What A Home Insurance Policy Doesn’t Cover

Is your home insurance policy covering you when you need it most? If you’re like most people on a “standard” home insurance plan, there are several things that aren’t actually covered with your policy!

Don’t worry – you’re about to find out what a home insurance policy doesn’t cover, and how you can quickly make a few updates to your plan to make sure you’ve got the coverage you need.

Before we get into that, take a quick inventory of what you’re hoping is covered in the case an unfortunate event presents itself to you. As we take a deeper dive into what isn’t covered, you’ll be able to quickly identify whether you’ll need extra coverage or if you’re in the clear!

What Doesn’t A Home Insurance Policy Cover?

Most home insurance policies don’t cover the following:

  • In-Home Businesses
  • Floods
  • Earthquakes
  • Vehicles used for business
  • High-value Jewelry.

Take a quick look at each in more detail, and how you can protect yourself.

In-Home Businesses Are Not Covered By Your Homeowners Insurance

Did you join the recent surge of people deciding to jump into at-home work, including freelancing, or even starting a business that’s based in their home? Whether you’ve just started or you’ve been at it for years, many people are unprepared for a sudden loss to their business equipment.

Don’t let that be you!

There are several ways to get your business property covered if you’ve got a home-based business.

According to the Insurance Information Institute (III), you can:

  1. Add a Policy Endorsement to your existing homeowners insurance. This simple endorsement is a simple way to increase your coverage to include business property. If your policy has minimal coverage for business property already (as some policies do), this can be a low-cost way to get the coverage you need.
  2. Add an In-Home Business Policy. This policy is for you if you need more comprehensive coverage for business equipment and have a need for liability coverage for your business. It can be a life-saver if you need to recoup costs beyond simple business property, such as loss of important papers, records, income, etc.
  3. Add a Businessowners Policy (BOP). If you’re a small/mid sized business that operates out of more than one location (including your home), you’ll want to consider the broader coverage offered by a BOP. 

Be Careful: Floods Are Not Covered In Most Home Insurance Policies

This one is slightly tricky, as most people don’t think they live in an area susceptible to flooding.

However, “flooding” can mean many things in your insurance policy. For example, a failed sump pump or water damage due to a clogged drain are generally not covered in a standard home insurance policy.

Many people have been saved by adding a separate flood insurance policy, as there is some gray area in standard policies, and they chose to be safe rather than sorry!

Earthquakes Aren’t Covered

Earthquakes are on the rise, according to data compiled by the National Oceanic and Atmospheric Administration branch of the US Government (and shown in this chart). Despite this, earthquakes are not covered by most home insurance policies.

If the thought of an earthquake hitting your area makes you tremble a little, you may want to consider specific earthquake coverage to be on the safe side.

Vehicles used for business

Not surprisingly, vehicles used for business are not covered in a homeowners policy, even if the damage to the vehicle happens on your property.

High-Value Jewelry

Jewelry-lovers take note! If you’ve got jewelry valued at over $2,000, there’s a good chance your homeowners insurance will not cover these pieces.

To make sure you’re covered, you can easily add on additional coverage into your policy to account for the loss if something should happen to your valuables. 

We’d recommend learning about coverage for commercial auto insurance if you own vehicles used for business, or check with your employer to ensure they have the correct coverage.

We’re Here To Help Find The Right Coverage For Your Situation

Don’t be alarmed if you’re in any of the categories above. Everyone’s situation is unique, and you deserve to be informed about what is – and what isn’t – included in your coverage. 

Let’s talk over your current policy and make sure you’ve got everything you need for your situation. 
Contact us today to get a customized plan, or to just get the peace of mind that you desire!

Insurance Check-Up

Insurance Check-Up

Life Changes and it’s Time for an Insurance Checkup

Having insurance policies is vital to gain great security and protection from unexpected problems. Ensuring everything in your life at an early stage is also a great idea.

While getting yourself and your house, vehicle, and assets insured is vital, you also need an insurance checkup to review your policies yearly. This allows you to ensure that the insurance coverage will be of help to you when your circumstances and lifestyle change. But if your insurance doesn’t cover you as it should, you need to make some changes to the policies or, even purchase new policies to cover your changing needs.

