Insurance Coverage: What Happens During a Flood?

Posted on December 14, 2022April 5, 2023 by cvargas

Your home insurance policy doesn’t provide a blanket of protection from everything. For example, you might not have coverage if a flood causes water damage to your property. But that also depends on the type of flood and what was damaged.

Today, let’s take a quick look at flooding and what you can do to protect yourself.

What kind of Flooding Isn’t Often Covered?

Although home insurance can help with some costs caused by flooding, there are quite a few that may not be in your policy. This may include:

Natural disasters, such as extreme rain or snow.
External sewage line breaks or backups.
Sump pump flooding.

However, your policy might include coverage in the event of damages from broken pipes inside the home, flooding from a bad water heater, or if a fire was the result of various types of water damage.

Generally speaking, a “flood” is considered any excess water on the property that is normally dry. If a sewage backup is caused by flooding, and you have a sewer backup endorsement on your policy, that is covered by insurance.

Of course, you review your policy with your local independent insurance agent or review your policy.

What Affects Flood Coverage Policy Costs?

Like any other type of insurance, the costs of flood coverage depend on a wide range of factors. This is why people will often pay different premiums even though they live in the same city.

Some of them include:

Risk of Flooding
If your home is in a location that is prone to floods, your policy could increase.

Your Deductible
A higher deductible of the coverage will reduce your monthly premiums.

Property Location
The neighborhood of your home could affect the cost aside from the flood risk.

Age of the Property
As older homes are more prone to needing repairs, their age could increase the cost of a flood policy.

Itemized Schedules
Not everything is covered in the home through flood insurance. Valuables such as jewelry and antiques may need to be scheduled separately.

How to Get Coverage in Case of a Flood

If flooding is a concern, you need to contact your insurance agent to buy a new policy. You can also renew an existing policy to include flood coverage.

The average premium in the United States is around $750. But this can be higher or lower depending on where you live. This is especially true if you live in a location that is prone to some kind of flooding.

At its average cost, flood coverage is only an extra $62.50 per month. Considering the sheer amount of damage water can do to a home, this is not that bad of an expense to protect your family and property.

Water Damage Can Be Devastating

The important thing is to have the flooding repaired immediately. Even the slightest trickle within the walls can result in mold growth, extreme drywall damage, and compromise the framework of your home.

At Vargas & Vargas Insurance, we can help ensure that your policy includes covering floods and other types of water damage. If this is a concern for you, contact us today to see how we can help.

You don’t have to face water damage and flooding on your own if you have proper coverage.

Why Do Insurance Rates Increase Over Time?

Posted on November 29, 2022December 10, 2022 by cvargas

As with anything else, insurance rates increase as time marches on. In fact, rates are often affected just as much by inflation as anything else you might buy.

Unfortunately, this means that the cost of premiums and policies will continue to rise. How much these rates increase depends on circumstances ranging from neighborhood growth to the world stage.

Replacement Cost Affects Insurance Rates

The first thing that you should consider is how replacement costs work. This is much different than the purchase price of your home or auto.

The replacement cost includes materials needed to “replace” the property, the cost of labor, and other elements to make it whole. If the cost of wood goes up, so will the replacement cost.

If your policy was frozen at the replacement costs from 20 years ago, it would be short. The end result is the costs coming out of your pocket.

As you can see, this kind of increase is good as it reduces how much you’ll have to pay in the event of an emergency, I recorded talking about replacement cost versus purchase or market value on your home, click here to watch the video.

Home and Auto Rates are Similar

Houses are not the only types of property that may have an increase. Insurance rates for automobiles go up as well.

In order for an auto to become “whole,” you’ll need the cost of materials and labor. Nowadays, this can also include a variety of technological advancements, such as rear cameras, sensors, and the wiring to make it all work.

In some cases, insurers will also consider things like the cost of medical bills when making adjustments. So, if the cost of medical care goes up, so do insurance rates.

Like ripples in a pond, anything affecting specific industries will take a toll on many. For example, the cost of computer chips will impact the cost of replacing the cameras I mentioned earlier.

What Can You Do to Lower Insurance Rates?

Depending on the type of property, there are quite a few methods at your disposal to reduce rates. The first thing you should do is ensure your policy is correct. If you’re paying for something you don’t need or have scheduled, it’s a waste of money.

