Value vs. Actual Cash Value, vs. Purchase Price

Most home insurance policies are written at Replacement Cost (RCV). It’s crucial to explain to new buyers that we’re insuring the home and its contents for what we estimate it will cost to replace the home with a brand new home and brand new contents on the same piece of property. 

This is important because:

  • Many buyers assume we’re insuring a home for Actual Cash Value (ACV) — what the building is worth today, considering depreciation.
  • Buyers may not understand that the purchase price of the property does not equal the cost to replace the home completely.
  • The purchase price of a property and replacement cost of a home are not the same thing. 

2. Are Their Vehicles Covered When Stored in Other Structures?

First-time buyers might think that their stored vehicles, which aren’t insured with an auto policy, will be covered by Other Structures coverage. This is not the case!

3. Will a Swimming Pool Change Their Rates?

Possibly. Swimming pools present a significant risk, even when they’re empty. New homebuyers should consider purchasing an umbrella policy if the home has a swimming pool. 

4. Is Your Client’s $10,000 Diamond Engagement Ring Covered? 

Generally, no. Most home insurance policies will set a specific limit on valuables like:

  • Jewelry
  • Furs
  • Cash
  • Musical instruments
  • Artwork

Ask your prospective client if they own these sorts of expensive items, and explain what the limits of coverage are. If your customers do have these sorts of belongings, often in the form of precious wedding jewelry, they probably need a Personal Articles Floater (PAF).

Be sure to put notes in their file, describing your conversation. At Vargas & Vargas, our goal as insurance agents is to be sure that customers have the protection they need so that they won’t face any surprises. Check out our blog for more great insurance topics, or get in touch with us today.

The First-Time Homebuyer’s Quick Guide to Finding Insurance

If you are purchasing your first home through a home loan, you will need to show proof of home insurance to your lenders before they can finalize the loan.

First-time homebuyers moving into their home

Since lenders do hold a lien on your property until you finish paying off your loan, having clients under home insurance is in their best interest. This can help protect the equity they have in your home in case of damages, such as electrical hazards.

While you might not always need to have insurance if you are paying your home through an unsecured line of credit or with cash, it pays to invest in it. Home insurance helps keep your home protected. When shopping for insurance, comparing prices and policies makes it easy to pick an insurance policy that covers your home optimally and is affordable enough.

Here are some insights on finding home insurance:

1. Pay Attention to the Limits

Home insurance coverage is divided into categories. Typically, any personal belongings you own will be covered under Coverage C of your insurance (personal property), and it pays to ensure that the limit will be enough to cater for what you own. However, some items, such as jewelry, will fall under a category containing a sub-limit, which tends to be set by your insurance company. If the sub-limit isn’t enough for such valuables, you have to add a rider for protection.

On the other hand, coverage E (liability) will protect your liability in case someone gets injured by accident in your property. When picking insurance, ensure that the liability limit awarded is enough to cover all your assets. Since most insurance policies set their liability limits at half a million dollars, you should consider buying umbrella insurance for extra coverage if this limit will not be enough for your property.

2. Understand Your Deductibles

Deductibles in insurance are the amount of cash you will pay out of pocket to cover any damages. When setting your deductible, choose a figure that is right into your budget. Unlike car insurance that fixes the deductible to a specific amount, home insurance deductibles might vary.

Some policies wills set your deductible at a percentage of your dwelling coverage. Others tend to have a split deductible system, whereby most claims will work under a set dollar deductible amount, while some claims (such as wind damage and other perils) may work under a percentage.

Also, some carriers might include a wind and storm deductible — or a named storm deductible — as a percentage of your dwelling coverage. To save on insurance costs, you can always increase your deductible. But it might be wise to save an amount equal to the deductible in a savings account for a rainy day.

3. Beware Of Exclusions

In some states, insurance agencies might exclude certain things from your policy. Under most policies, landslides, mudflows, and even earthquakes might be excluded. Flooding, in particular, isn’t always covered. For instance, in Massachusetts, earthquakes and floods are excluded. Even though you do not live in an earthquake or flood-prone area, it might be wise to purchase the extra coverage to eliminate the financial risks.  If you think you need coverage for an excluded peril, talk to your agency about purchasing the ad hoc coverage.