Here are some reasons why you need to opt for an insurance checkup.

Change in Family Status

Are you planning to get married or expect a baby? It would help protect your growing family by purchasing the right insurance plan. Insurance checkups will allow you to ensure whether the coverage is enough to support your entire family when you are not around. The loss of a family member through disability and death is also the right time for an insurance plan review.

Remodeling or Moving Your House

If you plan to remodel your house, your house value will surely increase. Similarly, if you move from the house, you might own a property with a higher value than the one you have before. Since your assets have increased, you need an insurance plan that covers these assets.

Retirement Time

When you decide to retire, you need something to rely on for your future expenses, especially final expenses, it’s vital to choose the right insurance plans to protect you properly. It would also be helpful if you had the proper insurance that will pay for your funeral, medical care, and debts.

Chance in Assets Value

Many people insure their jewelry and other assets to get the money if they get damaged or lost. But they forget the fact that these valuable assets increase over time. By keeping the coverage updated regularly for these valuable assets, you are protected in the event you lose them or they are stolen.

Discounts

Many insurance companies offer discounts on different insurance plans. This way, you can purchase the right insurance plans at much lower prices. So, if you have not received your discounts, it’s time to have an insurance checkup.

Bottom Line

Whether it’s life, house, vehicle, or assets insurance, insurance is not something that you purchase and forget. You need to always look for ways to lower your premiums and avail optimal benefits from your policy. For this purpose, you need to opt for an insurance checkup.

Missing Coverage

If you have any assets at all, an umbrella policy is a valuable protection. Home insurance and car insurance policies have liability limits that are often not high enough to protect you adequately. If you are found to be at fault beyond your liability limits, you may be required to pay the remainder of the money out of pocket. It could take all of your savings and assets and even your future assets to make that payment.

This will help you look for flaws in your insurance and allow you to get the features that you don’t have. Not only this but practicing this method can help you lower your premiums and get interesting discounts and offer. So, if you currently have any insurance, consider reviewing it.

At Vargas & Vargas Insurance, our clients enjoy customized insurance coverage to match their unique needs at incredibly affordable prices. Contact us today for a free insurance review or quote.

How to Organize Your Insurance Policies to Help Your Spouse or Dependents Find Them

older couple organizing and discussing their insurance policy documents on the computer

Acquiring policies like life insurance can put your mind at ease and help you feel secure. But it’s only the start of formulating a game plan that will keep you and your family prepared for any unforeseen circumstances.  Part of your ongoing strategy must involve decisions about organizing and storing your policies so that they can be retrieved by your spouse or dependents as needed.  By following these guidelines, you can live your life without worrying about how your insurance policies will be stored and accessed.  

Choose a Secure Physical and Digital Location

Step one for organizing any insurance plan is to keep it in a safe place that only you — and others you give permission to — can open.  There’s so much personal information in policy documents that is important to protect, so we recommend using either a safe or lockable filing cabinet. Let your spouse or dependents know where the key or password is stored.  In addition to keeping the papers in a physical location in your home, consider sending a copy to a trusted lawyer or loved one who will also keep it safe.  

A digital copy can far outlast paper, which can be lost, stolen, or destroyed.  For this reason, definitely keep electronic records of your insurance policies.  Make a list of passwords for where your policies are stored on your computer, and share the information with your dependents so they can find them.  If you aren’t using software to store your insurance policy, you can scan your hard copy onto your computer.

Communication Is Paramount

While discussing your home or life insurance with your spouse and family can be uncomfortable, clear communication is going to be how you avoid any additional difficulties in case of a crisis.  Your dependents need to know which policies you have, and they should probably know the names of your agent, insurance company, and other important contacts.  Set clear expectations about how and when these should be accessed, and go over how you have stored everything.  By communicating effectively, you can avoid your family being another statistic in the millions of insurance dollars that go unclaimed every year.