A few other ways to decrease insurance rates include:

Preventative measures. Fire alarms, anti-theft devices, safety features, and other preventative add-ons often work to reduce home and auto insurance premiums.
Keeping claims to a minimum. The more often you have to file a claim, whether it’s for the home or auto, the more you’ll pay. This is because insurance providers will see you as a high-risk factor.
Shopping around. You can always look around for a lower-cost insurer. However, keep in mind that low cost doesn’t mean superior service.

Insurance Rates Are Part of the Cost of Living

Sure, insurance companies need to make money. Otherwise, they would be out of business. However, not all increases in insurance are the result of greedy CEOs or banks.

Sometimes, increases are simply the result of an increase in the cost of wood or other materials.

At Vargas & Vargas Insurance, we can help you find affordable rates and plans throughout our network. Contact us today to see how we can help you save money on home and auto coverage.

After all, we may help you keep more money in your pocket to cover the other cost-of-living expenses.

Home Insurance FAQ: Purchase Price vs Replacement Cost pt 2

Posted on November 14, 2022November 11, 2022 by cvargas

In a previous article, we covered a couple of the most common home insurance questions when it comes to the purchase price and replacement cost. Today, we’re going to dive a bit deeper to answer a few more questions when it comes to these two elements.

It is our goal to help you further understand your home insurance policies, which could save you a lot of miscommunications down the road.

Is the Purchase Price and Replacement Cost the Same Thing?

The purchase price of your home depends on several factors. These often include values such as location, age, amenities, and other things that increase its “curb appeal.” However, replacement cost is based on how much it will cost to replace something after damages occur.

Replacement costs can vary depending on current market values. For instance, if the cost of lumber increases, as it did at the beginning of 2022, it would directly impact how much it would cost to rebuild a part of the home.

Can a Replacement Cost Be Higher Than the Purchase Price?

The current market influences the value of any home. If the market is particularly low, it is possible for replacement costs to surpass a home’s value.

This is especially true if the replacement materials are at an all-time premium.

In fact, there are a lot of things that can decrease the value of a home. This could include the safety of the neighborhood, previously sustained damages or even unkempt or dangerous landscaping.

What is the 80/20 Rule for Insuring a Home?

The 80/20 rule often refers to insuring your home for a minimum of 80% of the replacement costs. This doesn’t necessarily mean 20% will come out of your pocket during a claim, though.

In practice, a lot of insurance providers will pay out a claim in full if you maintain the 80% coverage.

Remember, the purchase price has no influence on replacement cost. This means you wouldn’t insure the home for 80% of what you’re paying for it.

When the insurance you carry is lower than 80% of the replacement cost of your home, you are penalized when you have a partial loss, call us, and we can explain further based on your particular circumstances.

Do Insurance Companies Pay the Replacement Value of Items in the Home?

In certain policies, items within the home have coverage in the event of theft, damage, or if destroyed. This is known as the Replacement Cost Value, or RCV. And in some cases, this only applies to objects scheduled in the policy itself.

In this instance, insurers pay the current market value of replacing the item.

For example, technology usually depreciates rapidly. The replacement cost of something like a television or computer is often much lower than the original price.

Know Your Home Insurance Terms

Purchase price and replacement cost are only a couple of home insurance terms you need to know. And the more you understand what’s in your policy, the better prepared you are in the event of an emergency.

At Vargas & Vargas Insurance, we can help you gain some clarity when it comes to your policy. Contact us today and find out how we can further help you with home insurance.

Don’t let a misunderstanding hinder your ability to process a claim.

Home Insurance Terms You Need to Know Going Forward

Posted on October 31, 2022October 21, 2022 by cvargas

Understanding the terms of your home insurance policy can alleviate a lot of confusion and problems down the road. It’s not simply a form full of non-sensical legal jargon; it’s the plan to keep your home and family safe from financial ruin.

Today, let’s take a look at those terms and clear some of the confusion.

General Home Insurance Terms

While a lot of insurance plans are unique to certain vendors, there are terms that are usually universal. So, no matter who is holding your policy, this list will still be of great benefit.

Declarations Page

The Declarations page is essentially a quick overview of the policy details. It delivers fundamental information such as:

Your basic info
Name and address of the insurance company
Coverage dates
Basic outline of coverages
Deductibles
Premium
and other basic interests

Essentially, this page is the “proof of insurance” when a mortgage company asks.

