Disaster Strikes Your Second Home: Are You Prepared?

Once you decide you’re financially ready to buy a vacation home, one important step is insuring your new pad. It’s different than buying insurance for a primary residence. Factors such as where it’s located, who stays there and what amenities are available will help determine your home insurance needs.

Your Vacation Home Versus Mother Nature

For many people, the whole idea of a vacation home is to be closer to a sandy beach or among the crisp mountain air. That perfect location for rest and relaxation may come with some additional insurance costs.

Hurricane season and intense rainstorms underscore the importance of knowing your coverage. The point applies to primary residences and vacation homes. When hurricane Florence hit in September 2018, more than 30 million people were under a flood watch and media outlets reported only about 3 percent of North Carolina and South Carolina homeowners held insurance policies

And the cost from homeowners without insurance can be significant. When assessing the aftermath of 2017’s Hurricane Harvey, the Texas Department of Insurance reported the average cost of flood damage caused was $80,000.

You can purchase a policy through the National Flood Insurance Program (NFIP), which is run by the Federal Management Agency (FEMA), or private insurance companies.

Other natural disasters or risks associated with a given region should be considered, as well. 

For areas where earthquakes or other seismic activity are common, supplemental policies to cover these risks are available. If you live in California, you also can receive it through the California Earthquake Agency (CEA). 

But Hawaii homeowners affected by volcanic eruptions and related damage were less likely to find coverage.

Whether it’s one of the aforementioned risks or another threat like wildfire, the area in which the home resides can result in higher deductibles for your property.  

Insuring Your Vacation Home for Guests

Renting out your vacation home is becoming more common. Homeowners do it to recover their investment and earn extra income. Unfortunately, guests can inadvertently hurt themselves or, inexplicable as it may seem, intentionally damage the property.

Don’t have enough insurance — or the right coverage? Additional headaches could follow. So, if you go this route, you’ll want to consider the potential insurance needs.

Before renting out your vacation home and selecting insurance, you’ll want to determine how often you’ll rent out the property and what service you’ll use.

Many insurance carriers will make a distinction based on how often you rent the property. If you plan to rent your vacation home occasionally, your carrier may offer a rental rider to add to your existing homeowners policy. These typically provide limited property and liability coverage. 

If regular renters seem more likely, your needs could warrant business insurance. 

The other important consideration is what service, if any, you will use to rent your property. Because of its large community and ease-of-use, Airbnb is a popular choiceAirbnb offers an insurance program to hosts. It would be easy for a homeowner to think they’re completely protected by the program. That would be a mistake.

It does provide coverage up to $1 million for property and liability claims. But there are still gaps. It doesn’t cover certain liability scenarios, such as assault, or protection for your valuables. 

Having rental guests? Don’t guess. Contact a Bond Insurance Group licensed agent to know what coverage you need. 

Insuring Your Vacation Home From Itself?

First, similar to how coverage works with your primary residence, the home’s specifications and features will affect how much your insurance costs. 

How old is the home? And what materials make up its construction? A carrier will review these factors when pricing coverage.

The style of home also could dictate cost. A four-bedroom, single-occupancy house on the beach may cost more to insure than a condominium two streets away. 

Not only would construction and age affect the costs, but how the property is managed could, too. Features or services provided (or not) by a property’s homeowners association, such as security, may affect cost.

Speaking of features, amenities that pose a risk could increase premiums and the need for more liability coverage. Pools and hot tubs are a prime example. 

Other Implications and Getting Help

When adding up the factors that go into insuring your vacation or second home, the costs can be greater than that of your primary residence.

Keep in mind the implications. If disaster strikes and you don’t have the right coverage, your insurance company could deny your claim. Additionally, in certain scenarios, they might decide to cancel your current policy or request you switch to a business policy. The latter may lead to higher premiums. 

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Can Your Smart Home Save You Money?

There’s a definite “cool factor” to the idea of a smart home. The ability to turn lights on and off with your voice, get notified if there’s someone on your porch, or have your smoke detector alert the fire department if it detects a problem seems futuristic. It’s reminiscent of the Jetsons and Iron Man.

Smart home devices definitely are cool – but they’re also practical. Many of the devices aren’t just about convenience, they’re also about safety. Lights that turn on and off automatically when you’re on vacation can deter burglars, smoke detectors that call the fire department can save lives and property, and doorbells that capture porch activity can help serve justice if your belongings are ever stolen.