Update Outdated Documents

Finally, you should keep everything up to date and know when your policies need updating.  There are many life events that can require you to update paperwork, including a new birth, a divorce, a new marriage, a change of address, business developments, and many more.  Seek advice from a qualified local insurance agent if you are unsure of when an update might be required.

At Vargas & Vargas Insurance, we can help you with these and other questions or concerns regarding your insurance policies.  Our ultimate goal is to assist you in any way we can with top-notch insurance plans and unbeatable customer service.

How to Know If You Are Financially Ready to Buy a Condo

couple with a young child analyzing their finances before buying a condo

Besides the convenience that accompanies owning a condo, who wouldn’t appreciate the freedom from the hustle and bustle of having to take care of the land while getting to have a roof over your head? However, just because buying a condo suits your needs, and you feel the need to buy one, it does not mean you are ready to own one.  Here are pertinent questions whose answers will help you find out whether you are really prepared to buy that desired condominium:

1. Can You Afford the Down Payment?

Whether you have sufficient cash to pay off for that condo or not is important, but it’s not the only cost to consider. A good down payment amount is a must-have. You are in an excellent position to go ahead and take the leap towards owning your dream condo only if your savings match the down payment requirements that accompany the property you have in mind.

2. Are You Managing Your Debt Well?

Second on the financial checklist that determines your readiness for buying a condo is how debt-free you are. Debts will certainly put constraints on your desire to acquire that condo you crave. You will want to ensure all impending bills and maxed credit cards are brought under control to free up more income that is needed for buying your condo.

3. Are You in a Position to Handle Hidden or Unforeseen Costs?

Before engaging the seller of the property, ensure you have set aside some money for unforeseen costs and any other unconsidered charges that will arise before closing the deal. For instance, many sellers throw all kinds of fees at you. These fees might range from recording fees and underwriting fees to the appraisal fees. There is also the hurdle of moving costs and money for decorating and furnishing the new condo in line with your tastes. Also, you may need to pay property taxes upfront.

4. Have You Considered the Cost of Purchasing a Condo Insurance Policy?

When looking to buy a condo, the last thing you would want is to risk any insurable outcome forcing your hard-earned investment down the drain. From the onset, you will then need to know from who and where you can shop around for a reliable and affordable condo insurance policy.

Condo insurance saves your money in case of any accidents and incidents in your condominium. For instance, without condo building insurance, you may not be able to replace your custom cabinets or fittings in the event of a fire. To avoid losses in terms of money or property, purchase proper condo insurance and protect yourself.

If you answered yes to these questions, step out of that bubble of uncertainty and get ready to buy that desired condo. Want to learn more about the condo insurance policy that suits you best from someone you can trust? Contact Vargas & Vargas Insurance for help with all the condo insurance concerns you might have.

Condo Owners Need More Coverage Than the Master Policy

Although most new condo owners are added to the property’s master policy upon purchase of the unit, the claim that this policy is all owners need is misleading. You may have been told that your unit’s coverage under the master policy prevents you from having to purchase separate coverage, but the policy is only meant to protect the property, not your personal possessions. If your condo is only covered under the master policy, now is a good time to purchase additional coverage that meets your needs. 

couple researching condo insurance as they move into a new condo

What Is a Master Policy? 

A master policy is the most basic type of insurance used by condo owners. It typically covers damage to the building itself, as well as common areas and liability for the condominium association. However, unlike other policies, your master policy does not cover your belongings or personal liability. The master policy provides the necessary protection for your condominium association. But only being covered under the master policy is not sufficient to protect yourself. 

How Should I Cover My Condo?

Every condo owner’s coverage should be comprised of both the master policy and individual condo insurance. Condo insurance is similar to regular homeowners insurance, but it is designed to meet the unique needs of shared property ownership. It covers owners’ belongings and personal liability, as well as additional coverage for the building itself. Upgraded features may also be covered only by condo insurance, as many master policies only cover standard features.    

What Happens If a Claim Is Made?

If a claim is made for something that happens within your unit, you will generally be defended by your private insurance company, not the master policy. Your insurance company will cover the necessary funds, minus the deductible. If you are only covered by the master policy, you will likely be responsible for the claim.  