The future is not set in stone. It can be very easy for a disaster to destroy your most prized investment: your home. Home insurance ensures that you can protect your investments. If you want to buy home insurance or get insights on how to save on insurance, feel free to contact us.

What Costs Are Part of Your Monthly House Payment?

If you’ve been looking at houses, you’ve probably seen real estate websites where the estimated monthly payment is shown. This is a great feature for breaking down the cost of a home that you will pay off in 15 or 30 years, and it can help you stay within your budget.

Woman smiling as she reviews her house payment at home
Monthly house payments include your mortgage payment, a portion of your property taxes, and your homeowners insurance premium.

However, it doesn’t always show the whole picture. The estimated payment only factors in the cost of the loan for a traditional 30-year mortgage at the current interest rate. It does not include the other costs that are factored into a standard monthly house payment. Two additional costs include:

  1. Property taxes
  2. Homeowners insurance

Property Taxes

Just like everything else in life, having property is also taxed. When you take out a mortgage loan, the property taxes are calculated into your monthly loan payment and put into an escrow account. When your taxes become due, your mortgage company makes the payment for you.

The percentage of taxes you owe depends on where your property is located, and this can be checked prior to purchasing a home. 

Although it may seem like a negative, having your taxes included in your monthly payment is actually a great way to stay organized. It takes away the burden of paying property taxes in one lump sum. Also, you don’t have to worry about whether you made the payment or not. (And if you love your home, you definitely don’t want to forget paying your property taxes!)

Homeowners Insurance

The other cost that goes into your monthly mortgage payment is homeowners insurance. It is standard for the insurance cost to be part of your mortgage payments, and mortgage lenders will often not loan you money if you do not have it. If anything should happen to your property, the lenders want to make sure that they can recover their costs. However, having the right home insurance policy isn’t just for them — it’s for you. You’ll want to be protected in case your home is damaged, and the right homeowners insurance policy can give you peace of mind.

You get to pick out the home insurance policy that works for you, and you should have it ready at the time of your closing. Here at Vargas and Vargas Insurance, we can guide you through the process. Contact us today for more information.

What’s the Difference Between Condo Insurance and Home Insurance?

Insurance is vital, regardless of whether you own a home or a condo. It can help offset damages to your property, so you don’t have to worry about paying for those damages out of your pocket.

happy young couple buying a condo and talking to the property manager
Protect your new condo by learning how condo insurance is different from home insurance.

However, the type of insurance you choose will dictate how any damages to your property will be handled. While both home and condo insurance might cover your property, there are some subtle differences between the two. Here is how home and condo insurance differ:

Condo Insurance

Condo insurance covers any non-communal property that you use as a property owner. Ideally, it should cover certain ‘walls-in’ losses, replacements, and repairs, as well as your personal property. For any damages that happen outside your unit walls, the condo association’s master insurance policy should offset them. But you should always verify the details before you purchase a condo or change your insurance policy.

Condo insurance also comes with loss assessment coverage. In situations where the condo association levies condo damage fees on all unit owners, this will cover the ad hoc fees. Condo associations will typically do this if the cost of offsetting damages to the communal assets is more than what their master insurance policy covers.

Home Insurance

Traditional home insurance tends to be for single-family dwellings, and it can be as simple or complex as mortgage lenders allow it to be. It should cover your entire home structure, including construction materials and other permanent elements. Most insurance policies also cover any personal property that is valued at 50% or greater of the insured home itself. The insurance can also cover other structures within the vicinity, such as detached garages and sheds.

Filing Claims

Filing claims is typically easy for home insurance, as it can be made directly with the insurers. On the flip side, there are some complexities in filing claims through condo insurance, and the specifics will depend on the situation.

For instance, the condo association insurance should take care of water damages as long as they are as a result of burst pipes outside your condo walls. Your condo insurance will, however, take care of damages arising from burst kitchen sink pipes, as they are within the unit’s walls.

Insurance policies tend to have rules that property owners have to adhere to for an easy claiming process. Regardless of the insurance policy you have, it pays to follow these rules. Be sure to read through the fine print of your insurance policy documents to choose the right coverage. If you have any questions about condo insurance or you’re looking for a new policy, we’re here to help. Contact us online or at 617-298-0655 to talk to our team.