Insured/Insurer

The Insured party is the individual for which the coverage is being provided. This is typically the home or property owner.

An insurer is the insurance company providing that coverage.

Additional Insured

The Additional Insured party is anyone other that the homeowner who has a vested interest in the property. This is often the mortgage company if applicable.

Also, this party can be a payee for larger claim payouts in the event of something major. For example, if a hurricane disintegrates half of your home, the mortgage company may receive the funds.

Policy Period

The Policy Period is the calendar date when the insurance is active. This is often processed annually, but some policies may be month-to-month.

Premium

Now, the Premium is how much your insurance costs every 12 months. This is not to be confused with a monthly payment, which is a considerably different amount.

However, the premium can be broken up into monthly, quarterly, and semi-annually payments to make it more immediately affordable.

Usually, homeowners will pay the amounts directly to the insurer through a mortgage escrow account.

Deductible

One of the more important home insurance terms to know is the Deductible. This is the amount a claim has to reach before the insurer bears any financial responsibility.

For instance, if you have a deductible of $500, but the damage repair or placement cost is only $450, the insurer doesn’t have to pay and it will come out of your pocket.

Of course, this is just an example. Every insurance company has its own levels for deductibles, and the higher the deductible, the less your annual premium you pay.

All-Risk/Named-Peril

An All-Risk policy will cover all potential losses other than specific exclusions of the policy. These are not very common as they are more expensive. However, they tend to be far more inclusive.

The Named-Peril policy covers causes of loss specific to the policy and nothing else. For instance, an insurance policy for the midwest may include tornado damage as it is a common risk for the property. However, it may not include earthquake coverage should one happen.

Replacement Cost Value / Actual Cash Value

Replacement cost and actual cash values are very different, especially when considering coverage and when filing insurance claims.

The Actual Cash Value, or ACV, is the cost to fix your home minus its decrease in market value due to age, location, and other environmental factors.

The Replacement Cost Value, or RCV, is the cost to replace or repair elements of the home or property according to today’s prices.

Other Valuables Not Included

Did you know that not all of your valuables may be covered by your home insurance policies? Things like jewelry, guns, cash, and antiques are not often covered unless you schedule them specifically on your policy.

Don’t leave anything to chance. Take a look at your policy and talk with an agent today to identify things of value in your home that are not currently covered.

Knowing Home Insurance Terms is Vital

Knowing how to read your home insurance policy is an essential facet of life, and understanding the terms is an excellent first step. It can help reduce a lot of confusion in the event of an emergency.

Not to mention making sure certain things in the home are covered.

At Vargas & Vargas Insurance, we’ll help you understand the details and terms of your home insurance policy. Contact us today and let us provide assistance that will give you peace of mind.

Getting your Dorchester area home ready for winter with the right insurance

Posted on September 27, 2022October 12, 2022 by agentinsure

Vargas & Vargas Insurance is here for the residents of Boston, MA, and the surrounding area. If you are considering a new home purchase or want to make sure that you have the right insurance in place before winter arrives, give our office a call.

Get your home ready for winter with the right insurance

Winters can be disruptive in our area, and it only makes sense to carry the correct type of insurance at the correct policy levels. If it’s been a while since you have reviewed your policy, now is a great time to do so. Home insurance needs can change over time, so it is advisable to review your policy regularly.

In the lead-up to winter, be sure to have your home ready for the weather. Make sure your home policy contains all the coverage you need. Roofs, windows, and outbuildings are often frequent targets of loss and damage. Be sure that your policy covers such items and at the correct amount.

Liability coverage is another part of your policy that is important to review. If someone were to slip and fall on ice located on your property, you could be held financially responsible for any injuries that they sustain. Ensure that your liability is at the correct level and provides the protection you need.

Now is the perfect time to get your home ready for winter!

Give us a call today!

Boston, MA, area residents can turn to the Vargas & Vargas Insurance team for all their insurance needs. We handle all types of insurance, including homeowners. Let us help you ensure that you have the proper protection. Call or stop by today!

Is the FAIR Plan Home Insurance the Best Choice for Your Insurance Needs?