Your master policy should work together with private condo insurance to provide the best possible protection, rather than being considered the only insurance you need. In order to adequately protect yourself and your belongings, select a condo insurance policy that effectively fills in the gaps of your master policy.  At Vargas & Vargas Insurance, we’re here to help you find the right coverage.

Jewelry and Gem Valuations: GIA or Bust!

As Massachusetts insurance professionals, the licensed agents at Vargas & Vargas Insurance are here to make sure your risks are covered. Part of that mission is to educate our customers about the importance of credible paperwork. Today, we’re talking specifically about worthless jewelry valuations and fake appraisals.

older woman giving her adult granddaughter heirloom jewelry

In January 2020, Jewelry Insurance Issues published this article, making all of us in the industry aware that AGA, the “Accredited Gemologists Association” logo has been ripped off and is being used on bogus jewelry certifications. The alarming thing is that AGA isn’t even a gemology lab! It’s a non-profit club whose mission is to provide networking between jewelers, gemologists, and material sources.

So which certificates can we trust? 

Diamond & Jewelry Certifications We Can Trust

The most respected diamond or gem appraisal will come from the Gemological Institute of America, or the GIA. Jewelers and investors around the globe trust GIA above any other source. Many investors and insurers will only accept GIA paperwork. There are a few other sources available for certifications, however, including the following:

  • The retailer or manufacturer may provide a gem certificate when you purchase the piece. These are to be taken with a grain of salt. Some insurers will write a personal articles floater (the type of insurance associated with a fine piece of jewelry) based on this certificate. Others will not. 
  • A professional appraisal from a certified gemologist may also appease an insurer.
  • The International Colored Gemstone Association (IGA) also offers gem certifications. Their reputation isn’t illustrious, however, so an insurer or collector might not accept them.

Personal article floaters (PAFs) for jewelry are written on a case-by-case basis. If you believe your ring is worth $25,000, the best thing you can do is send it off to GIA (through a related jeweler) for a genuine lab report. As of 2020, GIA lab inspections cost around $500 for general consumers, but a GIA certified jeweler can have them done at a third of that price.

The process takes three weeks. Afterward, you’ll have irrefutable evidence of your gem’s value.  

Jewelry Scams Happen

Gem and jewelry “fakes” and “cons” have been around for centuries. If you’ve been conned into buying a fake gem, know you’re not alone. Sometimes a gem can be innocently mislabeled, as in the case of the Black Prince’s Ruby, which is a spinel set in the imperial state crown of England. Yes, the highlight of the crown is an imposter! If your lab report comes back describing your gem as a simulant, lab-created, or of much lower quality than you thought, you may have some options. Speaking directly to the jeweler is your first course of action. A good jeweler will do their best to fix the situation. 

If you purchased your piece from an online retailer or auction house (eBay), you might have protections in place via PayPal or your credit card. The good news is that you won’t be paying to insure a fake!

We hope you’ve enjoyed our discussion of bogus gem reports. We sure enjoyed writing it! If you’d like to learn more about insurance for your most cherished heirlooms, email one of our agents today!

How to Protect Your Personal Assets When You’re a Landlord

Let’s say that you inherit or purchase a house and end up with two properties. At this point, you have some very big decisions to make. You can sell the extra home or use it as a rental property. Either choice can have immediate benefits, but with rental properties, you have risks as well. These risks may include lawsuits and claims for personal injuries or damages to your tenants. Therefore, before you decide to start your new job as a landlord, we suggest you prepare for the ‘what-ifs.’ You need to know how to protect your personal assets when you’re a landlord. 

homeowner evaluating how to protect his rental property on his home computer

Understanding Your Risks as a Landlord

There are some things that you cannot be held liable for as a landlord. If your tenant suffers a personal injury while jumping on a trampoline that they brought on the property, you most likely will not be held accountable for it. This is especially true if you were unaware that they had a trampoline or you felt that they were grown up enough to play safely while on it. 

