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With homeownership comes tax breaks- know your deductions!

All homeowners know how household expenses can really add up. However, many don’t understand all of the tax deductions they are eligible for. Knowing the types of home-related tax deductions you are eligible for can save you a great deal of money come tax season. With the 2012 tax filing deadline just days away, brush up on your knowledge of tax-related deductions so you can make the most of your home-related deductions this year.

The three most common deductions for homeowners this year include mortgage interest, mortgage insurance premiums and property taxes. Here’s the lowdown on what can be deducted:

Mortgage Interest- According to the IRS.gov homeowners can deduct any mortgage interest they’ve paid last year. Keep in mind that any amount you paid towards your premium is not tax deductible- only the interest. Mortgage interest is the amount you pay your lender to compensate them for funding your loan. To find out how much mortgage interest you’ve paid contact your lender and ask them for a statement showing how much interest you paid during the tax year in question. Most lenders will automatically send you one at the beginning of each year.

Mortgage Insurance Premiums (PMI)- Allowed deductions change frequently however for the 2011 tax year the IRS is allowing homeowners to deduct anything they have paid in mortgage insurance premiums or PMI (personal mortgage insurance). PMI is an insurance premium that mortgage holders pay to insure their loan. Most lenders require mortgage holders to pay PMI if they put less than 20 percent down on their home. This protects the lender in the event the homeowner defaults on their loan.

Property Taxes- The amount you pay for property taxes is also tax deductible. Most people escrow their property taxes with their mortgage payment similar to their homeowners insurance premiums. Unlike homeowners insurance premiums however, the amount paid towards property taxes can be deducted from your income taxes.

How can homeowners insurance premiums increase while property values decrease?

It’s a really common question and one that our agents are answering all the time. Homeowners see their property values dropping and wonder, “How can it cost more to insure my home when my property value is declining?”

It’s a good question- and one that should be thoroughly answered.

During the economic slump that we’ve been experiencing over the past few years property values tend to decline as the real estate market slows. Homes are not selling as quickly which decreases demand and therefore lowers the competitive edge of the seller. As homeowners across the country have seen, most property values are much lower across the board than they were even just a few years ago.

So with home values declining, why do home insurance rates continue to increase?

Here are a few reasons:

1- One of the greatest factors in determining the cost of home insurance is the replacement value of the home being insured. The factors that determine your home’s replacement value vary greatly from the factors that determine its market value. The replacement value of a home is the cost that it would take to rebuild a home using current construction costs. Just because home values have dropped, doesn’t mean that building costs have dropped, so it may cost more to rebuild your home even when it’s not worth as much on the real estate market. >>Check out this home insurance calculator to see how your replacement cost is determined.

2- As severe weather events rock the country over the past few years insurers have been left picking up the tab for the thousands of homeowners insurance claims filed. If the area around your home has been struck hard by hurricanes, tornadoes, flash flooding or snow storms you will likely see rate increases in the near future.

3- Insurance fraud is another factor continually driving up the losses incurred by insurance companies and therefore the premiums held by the consumer. It was estimated by the Coalition Against Insurance Fraud that in 2006, $80 billion was lost due to insurance fraud in the United States alone.

There are some things you can do to decrease the cost of your homeowners insurance including installing burglar alarms and other protective devices in and around your home. Most homeowners find that the discounts they receive for having these devices outweigh the cost to install and maintain them. You homeowners insurance agent should be able to give you savings estimates for installing any of these features.

For more information visit Home Insurance Discounts.

New electronic insurance cards may save you a ticket

The growing trend amongst states is to allow drivers to present an electronic version of their car insurance ID card if they don’t have the paper version available.  A bill was passed in Idaho last week that allows drivers to do just this and there are similar  bills under consideration in California, Mississippi, Arizona, and Maryland.

Insurance professionals estimate that tens of millions of police stops are made each year where drivers are expected to show proof of insurance. Problem is many drivers simply forget to put the ID card in their car and therefore cannot produce it for a police officer.

These drivers, who were previously given tickets and made to appear in court, would now have the option to access an electronic version of their insurance ID card on a smart phone and present that to a police officer instead.

The hope is that this will avoid not only thousands of tickets each year but also that it will save insurance companies money as they won’t have to print and mail as many ID cards.



How to make your next move more “green”

green-moving tipsMoving from one home to another almost always adds some level of chaos to your life for a short period of time. However, have you ever thought about the chaos it brings to the environment? Add up all those carboard boxes, styrofoam packing peanuts and newspaper and you’ve got quite a lot of waste being produced every time a family moves.  Many people think that going green takes a lot of effort but in some cases it can actually add simplicity to a process such as moving. Here are a few ways to make your next move more green while also making your move a happier one.

Clean out and donate: I always thought that plenty of closet space was a crucial element for any home. However, I’ve learned that the more closet space I have, the more “stuff” I collect that I really don’t need. Moving is a great time to clean out the closets and get rid of the stuff you no longer want, use or need. Better yet, instead of just throwing things out, make a pile of gently used items that you can drop off at your local donation center.