What Should You Do If Your Car Insurance Gets Canceled?

Car insurance is something that we have to have if we legally want to be able to drive our automobile. However, we have all been in situations where we forget to pay for it. Car insurance is something we know we need, but it often falls through the cracks. We either have it or we don’t, but most people generally don’t think about it. 

man smiling and driving a sedan
Talk to your insurance company about your options instead of letting your car insurance lapse.

Did you forget it, or were you out of town and fail to see the “due by” notices? Maybe you moved, and the notice got lost in a moving box. Either way, it can be a frustrating mess. But don’t just let your coverage lapse. Here’s what you can do instead.

The Right Way to Handle Car Insurance Cancellations

In Massachusetts, a car insurance provider has the right to cancel your car insurance for lack of payment. However, they will send you a warning ahead of cancellation. Insurance providers are obligated to give you a notice 20 days in advance of the cancellation. 

This means if you fail to pay by December 1, they can send out a notice giving you until the 21st of December. Failure to pay by the 21st will mean that your policy ends and you are no longer covered. 

If you are unable to pay and wish to avoid cancellation, there are a few things you can do. They include:

  • Contacting your insurance provider
  • Asking for a negotiation to keep your policy active
  • Providing proof of why you lapsed in payment (for example, in the event of a hospital stay or a family emergency)

Often, if you talk to your insurance representative, you can get your coverage reinstated if you show good cause. Otherwise, you can appeal through the Board of Appeals

What If I Want to Just Cancel My Policy?

Once you receive a cancellation notice, it can be tempting to just let it happen and search for new coverage. But you should never allow your policy to lapse. There’s a right way and a wrong way to cancel a policy that you no longer want. 

  • The Right Way: If you want to improve your coverage by switching to a new company or policy, you are legally able to do it. There may be a penalty for canceling mid-policy, but it is still better to avoid the company canceling. Contact your insurance provider and explain to them why you want to cancel and ask about the penalty cost for doing so. You can also choose to cancel as your policy ends, especially if you are just changing companies. 
  • The Wrong Way: Simply allowing your insurance company to cancel your policy may come with some pretty nasty consequences. Your insurance providers are obligated to tell the Massachusetts Registry of Motor Vehicles (RMV) if your policy lapses, which could result in you losing your license. If you are caught driving without insurance coverage, you could face fines and more. It is topped off by the fact that a lapse will impact your credit rating

Plan Before You Cancel

Canceling a policy should never be done without thought. If you are switching companies, look at your current provider’s penalties for canceling an existing policy. You may also consider having your new insurance company talk to your current provider to resolve the issue. This will prevent cancellation penalties and ensure a gap-free transition.

If you are considering changing your insurance policy, Vargas & Vargas Insurance is here to help. You can contact us or request a free quote. 

Why You Should Update Your Policy After Improving Your Home

A couple looking at their newly renovated kitchen and home improvement plans
Updating your home insurance gives you better protection and can even lower your premiums!

Home improvements can change more than your home. The truth is, even a kitchen upgrade can increase your home’s efficiency, value, and more. That means you need to consider how the increase in value can impact your home insurance policy. Not considering it can make it impossible for you to get everything you deserve if you file a claim. It can also mean you pay more than you have to for insurance coverage. Why risk it?

What Home Improvements Require Changes to Home Insurance?

Let’s say that, within the past few years, you have invested money into your home to upgrade your kitchen, home office, and your roof. You may not think about them being a total cost, but each improvement adds up. It is easy to spend over $100,000 on improvements.

This amount, whether the work was done recently or over the last ten years, means that you should reconsider your insurance policy. Some improvements may increase your policy cost, but others may lower it drastically.

Improvements That Make a Difference

To help you see how certain things can raise or lower your home’s value according to your insurance, you have to look at the premium you pay. Most home improvements will lower the cost of your premium, but it is always best to be covered. Home improvements that reduce the risk of claims, for example, can lower your premium.