Posted on September 19, 2022September 16, 2022 by cvargas

Not everyone lives in the most serene locations or moves into the most perfect of homes. And sometimes, issues can arise that make finding quality insurance quite difficult. That’s when a FAIR Plan insurance policy might be the best course of action.

Whether it’s from outdated wiring, roof damages, owning a high-risk dog breed, or filing too many claims, you could find yourself losing coverage of your home. However, there are options available when facing these high-risk elements.

What is the FAIR Plan?

Fair Access to Insurance Requirements, or FAIR, are plans that offer protection to homeowners, Condominiums, and nonowner-occupied properties, also known as Dwelling policies who usually cannot otherwise get coverage elsewhere. These types of policies focus on the home itself rather than the owner.

For instance, if your home is in a location prone to various severe weather conditions or crime, you may qualify for FAIR Plan coverage. This also includes residences that have old plumbing or electrical systems, as they are more likely to have been flooded or fire damaged.

Essentially, the Fair Plan offers insurance for people who are sometimes unable to qualify for a regular type of insurance plan due to the high-risk nature of the home or high insurance premium communities.

How Do You Qualify for FAIR Plan Insurance?

The qualifications for FAIR home insurance vary from state to state. Nonetheless, a lot of plans follow several eligibility requirements across the board.

Still, you may want to look into the specific requirements for your area or call us to help you.

In any case, having a “high-risk” home doesn’t automatically qualify you for FAIR Plan coverage. And in most cases, you may need to make improvements to your property before coverage is allowed.

For example, repairing prior damage or making sure that your home has no safety hazards.

What is Covered By FAIR Plan Insurance?

FAIR Plan home insurance policies provide the same coverage that traditional plans do. The FAIR Plan provides you coverage when you most need it.

The FAIR Plan will cover damages from fires, vandalism, windstorms, and other severe weather. This includes the contents of the home in some instances.

When it comes to liability, some FAIR Plan home insurance plans provide a cushion of up to $500,000 for personal protection. This includes up to $5,000 if your property injures a third party.

What are the Best Home Insurance Plans in Massachusetts?

FAIR Plan home insurance gives you peace of mind knowing you have a policy that can cover you. Regardless of your situation, there are coverage options available.

At Vargas & Vargas insurance, we specialize in all forms of insurance, including high-risk properties, homes that have outdated wiring, and various dog breeds I mentioned earlier. Contact us today and find out how we can help you get home insurance for your house or condo or investment property.

How to Protect Your Home from Rising Housing Costs

Posted on September 12, 2022September 12, 2022 by cvargas

In many areas, the housing market is skyrocketing. In fact, many homes in the United States have doubled and even tripled in price. And while these rising housing costs may give you pause, it’s important to keep yourself protected.

While you may be tempted to find a way to reduce Coverage A your new home to save money, the alternative could put you in financial dire straights.

Today, let’s go over some of the ways you can keep your home protected even as the housing market continues to inflate.

Understanding Market Price vs Build Cost

There is a big difference between the market price of your home and its build cost. The materials that go into building or repairing your home could greatly vary.

For example, during the pandemic, the cost of wood skyrocketed. This meant the repair costs of certain types of damages would have been much greater. Not having enough Coverage A would have resulted in additional costs for you.

This is true regardless of where your home was located or its appraisal value.

Running a Replacement Costs Estimate

A replacement cost is when you calculate how much it would cost to rebuild a residence that is virtually similar to your previous home. Now, this estimate takes into consideration the quality of the materials used as well as various amenities and sizes.

However, it doesn’t include things like land value or other improvements made aside from the basic structure. This estimate could help you get an idea of how much Coverage A you will need in the event of a catastrophe.

Adding EDC to Your Home

Extended Dwelling Coverage, or EDC, is the additional amount of insurance from your provider to compensate in the event of a “total loss” going beyond your current coverage. In other words, it fills in the gaps when rising costs affect the amount covered when repairing or rebuilding housing.

Having an adequate EDC in your policy is always a good call. It can mean the difference between having full coverage or having to pay some of the expenses yourself.

Communicate with Your Agent

Perhaps one of the most effective ways of protecting your home when rising housing costs run rampant is by staying in communication with your agent. They are a wealth of information and will do everything they can to help within your budget.