Even beyond peace of mind, smart devices can help you save money. It goes beyond smart thermostats that monitor the temperature of your home to save you money on utilities. 

It’s time to start looking seriously at how certain smart home devices can help you save money on homeowners insurance. Many insurance companies offer premium discounts of 5 percent to 20 percent for policyholders who install smart devices. The decreased revenue from premiums still costs less than the costs to repair or replace lost or damaged property. 

If you have or plan to install any of the following smart home devices, check to see if you’re eligible for any insurance discounts on the product itself, the installation or your premiums. 

  • Home Security Monitors

  • A small, weatherproof tower with a camera that surveys your home and property. It regularly sends photos to your smartphone. Your insurance company can use these photos to assess any damage that occurs rather than sending out a surveyor. It may allow the insurer to pass along those savings to you in the form of a discount.

  • Video Capture Doorbells

  • Notifies you of motion at your door so you can not only view the activity but communicate two-way with your visitors. These doorbells may be eligible for discounts not only on premium, but on purchase of the device and installation. 

  • Smart Smoke Detectors

  • These devices not only test themselves regularly and notify you of the results, they also alert you and/or the fire department if it detects smoke or carbon monoxide and lets you know where the problem originated. Insurance companies may offer discounts to policyholders with smart smoke detectors installed, since they can help the insurers save significantly on repairing property damaged by smoke or fire. 

  • Interior Fire Sprinklers

  • No longer just for commercial buildings, interior sprinklers can help prevent the spread of any fire that may occur, especially for homes in more remote areas. 

  • Water Sensors Coupled With Auto-Shut-Off Valves

  • Designed to detect flooding that isn’t caused by weather and turn off the water supply to the problematic area. This means if you leave for the weekend and a frozen pipe bursts, you won’t have water gushing into your home the whole time you’re away.

  • Smart Lock Systems

  • Can be controlled manually provide extra security while you’re away from home. Can’t remember if you locked the front door or shut the garage? Just check the app and make sure you’re all locked up. 

In most instances, installing smart home security devices like these won’t negate their purchase prices – you’ll still be paying more than you’re saving in insurance discounts. However, any discounts you receive can help you justify their installation. After all, if you can save a few bucks on your homeowners policy and feel a bit more like Iron Man, why wouldn’t you? 

Any discounts you get on your insurance premiums from installing a smart device is icing on the cake. After all, if you can save a few bucks on your homeowners policy and feel a bit more like Iron Man, why wouldn’t you?

How to Insure Your Car for a Short Period of Time

In doing auto insurance research you may have run across some information about temporary car insurance. If you ask Google “Do I need temporary insurance for my situation?” we have the answers.

In most cases, experts say, additional auto insurance is not necessary or even useful. Exceptions pop up, but chances are the comprehensive auto policy you already have also will work in a “temporary” situation. Realize something else: With some exceptions, “temporary insurance,” usually means terms lasting six months or a year. However, it’s also the kind of agreement you can cancel once you no longer need it.

No matter who your insurance company is — Progressive, Liberty Mutual, Nationwide, or any of Bond Insurance Group’s many trusted carriers — getting in touch with your agent to review your policy is a smart move. In the meantime, let’s check out a few scenarios where someone might think they need additional auto insurance.

Renting a Car Internationally

Rules differ from company to company, but auto coverage in the U.S. typically (though not always) extends to Canada. This is much less the case in Mexico, where many insurance carriers licensed in the U.S. do not have operating privileges. Some companies offer temporary auto insurance packages for Mexicothat include everything from liability to collision and theft, to medical payments and legal assistance, to vandalism and U.S. repairs. Conversely, for people coming to the U.S. — maybe road tripping on a motorcycle — offer short-term insurance solutions are available.

U.S. residents traveling anywhere else — Europe, South America, Australia — won’t be covered by their regular policies. One possible solution to keep in mind: Credit card companies often will make available insurance policies if you pay for the rental with the card. Check with your credit card company for details.

Ride Sharing Professionals

Drivers who use their own car to transport people for a fee may realize a regular policy does not cover ride sharing. Getting paid transforms your car from a personal vehicle into a commercial one. Uber and Lyft extend insurance with certain limits to drivers. You might never need it, but the more you drive, the greater the chance of an accident. No matter how long you plan on working as a driver, any supplemental insurance solution won’t be temporary. Talk to your carrier about commercial insurance.