Improvements That Can Lower Home Insurance Premiums

  • New Roof
  • New Security System
  • Generators
  • Reducing Fire Hazards (Replacing Old Wiring or Wood Heaters)
  • Updates to Plumbing

Improvements That Can Increase Home Insurance Premiums

  • New Pool
  • Home Additions or Decks
  • Kitchen Remodels (May Raise or Lower Premiums)

This list is not all-inclusive. Your insurance company can tell you what other updates and renovations may save you money on your home insurance premium. 

Why Risk Paying More?

Many people wonder why they should pay more for homeowners insurance if they have already paid to renovate their home. The answer to this is simple. If you upgrade your kitchen with granite countertops, all new appliances, and more, what happens if a tree falls on your roof? You risk losing your improvements because nothing is documented as it should be. 

Your insurance company will only cover the cost of what your home was valued at when you purchased insurance. If you have no record of the renovations, you lose out on being able to collect money from your investment. 

With other additions, such as a pool, you may need to add insurance coverage to ensure you are not liable for accidents. This would mean the addition of umbrella insurance, but it could save you a lot of money if something unfortunate happens. 

In life, there are no guarantees. Vargas & Vargas Insurance can help you decide what type of home improvements require you to make changes to your home insurance policy. No matter how long ago or how soon you plan to remodel, we’re here to help. 

4 Reasons Your Home Insurance Premium Increases. Number 2 Will SHOCK YOU!

There comes that time of year when your Homeowner’s Insurance Renewal arrives in the mail.  You’re happily buzzing through your day when you read the bad news: your premium is increasing!

Panic sets in, then a fair amount of anger, and possibly a bit of anxiety. 

Whether your insurance is included in your mortgage payment through an escrow account, or you pay it separately on your own, panic sets in because you know this increase will impact your household budget. 

Anger arises due to the unfairness of this rate increase.
“How dare they!” “Why are they doing this to me?”

The anxiety is the worst part, but also the possible best part of your response to the premium increase.  Anxiety emerges because you truly don’t know why, nor do you understand, why your insurance carrier would increase your premium in such a seemingly arbitrary way.  But that same anxiety can fuel your desire to learn the answer to that question, and then to drive you forward to take action and seek a favorable resolution.

Here are 4 reasons why your Insurance Carrier might increase your Homeowner’s Insurance Premium; the second one will knock you out of your chair!

  1. Claims.  Have you had a claim in the past twelve months?  This is one of the most common reasons for a premium increase.  But this doesn’t always have to be so!  First, query your Insurance Carrier to determine if there are actions you can take to resolve the issue around the claim. For example, if the claim was due to a burglary, maybe installing a quality security system can relieve the premium-increase-pressure. If that doesn’t work, calling your Independent Insurance Agent is a great solution!  Your Agent can either advocate on your behalf with your current Insurance Carrier, or, find another Homeowner’s policy at a lower rate.
  2. Credit Score.  Insurance Carriers use a specific “Insurance Score” to predict the likelihood of a future claim.  The Insurance Score is different than your Credit Score, but uses similar methodology to create a score based on multiple data points.  Generally speaking, if you have good credit, then you’ll have a good Insurance Score.  But the Insurance Score is out of your control unlike your consumer credit score.  With a consumer score, in the event of an error on your credit report that impacts your score, Federal Regulations permit you to dispute the error and work on restoring your good score.  Your Insurance Score, on the other hand, is an unknown to the consumer.  To prevent arriving at a lower Insurance Score, monitoring and maintaining your consumer Credit Score is important.  Find out more at the Federal Trade Commission website here.
  3. Construction Costs.  Your Homeowners Insurance coverage is based on a calculation to repair or rebuild your home in the event of damage or disaster.  Therefore, the costs of materials and labor specific to your area can impact the calculation of those repair/rebuild costs.  If your local construction costs have increased due to market conditions, then it is a good likelihood your Insurance Premium can increase also.  The good news is that your Independent Insurance Agent can review your entire policy. We recommend a Twice-Yearly Review to determine if there are other areas of your policy where you can derive savings to offset any such increase in your annual premium.
  4. One of the most popular reasons for a rate increase is…..drum roll: State Filed Rate Increase. The insurance carrier will file a request with the state to allow for an increase on their policies that affect all policyholders. The only way around this is to call your independent insurance agent so they can shop other carriers who are competitive. Even after a filed rate increase, most insurance companies will eventually revamp their product portfolio to be more competitive. It’s basically a vicious circle.