Whether it’s finding discounts or making tweaks to your policy to provide enough coverage, your agent is on your side.

Rising Housing Costs Shouldn’t Detract from Coverage Decisions

Home insurance is one thing you do not want to skimp on. In the event of an emergency, having too little Coverage A could wind up costing you a lot of money out-of-pocket. Don’t let rising housing costs dissuade you from shielding your wallet from damages.

At Vargas & Vargas Insurance, we’ll go the extra mile to ensure that your home remains protected. This is regardless of how the housing market performs. It’s our job to make sure that you have coverage without breaking the bank.

Does Inflation Cause Insurance Rates to Go Up?

Posted on August 8, 2022July 27, 2022 by cvargas

Inflation will affect a wide scope of products and services. Unfortunately, this also includes home and auto insurance. The reason for this is that insurers examine several factors when determining rates. One of these factors is the cost to repair or replace.

How Inflation Can Affect Insurance Rates

If the cost of raw materials goes up, this will have an impact on how much an insurer will need to cover predetermined expenses.

For example, a lot of automobiles require microchips in order to function properly. Thanks to the global chip shortage, the costs to replace them are much higher than they were five years ago.

This means insurers must pass on the more expensive auto repairs to clients.

Some expenses for home repair recently increased in 2020 and 2021. However, lumber prices have come down as inventories continue to pile up due to things like mortgage rates increasing, which decreases demand for new home sales.

However, shortages can come in a variety of forms for housing. For example, a current lack of labor and certain electrical equipment can ultimately affect new construction and repairs.

This all culminates in how an insurer adjusts your premiums. In other words, it’s common for inflation to directly affect how much you’ll pay for home and auto insurance.

It all comes down to the cost of repairs should something happen.

Ways to Lower Your Monthly Premiums

Although inflation will directly impact insurance rates, there are several things you can do to reduce the costs on your end.

A few ways you can lower monthly insurance premiums include:

Bundling auto and home insurance packages – many insurers will offer discounts by combining policies.
Pay for a year in advance – depending on your insurer, you may be offered a discount if you pay for a year or more ahead of time.
Increase your deductibles – Although this means you’ll need to have more money out-of-pocket before insurance kicks in, a higher deductible often results in lower monthly premiums.
Check your insurer for any home and auto insurance discount programs – for instance, many auto insurers will have “good driver” discounts for those who have never filed a claim.
Demonstrate being a safe homeowner – it’s possible that you may qualify for discounts if you show a history of not filing insurance claims or have equipment installed to prevent damage to the home.
Make home improvements – it doesn’t take a massive investment to improve the home. Something as simple as improved lighting, CO2 sensors, or installing a doorbell camera may help reduce insurance premiums.

Of course, this also depends greatly on your insurance agent. But for the most part, insurers have a variety of discounts available if you ask for them.

Let Us Help You Weather Inflation Issues

At Vargas & Vargas Insurance, we’ll help you customize your plan to help you adjust during times of inflation. We are here to offer you solutions that will fit your budget. Contact us today and find out how we can help you.

From auto insurance to home protection, don’t let rising costs scare you away from protecting your property.

How Extreme Heat Waves Can Easily Damage Your Home

Posted on July 25, 2022July 25, 2022 by cvargas

Heat waves are becoming more commonplace in many areas of the globe. By July of 2022, three heat waves have swept through the United States. And this doesn’t include the excessive temperatures in places like Europe and Great Britain.

Heat waves can be exceptionally dangerous to human life, which is why you need to keep yourself and your family safe. Yet, they are also exceptionally dangerous to the home.

Never underestimate the power of Mother Nature.

Wear and Tear to Structures

A large portion of homes are made with a wooden structure. From support beams to floors and roofs, there is a lot of lumber in many houses and businesses.

The problem is that wood contracts and expands due to varying temperatures. This fluctuation becomes more rapid and extreme depending on the ambient heat and cold fronts.

The end result is the wood begins to crack and split in various locations throughout the residence. This can compromise the structural integrity of the building and could result in causing far more damage down the line.

For example, a split support beam is less likely to hold the weight of walls or ceilings.

Leaky Roofs

Speaking of splitting wood, the roof is perhaps your first defense against the elements. Due to its construction materials and ability to absorb sunlight and heat, it’s constantly exposed to extreme weather.