Frequent Car Renters

Business people who rent cars first want to make sure their primary auto insurance covers their needs. Spending extra money on insurance at the rental counter is an option. Most experts will tell you the car insurance sold at rental counters is not necessary. Your regular insurance probably gives you the coverage you need.

An effective primary auto insurance policy goes wherever you do, and extends to family, friends, the neighbors, or any chosen occupant.

People ‘In Between’ Cars

It depends on what “in between” means. Do you to buy a vehicle in a few weeks or even months? You should have some kind continuous insurance. Have you sold your car and plan to ride the subway or take taxis (or use ride share) everywhere? If you plan to literally never drive, and don’t need to purchase insurance for reasons other than driving, perhaps you can ditch your insurance policy. Something to consider: If you think you might drive again, a long lapse in coverage will make insurers wary to sell you a policy, which could affect your rates.

Non-Car Owners Insurance Needs

If you don’t own a car but might need to drive one occasionally, look into a non-owner policy. People who don’t own vehicles but instead borrow cars for personal use, or perhaps drive cars professionally that are not their own, should pursue a non-owner policy. Like other policies (away from the car-rental counter), it’s something that keeps you legal.

With few exceptions (most of them at the airport rental counter) there’s no such thing in the U.S. as temporary car insurance. The most important thing to remember is having the right continuous insurance so you’re covered no matter where, when or what you’re driving.

 

What are the Benefits of Bundling Home and Auto Insurance?

We’ve all seen the ads. Whether in a museum of inexplicable accidents or a fitness class where alter egos debate coverage, the messaging often includes: Bundle your home and auto insurance. 

But should you?

It often leads to greater savings and better service. Let’s explore why.

Most Carriers Offer Multiple Products

Bundling home and auto policies provides a good deal for most. If you can get a single stop for your insurance needs — and save money — who wouldn’t? 

Aside from financial savings through companion discounts by purchasing multiple policies, a single carrier can save you time.

Bundling Policies Should Save Money

For bundling to make sense, combining your home and auto insurance under a single carrier should save you some money.

Often called a multi-policy or companion discount, bundling home and auto insurance can save you as much as 20 percent to 30 percent on premiums than if you purchased the policies from separate companies.

Now, that amount can vary by state and carrier. 

A byproduct of bundling can result in financial benefits down the line, as well. In certain circumstances, such as a car and house each incurring damage in the same incident, you could save you money. When you bundle, you can save by filing a single claim and paying one deductible. If you have multiple carriers in that same scenario, you would need to file claims with each carrier and pay multiple deductibles.

Hopefully you never encounter an incident where both your home and auto are damaged. If you do, saving some money could make you feel a bit better about the situation.

Bundling Should Save Time

In this day and age, where our attention is pulled in many different directions, bundling coverage could look attractive by the time savings alone.

When you bundle coverage, it should reduce administration such as paperwork and websites to visit. Overall, the need to communicate with multiple providers goes away. And when changes need to be made, having that relationship with a single provider can help simplify the process of needing to add coverage or address issues.

Loyalty Can Work Both Ways

We mentioned issues prior. Not only could you develop a personal relationship with a carrier, but that carrier can look at you differently if you have multiple products with them.

Live in an area with severe weather? When carriers get skittish about providing home coverage, it’s easier to obtain or keep your coverage if you have bundled products. They know if they don’t keep you as a client in one product, you’re likely to switch to another carrier for the other service.

Speaking of loyalty, carriers can also offer more expansive bundles. These combinations of policies work best for people who are looking to not only bundle home and auto policies, but also perhaps, as an example, a recreation vehicle or two as well as another property. 

These bundles can provide the same advantages of time and cost savings. But before committing to a single carrier for most of your insurance needs, consider and evaluate some key criteria about the company.

Sometimes Bundling Isn’t The Answer

Even though bundling policies provides benefits for many people, in some instances it doesn’t make sense. First, you want to make sure you’re getting the same coverage for your money. Don’t skimp on coverage because you could end up paying more in event of a loss down the road. 

Also, certain special items, such as premium vehicles, may not work well in a bundle.

Borrowing Money? What Loan is Best for You?

Most people need to borrow money at some point. Americans owe more than $13 trillion in total debt. Borrowing is clearly an expensive proposition for many American families.

