The 7 Most Common Home Insurance Claims That Make Premiums Spike—and How to Avoid Them

by Jamie Wiebb | Realtor.com

To many homeowners, home insurance is just another bill to pay. But when disasters happen, this extra layer of protection can serve as your lifeboat—and simultaneously, your worst nightmare.

That’s because each home insurance claim, while offering financial relief in the short term, can increase the amount you pay for your premium—sometimes dramatically. So what’s a budget-conscious homeowner to do? First, you should know the most common home insurance claims—and how to avoid having to file one in the first place.

To be clear, we’re not saying you shouldn’t file a home insurance claim when you’ve suffered loss or damage—that’s what insurance is for, and you’re paying for it. But certain types of damage can be prevented or minimized, and it’s in your financial best interest to take the proactive route.

So make sure you understand how your insurance works—and how to prepare for the inevitable—because you could save yourself some major bucks.

1. Bad weather

Ask 10 home insurance agents about their most-encountered claims, and all of them will list weather near the top: Tornadoes cause tremendous structural damage. Lightning can fry your electronics—or set your house on fire.

And hail? Insurance agents hate hail. For good reason: A single hailstorm might force your insurance to pay for a new roof, siding, windows, and more.

“Hail is a rough thing on insurance because it hits entire neighborhoods,” says Bob Buckel, a vice president and product manager at Erie Insurance. “And there’s not a lot you can do to prevent hail losses.”

How to prevent it: Properly maintaining your roof and siding won’t prevent a hailstorm, but it can lessen the damage when one happens—and thus decrease the insurance payout.

2. Plumbing failures

Water damage is another common insurance claim—and most of the destruction isn’t caused by rain.

“Most of the time [water damage] means a failure of a plumbing system in your home,” Buckel says. An average 2.5-bathroom home has 13 faucets or water sources, he adds—”and each one is susceptible to breaking.”

How to prevent it: You’ll need to do a little regular upkeep. Are there any leaky faucets or curious puddles on the floor? Check them out, and fix any associated problems. Immediately.

“Sometimes, everything is done properly during installation, but the homeowner neglects routine maintenance such as inspecting and repairing grout and caulk, removing clumps of hair from a shower drain, or checking and replacing water supply lines for appliances,” says Scott Congiusti, the assistant vice president of claims for HUB International.

But plumbing problems plague perfectly maintained homes, too.

“A clogged toilet, sink left running, and an overloaded washing machine can all be easily prevented, but it is not always easy with guests, small children, or domestic staff present in the household,” Congiusti says. “You can minimize, but never eliminate, human error.”

3. Fires

In terms of stress and expense, a house fire is, perhaps unsurprisingly, one of the worst home insurance claims. Unlike hail or wind damage, it’s not simply a matter of replacing roof or siding. Often it means moving out, living temporarily in a rental, and rebuilding a room—or even the whole house.

“The colder the winter, the more fires we see,” Buckel says. “People start supplementing their heating with a wood-burning stove, and we see a lot of claims coming out of those.”

How to prevent it: To avoid a house fire (and the associated damage), have your chimney inspected and regularly cleaned, and be alert for any fire risks around the home, such as space heaters or overloaded extension cords.

4. Washer hoses

It’s easy to forget about these hoses tucked behind your washing machine, but poor maintenance could lead to an expensive insurance claim—especially if your washer and dryer aren’t located in a basement.

“Washer hoses breaking in the basement is one thing, because there’s usually a drain there,” Buckel says. “But imagine one breaking in the second-floor laundry room.”

This dramatic failure could lead to what Buckel calls “significant claims”: up to six-figure losses.

How to prevent it: Regularly check and replace your hoses (at least every five years) to keep your washer from flooding the house.

5. Flooding

While your home insurance should cover any home-related water damage from plumbing leaks, flooding caused by external forces —like an overflowing river—is typically not included in your regular home insurance plan.

“It’s a nationwide problem,” Buckel says.

Indeed: In 2016, only 12% of American homeowners had flood insurance.

“People think, ‘Oh well, I have to live in a flood zone to get flood insurance,'” Buckel says. “But 25% of all flood claims come from properties outside of a flood zone.”

How to prevent it: If there are any major bodies of water nearby—even if your home doesn’t technically fall in a flood zone (check here)—consider speaking with an agent. It’s better to be covered in case of disaster than to lose everything.

6. Service line breakages

You might not spend a lot of time thinking about your service lines—those large, in-ground pipes that swoop away your sewage and supply must-haves like water and gas—but if one breaks, you won’t be able to think of anything else. And these guys are surprisingly fragile: All you need is one rogue tree root breaking through the piping to screw up your month.

Many insurance companies won’t cover that unless you have a specific endorsement (an addition to your contract expanding the scope of coverage), Buckel says. “And these problems are expensive. You often have to dig up the line and then replace it. That claim could be more than $6,000.”

How to prevent it: Get regular sewer scopes to ensure the line stays clean, and pay attention to any water seepage in your yard that could indicate a problem with your water lines. Talk to your insurance agent to make sure you’re covered in case your lines go haywire. Otherwise, you could be in for a huge financial surprise.

7. Personal liabilities

Ever heard the one about someone tripping on a home’s walkway and then suing the owners for all they’re worth? These kinds of claims are surprisingly common, experts say. And while your insurance might cover the cost of the lawsuit, a single personal liability claim can increase your premiums for years.

“A family friend of 20-plus years that slips on an icy walkway can turn into years of torment, all because of the myth that, ‘It’s not you I’m suing, it’s the insurance company,'” Congiusti says. “Well, when it’s time to renew a homeowners policy, you may not feel that way when a large claim payment limits your choices.”