As I mentioned earlier, wood begins to crack as it constricts and expands. This includes the materials your shingles are nailed to. Once the smallest crack forms, moisture can easily enter and begin wreaking havoc on the roof.

This doesn’t include how heat waves can cause shingles and other roof types to warp, exposing the underbelly of the roof to even more potential damage.

Wildfire Hazards

An inevitable outcome of heat waves is the onset of wildfires. You’ve probably seen a lot of news coverage in 2022 regarding the damage these fires have caused just in the first half of the year alone.

If a strong wind picks up, wildfires can quickly consume large swaths of land in a very short period of time.

Even if the fire doesn’t consume the entire home, everything from electrical to plumbing damage can be part of the end result. The smallest fires have the potential to cost hundreds if not thousands to repair.

Foundation and Cement Damage

Wood isn’t the only building material that will be affected by heat waves. In fact, the very foundation of your home can be subject to extensive damage during extreme temperatures and drought.

For instance, when the moisture in the soil evaporates, the foundation is less likely to keep a firm grip on the ground. You’ll often see these kinds of effects on sidewalks and roads as cracks begin to form.

However, the actual foundation of your house can also experience the same fate. And just like the roof, cracks in the foundation can lead to a variety of leaks and other weather-based damage.

Protect Yourself During Heat Waves

At Vargas & Vargas Insurance, we’ll help you stay protected against a variety of weather issues. From heat waves to floods, contact us today to find out what we can do to customize your policies for the future.

The last thing you want to experience is a leak in the middle of winter after a heat wave compromised your roof.

6 Ways Insurance Agents Can Help When Buying a Home

Posted on July 10, 2022June 25, 2022 by cvargas

Buying a home is an exciting time in anyone’s life. However, it can also be stressful as you want the best deal possible while finding that “perfect” house. Have you thought about how an insurance agent can help you find the home of your dreams?

Being a Local Expert

Whether you’re a local yourself or moving into a new city, insurance agents are experts in their geographic location. This means they can help by making recommendations while knowing the ins and outs of the locale.

These insights can include everything from school districts to lifestyle happenings and safety. Being part of the local community gives agents a great perspective of the area including specific neighborhoods.

Accurate Cost of Home Insurance Coverages

A local insurance agent will have the ability to provide an accurate estimation of homeowner’s coverage. Thanks to their familiarity with the locale and market values, you’ll get a better idea of how much you’ll spend in addition to your mortgage.

Things like safety features, square footage, and neighborhood can affect your monthly premiums. Contacting a local insurance agent when buying a home takes a lot of guesswork out of the equation.

Better Understanding of Coverage Types

Working in the local area, insurance agents have a better grasp of the types of coverage you might need. For instance, does the location of your prospective new home have an issue with flooding?

This can also benefit you in the other direction as an agent can help save you money by not requiring coverage types. For example, it’s unlikely you’ll need earthquake coverage if the area hasn’t experienced one in a century or two.

Understanding Previous Claims

One of the more profound aspects to using a local insurance agent is his or her understanding of previous claims. What are the most prominent issues for the area in which you’re looking?

This can help you spot all kinds of warning signs before you decide to put a bid on that new home. What if the neighborhood has a long history of flood damage?

Home Inspection Reviews

Home inspections are a crucial step when it comes to buying a home. These determine the safety of the structure and what may need to be addressed soon.

Your local insurance agent can take a look at this inspection and use it as a guide into what issues might impact your rates. Things like electrical wiring, foundation cracks, mold detection, or roof damage can cost you quite a bit. In fact, depending on the extent of the damage, the seller might not be able to sell the home until those issues are fixed.

Capacity to Save Money when Buying a Home

Not only can a local insurance agent help you save money by avoiding certain homes, but you might also get discounts on premiums. Some insurers will discount rates if the home has:

smoke alarms
sprinkler systems
security systems
carbon monoxide sensors
energy-efficient appliances
or other disaster-prevention elements

Local Insurance Agents are a Treasure Trove of Information

Never underestimate the value of your local insurance agent. He or she will have a deeper understanding of many aspects you might not consider.

Let Vargas & Vargas Insurance assist in making one of the biggest decisions of your life. Contact us today and we’ll do what we can to make sure you find that perfect home with the affordable coverage you’ll need.

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