If you do find yourself borrowing to buy a home, a car, an education, or anything else, it is important to look at the pros and cons. It’s all about making the right long-term decisions and minimizing out-of-pocket costs. Let’s look at what you need to know to best evaluate loan options available to Americans today.

Common Types of Loans

Loans come in many names and forms. When looking at consumer loans (loans to people and not businesses) there are four main categories: mortgages, student loans, personal loans and auto loans.

While these are the most common ways to borrow, there are some substitutes for traditional loans to use instead. Those include credit cards, lines of credit, home equity lines of credit and borrowing from yourself with a 401(k) loan.

Not all loans are created equal. It is important to understand some of the similarities and differences between the various types of loans and alternatives.

What All Loans Have in Common

All loans and borrowing products have a few features in common. Here are a few of the most important places to look:

Interest Rate

The first place to look with any loan is the interest rate. This is the main way you pay for borrowed funds. Depending on the type of borrowing, rates can be single-digit percentages or hundreds of percentage points for the worst short-term loans.

Fees

Common fees with loans include origination fees, late and returned payment fees, annual fees and early payoff fees. Fewer and lower fees are better.

Minimum Payment

Every loan requires you to pay it back somehow. Depending on the type and duration of the loan, your minimum payment will vary.

Payment Schedule

The vast majority of loans require monthly payments, but some allow you to pay more frequently or require a different schedule.

Lender 

Is the company you plan to borrow from an upstanding, trustworthy company? Only work with licensed, reputable lenders.

Features of Popular Loans

Here is a brief summary of each of the major types of borrowing, including traditional loans and other lending products.

Mortgages

Mortgage loans are a type of loan where you borrow to buy a property, most often a single family home or condo. The most popular type of mortgage is a 30-year fixed loan, where you pay the same payment and interest rate for the next 30 years or until the loan is paid off. 

Student Loans

Student loans are one of the fastest growing categories of borrowing. From banks and nonbank lenders, student loans help pay for the cost of a college or university education. Some loans are backed by the U.S. government, which means lower rates and better terms than private student loans.

Personal Loans 

A personal loan is an unsecured loan. The best personal loans these days often come from credit unions and online lenders. Payday loans fall into this category. You should avoid this type of predatory loan if at all possible. Payday loans typically charge high interest rates.

Auto Loans

Car loans are similar to a mortgage, except secured by the car instead of a home. When a loan is secured, it means the bank can take (foreclose) the asset if you stop paying. Most car loans are around two to seven years long with a fixed monthly payment

Credit Cards

Credit cards are a form of unsecured loan, and they often charge interest rates from around 7 percent for the best cards and borrowers up to 30 percent for the worst cards. Beware credit card debt. It is a lot easier to spend than it is to pay it back.

Lines of Credit

A line of credit can come in several forms. One popular form is as a personal loan, or an unsecured loan. Lines of credit are revolving accounts, which means you can add to the balance and pay it off again and again over the life of the account.

Home Equity Lines of Credit 

A Home Equity Line of Credit, or HELOC, is a secured line of credit. It is a hybrid of a personal line of credit and a mortgage. Because a HELOC is secured by your home, it gets a better interest rate than nearly anything else other than a mortgage. But you can spend on it like a credit card.

401(k) Loan

A 401(k) loan should be a very last resort. Taking from your 401(k) means borrowing from your retirement, and if you don’t pay it back you get hit with a handful of fees and penalties. Avoid this type of loan if at all possible.

This is not an exhaustive list of every type of loan. Many others exist that fall within these categories, and there are some less common and customized loans available in real estate, business, construction, and other areas.

Go Into Lending With Your Eyes Wide Open

Some finance experts suggest there are good debts and bad debts. Good debts arguably include a mortgage, which get you a home, and student loans, which get you an education. However, not all student loans or mortgages are good or affordable.

When it comes to cars, credit cards, and anything else, it’s best to avoid borrowing if you can’t afford to easily pay it off in full from savings. If you pay off your credit cards in full before the due date, you never have to pay interest. This is where valuable rewards cards come in. Savvy spenders buy with cards and pay them off to get rewards but avoid the costs.

Even with “good debt,” borrowing has costs. Avoid borrowing when you can. But if you do need to take out a loan, make sure you get the right loan with the most favorable terms for your needs.