The problem arises when you, as a landlord, know that there is a risk of danger to the property or the people who are renting from you. For instance, you may be held liable if:

  • You know that dangerous animals or pets are nearby.
  • You are aware of improper maintenance, water damages, or faulty wiring issues and fail to repair them.
  • You know that criminal activity in the area creates a risk for the personal safety of your tenants.
  • You are aware that the home is in violation of local laws or building codes.

As a property owner for a rental property, you have to fix the issues that you know are there. The shortlist above is only a few of the things that you could be held accountable for. 

How to Protect Your Assets as a Landlord

To protect yourself, you must put effort into securing your personal property. This can be done in several ways. Some of the most common include:

1. Create an LLC for Your Business

The term LLC means that you are a limited liability company. Many homeowners don’t think about the fact that they are a business when they become a landlord, but it’s something to consider. LLCs give you protection from potential problems. The term LLC basically gives you a buffer so that a tenant cannot go after your personal assets — just the business’s assets. 

2. Hiring a Skilled Property Management Company

When you have rental properties, you may not know all that you are responsible or accountable for. A property manager can help you sort through applicants, avoid fair housing violations, and more. They have a full understanding of what is involved and can help you ensure your property is operating legally in every way. 

3. Limit Potential Areas of Liability

If you know that there is a particular risk involved with the property, do everything you can to lessen it. For instance, if you know there is a family of feral cats roaming near your property, contact animal control to help you catch them. Remember that storm last year? If there is any chance that it caused roof damage, have the roof inspected before you rent it out. The more prepared the property is, the safer you will be.

4. Protect Your Assets with Insurance Coverage

When you have a rental property, you need to protect yourself with proper insurance. The minimum protection for you should come from adding a rider or extension to your home insurance. It can help you cover the cost of something going wrong with your rental property. An umbrella policy may also be wise since it can protect you from possible lawsuits.

Along with this, it is important that you inform your tenants that your policy does not cover them. They should purchase their own insurance to protect their personal property. 

If you would like more information on your options as a landlord and protecting what is yours, we are here for you. You can contact us anytime for a quote. Vargas & Vargas is also available via phone calls or text. If you need help during business hours, call us at 617-298-0655.

Making an Informed Choice About Accessing the Cash Value of Your Life Insurance Policy

It’s important that you’re well-informed before you access all or part of the cash value of your life insurance policy. After all, you took out the policy to provide for your survivors. That’s why the agents at Vargas & Vargas Insurance work hard to have the answers our clients are looking for. You need to know what impact accessing these funds could have on their future and your own. 

couple sitting in their house and discussing life insurance policy options

Life Insurance Policies that Accrue Cash Value

Cash value life insurance policies are sometimes referred to as permanent life insurance policies. This category includes whole life, universal life, and variable life. One of the biggest differences between these policies and term life insurance is that the latter policies do not accumulate cash value.

Common Ways to Access Cash Value

Policy Loan

Benefits: The life insurance company may offer you a lower interest rate than you can get with a conventional bank loan or by taking a cash advance on your credit card. A policy loan does not qualify as taxable income. You’re typically not required to repay the money since you’ve basically borrowed your own funds.

Drawbacks: However, policy loan repayment is to your beneficiary’s advantage. After death, the insurer usually deducts the amount you borrowed and the accumulated interest from the death benefit.

Withdrawal

Benefits: When the amount withdrawn is not greater than the total of paid premiums, the withdrawal is not taxed. The rules governing a withdrawal depend on your policy. Some policies allow dollar-for-dollar withdrawals.

Drawbacks: With other policies, a withdrawal reduces the death benefit by an amount greater than what the policyholder withdrew.  Withdrawals that exceed premiums paid are usually taxed.

Policy Surrender

Benefits: You’ll receive the policy’s cash value. 

Drawbacks: Your insurer may charge a surrender fee. If you owe any debt from policy loans, the insurer also subtracts your debt from your cash value. Generally, the income from a policy surrender is taxable. Most importantly, you’re effectively canceling the policy. Your survivors will not receive a benefit from the policy.