How to prevent it: Sidewalks contribute to a lot of these injury claims—as do trampolines and pools. Pay careful attention whenever your pool or trampoline are in use, and make sure sidewalks are clear and any tripping hazards around the home have been removed.

Posted on October 9, 2018 at 1:34 pm
Nadine Scott | Category: Real Estate

9 Things You Should Consider Before Buying A Vacation Home

by Kate Ashford | Forbes

About one in eight homebuyers is buying a second home, according to research from the National Association of Realtors. And summer is a time of year when buyers think about it.

Consider: You’ve just had a great summer trip to a relaxing location, and you’re wondering whether you should get yourself a permanent place there. Or you’re emerging from a long, cold winter, and you’re thinking of snagging a condo somewhere warm where you can escape in January.

Before you start putting a down payment together, here’s what you should ask yourself:

Where is it? It’s nice to contemplate a second place in Florida when you live in upstate New York—but are you going to want to jump on a plane several times a year to get there? “It’s ideal to be able to get to your vacation home within a two-hour window, especially if you are working or have a young family,” says Elizabeth Scheiderer, a financial planner in Mayfield Heights, OH. “You’re much more likely to actually use it.”

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It’s also wise to think about whether you’re purchasing in an area that experiences severe weather during the year. “Purchasing a second home in a hurricane prone area is not the best decision, which I wish I had known a decade ago when we purchased a second home on Hilton Head Island,” says Thomas Balcom, a financial planner in Lauderdale-by-the-Sea, FL. “Our primary residence is in South Florida, which is often in the ‘cone’ of many hurricanes. This was a hard lesson to learn two years ago when both homes experienced damage during back-to-back storms.”

Have you visited more than once? Ideally, you’ll want to spend a solid amount of time in a location before buying property there. “Get to know the area and whether it’s going to offer you a potential boost in the future or if it’s an area that may suffer economically,” says Monica Dwyer, a financial planner in West Chester, OH. “Does it rely on a specific industry or company, and what would happen if there were a slump in the economy? Find a real estate agent that has a lot of local experience that could help you figure this out.

Would you rent it? If you plan to rent the property to help with expenses, first make sure the community allows short-term rentals. Plan for additional expenses, including a management company, potential damages and repairs, and for the property to go unrented for some periods. “If you use the property for personal use for more than 14 days during the year, then a portion of the expenses will not be tax deductible,” says Nicole Theisen Strbich, a financial planner in Alexandria, VA. “If you are married and your adjusted gross income is above $150,000, any losses from the rental property will not be tax deductible and are carried forward to future years.”

When would you use it? If you’re thinking of renting it out, and you primarily want to stay there when other people would want to stay there, that could be an issue. “If it’s a ski condo and you want it for skiing, that’s also when your potential rental pool would want it,” says Judy McNary, a financial planner in Boulder, CO. “Are you willing to give up use during your desired time? Or is the property in a place that is multi-seasonal that could be rented during high season but used by you happily during shoulder season?”

What kind of lifestyle do you want in retirement? If this second property is for your later years, this is an important thing to consider. “For many, they think their second home should be equivalent to their primary home, and I’d argue it doesn’t need to be,” says Brett Anderson, a financial planner in Hudson, WI. “When you evaluate your lifestyle priorities, chances are you’ll discover you won’t need to spend or invest as much into a second home.”

Have you calculated the carrying costs? Sure, you work the costs of the second mortgage into your cash flow, but have you considered the other expenses that come with a second property? “There could be HOA fees, property taxes, insurance, yard maintenance and cleaning costs,” Scheiderer says. “Especially in resort towns, these services may come at a premium price.”

Does your accountant approve? Have you run your second home dreams past your financial professional? “A wrinkle with buying a second home, stemming from the new tax code, is that the property taxes on the second property will likely not be deductible,” says Samual Boyd, a financial planner in Washington, D.C. “With a $10,000 State and Local Tax (SALT) limitation, most people won’t benefit from any property tax deduction on the second property.”

Can you still meet long-term financial goals? Will you be able to continue to save for retirement, college, a wedding or something else long-term? There’s nothing wrong with shifting a plan for a new priority, but you have to think it through. “I recently spoke with someone about this because they are thinking of building a beach house, and after going through their financial plan and the budget for the house, they may not be able to contribute as much toward their college savings goals,” says Carrie Galloway, a financial planner in New York City. “We’ve discussed and laid out that they may need to sell the beach house or downsize their current home when it comes time for their children to go to college.”

Are you counting on continuous appreciation? “We bought in 1999 and the value went straight up… until 2008, when the value plummeted, along with all real estate,” says Leon LaBrecque, a financial planner in Troy, MI. “We are back on the plus side, and right now, we’re gaining about 4% a year and paying 3.5% on the mortgage, so we are winning. Contrast that to 2009, when we were paying 3.5% and losing 20%. Ugly, and not the kind of investment we like, but we sure used the cottage.”

Posted on July 16, 2018 at 2:05 pm
Nadine Scott | Category: Real Estate

McKenzie Valley Stats

This graph shows the active inventory for the McKenzie River Valley

Call or email me for a custom report, 541-915-0807 or nadine@windermere.com.

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Posted on July 11, 2018 at 12:32 pm
Nadine Scott | Category: Real Estate | Tagged ,

McKenzie River Riverfront Properties

McKenzie River riverfront properties Nestled in the Cascade Mountains lies the 90 mile long McKenzie River. Originating in Clear Lake, this waterway boasts pristine views, relaxing activities, and prime riverfront properties. Fishing, boating, and hiking are never far off when you live along the McKenzie River, and the scenic views are never ending. Having lived in the McKenzie River Valley myself for over 40 years

Posted on June 21, 2018 at 11:26 am
Nadine Scott | Category: Real Estate