Bottom Line: Reduce your anger, panic, and anxiety from an increase in your insurance premium by contacting your Independent Insurance Agent for the best and most expert guidance.

Contact our team at Vargas & Vargas Insurance to learn more about the benefits reviewing your insurance portfolio and what other options you have to reduce this emotional event.

Is Twice Yearly Too Often?

It’s often said that “insurance is boring.”  This notion probably leads many consumers to avoid communicating with their Independent Insurance Agent unless absolutely necessary.

Three “absolutely necessary” moments come immediately to mind:

  1. Increased Premium notification
  2. Notice to cancel
  3. A Claim

While you can only minimize your chances of ever having to make a claim on your insurance policy with smart, proactive and risk-aversion thinking, you can eliminate the first two instances of speaking with with your Agent.

The simple way to cancel out these two dreaded tasks is to speak with your Independent Insurance Agent twice a year. You might think you can cut that down to only once a year, around the time of your renewal period coming up.  But twice annually is truly the ideal scenario to deal with this otherwise “boring” task.

Checking in with your Agent in advance of renewal time allows you both to update each other on developments. 

For your part, you get to share news of:
* the new job
* the new child
* the vacation you’re planning
* the new jewelry or artwork
* the new addition to your home you’re planning. 

Your Agent may find this information fascinating and entertaining, but, more importantly your Agent can react to your news with important information on how these wonderful developments can affect your overall insurance plan.   And that call becomes worth its weight in gold.  Because your Agent can then review your current policies for how those policies cover your new life developments. 

If there are any challenges encountered therein, the kind that could affect a premium at renewal time, or worse, offer the carrier an opportunity to cancel the policy, your Agent has the chance to get out in front of the problem.

While you’re busy sharing wonderful developments, your Agent can also update you on any developments in the insurance realm that can either affect your current policies in a negative fashion (again, anticipating problems before they arise at renewal time), or potentially save you money by changing the coverages, policies, or even insurance carriers.

It’s not boring when you’re saving money and improving your insurance coverage.  Make that call to your Independent Insurance Agent. 
Twice. Every year.

Please schedule a call with us to discuss your policy portfolio to ensure you have adequate coverage at an affordable price.

Invite Your Neighbors to The Party

Do you know the old advice about throwing a party when you’re the new kid in town?  Yes, it’s housewarming time and you’re so happy and you invite all your friends over to celebrate.  But you don’t want to annoy your new neighbors, do you?  It’s no good getting on the bad side of your neighbors when you’re the newbie on the street/floor.

The old advice about just such a moment is to invite those very same neighbors! That’s right, don’t just invite your friends, invite the neighbors, the people who aren’t your friends.  (Hopefully some day they will be, but that’s another story altogether)

The idea behind this wisdom is that, if your party gets a little loud, your neighbors can’t possibly complain to you by banging on your door, or, worse, by calling the police.  How can they complain about your party when you invited them in the first place?  They could easily have accepted your invitation, and could just as easily be enjoying themselves with all the other revelers and getting to know you, their new neighbor too.

Take that advice a step further when you’re going to get some serious construction or landscaping work done on your home. Invite the neighbors, in a manner of speaking.  

Let’s say you hired a tree company to come in and remove several large trees.  You know the crew is going to arrive early in the morning.  And you know it’s going to get loud out there very quickly, between chainsaws, falling trees, workers yelling, and, oh, the wood chipper blasting!

Why leave it to chance that your neighbors are going to be annoyed by this early morning noise?  Let them know in advance about the work, either with a notecard you leave on their door, or a nice letter in the mail, or by knocking on the door, and introducing yourself.  You might even invite them to stop by for a cup of coffee to watch the trees come down!

There’s a lot to be said about tranquility in your neighborhood, and this is a great way to promote that, and make some new friends in the process.  So, when you’re getting major repair work or landscaping work done at your house, invite the neighbors!

When was the last time you reviewed your insurance portfolio. Please schedule a call with us to discuss your policies.