We’ve provided this information as a general introduction to accessing the cash value in your life insurance policy. If you have specific questions about life insurance policies, contact our team for assistance.

Should I Buy Earthquake Coverage?

At Vargas & Vargas Insurance, our job is to provide the right insurance policies to protect your investment into your home and to protect your family and belongings. Today, we’re talking about earthquake insurance. Before we get any farther, we should point out that most dwelling policies don’t include earthquake coverage. In other words, if a huge 8.1-magnitude earthquake were to rumble through Massachusetts and toppled your home to rubble, you would not be covered with a standard homeowner’s policy.

mother and daughter inside a kitchen

Earthquake coverage is a rider that can be added to any home insurance policy. It’s worth the money if you ever experience a significant loss, and it’s certainly worth the peace of mind.

Does Massachusetts Experience Earthquakes?

Yes! According to the Northeast States Emergency Consortium (NESEC), the state has felt 408 earthquakes over the last 450 years. That’s almost one per year on average. Earthquakes occurring in surrounding states, and even as far as Quebec, Canada, have been felt in Massachusetts, too. 

Even though our earthquake history in recent years isn’t as scary as in other states like California, Massachusetts homeowners are always at risk of earthquake loss. Preparing for one now can protect your home later.

On Home Valuations and Earthquake Deductibles

Earthquake insurance is written based on the replacement cost of your home, not the purchase price or property tax valuation. In other words, your company will insure your home based on what it will cost to build a new home from the ground up, just like through your general homeowner’s policy.

However, deductibles work differently with earthquake insurance. You can choose your deductible to be 5%, 10%, 15%, 20%, or 25%. It’s vital that you understand these deductibles as they relate to a loss.

For example, let’s say your home replacement cost is $250,000. A 10% deductible is $25,000. Earthquake insurance won’t come into play for a small loss. If a small earthquake occurs and breaks all your dishes and some windows, the damage won’t be more than your deductible of $25,000. However, if your entire home were to turn to a pile of rubble, you’d be entitled to a check for $225,000.

Ultimately, the choice to insure your home against earthquake damage is entirely up to you. It’s an affordable addition to any homeowner policy, but it’s important to choose the right coverage for your specific property. Reach out to a licensed insurance agent at Vargas & Vargas Insurance today to learn more.

To Escrow or Not To Escrow?

Many Homeowners have an escrow account for their mortgage payment. The purpose of the escrow account is to maintain a balance of funds the mortgage lender uses to pay bills on behalf of the Homeowner such as property taxes and insurance.

Many other Homeowners do not have an escrow account, even if they have a mortgage; they pay their own taxes and insurance directly.

Not every mortgage program requires that a Homeowner maintain an escrow account.  The general rules are the following for an escrow requirement:

  • Down payment less than 25% at time of purchase
  • Government Insured mortgage (FHA, VA), regardless of down payment at time of purchase

If your mortgage is not a Government-insured mortgage, and your down payment is less than 25% you still have the option to request a “waiver” of the escrow account requirement. Sometimes a lender will charge a premium—usually in the points paid—to waive the escrow requirement.

There is one primary benefit to having your property taxes and insurance included in an escrow account.  This is the monthly budgeting benefit.  Since the taxes and insurance escrow is included in your mortgage payment, then the mortgage payment is the only budget item you need to plan for.  

But there’s an important negative aspect to an escrow account.  The “set it and forget it” mentality that can easily set in.  That is, since your Homeowner’s insurance is included in your mortgage, many Homeowners not only forget to review their insurance on an annual basis to determine savings on premiums, but these same Homeowners often have no idea of the amount of their annual insurance premium, including when the premium increases.

If you have the opportunity to remove at least your Homeowners Insurance from your escrow account, you should do so.  This control allows you to discuss your insurance twice every year with your Independent Insurance Agent to lower your premiums and to take advantage of any developments that can improve the quality of your insurance coverage. 

The process to remove your Homeowners Insurance from your escrow account can be difficult but is worth the effort.  Contact your mortgage servicing lender today to find out if this option is available to you.