  • The bonus for you: The less stuff you have to move the better and you’ll be glad come moving day that you’ve limited the number of boxes that need to be hauled. Not only that but if you donate your items and collect a tax receipt it will all be tax deductible which means more money in your pocket at tax season.
  • Why the environment will thank you: Whenever you donate an item you give it another chance to be used which lowers the amount of junk going to the landfill.

Don’t buy boxes: With the amount of cardboard boxes being used and discarded every day it amazes me that people ever have to purchase boxes new. Ask your friends and family if anyone has boxes that they want to donate to your cause. If that doesn’t work, post an ad on Craigs List or find a local company that rents gently used boxes. Corrugated cardboard boxes are made to withstand much more than one move so try and find free boxes wherever you can to avoid buying new ones.

  • The bonus for you: It will save you money!
  • Why the environment will thank you: Every time a box is recycled that means one less box is going to a landfill that day.

Swap towels and linens for styrofoam alternatives: When it comes to packing up fragile items many people use styrofoam packing “peanuts” to pad their items and prevent breakage. Do the earth a favor and steer away from these often-unrecyclable materials and opt instead to use something you already have around the house. Hand towels, wash clothes and other home linens make for great insulators against breakage.

  • The bonus for you: Not only will you save some money on packing supplies but you’ll also have less boxes to move since your linens will be taking the space of the styrofoam peanuts.
  • Why the environment will thank you: Aside from the new packing materials that actually dissolve in water many of the materials still being used take years to break down in a landfill. Use what you have and avoid knowing that those packing peanuts will outlive you.

Make One Trip: If you’re making a local move you might be considering making multiple trips in your own vehicle instead of renting a moving truck. Not only can this mean lots of unnessecary travel but the extra emissions created are not helping air quality. Consider renting a moving truck for the day from a local rental company.

  • The bonus for you: Making one trip means all of your stuff is always in one place at one time. No wondering if the box of drinking glasses made it with the last trip. Also, oftentimes when you rent a moving truck they will throw in blankets and dollys to help move your furntiture
  • Why the environment will thank you: One trip even in a large sized moving truck means you are using less fuel and creating less emissions.

Opt for paperless billing: Since you will need to change your address it’s a convenient time to also change your method of billing. Many companies that bill you monthly for various services  such as ultilities, insurance and loan repayment can change your billing delivery to paperless so you will no longer receive bills in the mail. Just be sure to always add your service provider’s email address to your “Not Spam” list so your bills are always delivered promptly.

  • The Bonus for you: Sometimes service providers will actually reward you for opting into paperless billing by making a small deduction from your monthly amount owed.  
  • Why the environment will thank you: Less paper billing means less trees being cut down to produce paper each year. Do you part and take advantage of the green nature of the internet by getting your bills emailed to you each month.

How your pooch can affect your homeowners insurance

Many people shopping for homeowners insurance are surprised to hear that man’s best friend can affect their homeowners insurance eligibility. If you are a current or future dog owner, get the low down on how this affects your home insurance so you can be an informed insurance consumer.

There is a lot of controversy out there about the policies adopted by many insurance carriers regarding dog breeds. For example, many insurance carriers will not insure a homeowner who has a dog that is deemed to be a “dangerous breed”.

What is a dangerous breed you ask?

Insurance companies use research based on reports of dog bite history to create a list of dog breeds that they deem to be dangerous. This list typically contains breeds such as Pit Bull, Rotweiller and Doberman. Since your homeowners insurance policy typically protects you in the event of a lawsuit, insurance carriers often will not insure a homeowner who has a dangerous breed as they consider them to be at an increased risk for liability claims. Many dog owners, however, dispute that these breeds are dangerous at all and are surprised to hear that they may be denied home insurance coverage by a company who won’t insure those breeds. When it comes down it, insurance companies are not claiming that EVERY Pit Bull (or Rotweiller, Doberman) is a dangerous dog- just that history shows that the breed is at an increased risk of causing a bite injury.

>>For more information on what breeds are considered dangerous, read the CDC’s report that analyzes 20 years of dog bite history

Some insurance companies will allow owners of dangerous breeds to obtain coverage as long as they exclude their pet from their policy. This means that in the event that the insured’s dog bites someone, any resulting lawsuit would have to be paid out of pocket and would not be covered by their homeowners insurance policy.

Aside from dangerous breeds, dogs that have a bite history can also cause issues for their owners who are trying to obtain homeowners insurance. For example, if a homeowner owns a Golden Retriever (often considered one of the least-vicious breeds) that happens to have a history of biting people, they would many times be denied home insurance coverage by some insurance companies. Again, if the company allowed “dog exclusions” the insured may be able to still obtain coverage but wouldn’t be covered for any lawsuit resulting from injuries caused by the dog.

The good news for many owners of  dogs sometimes deemed a “dangerous breed” is that there are still insurance companies out there that will provide them with coverage. Your best bet is to contact a homeowners insurance agent that can shop multiple home insurance quotes simultaneously and tell them about the dog up front.

Home Warranty vs. Home Insurance- a Homeowners Guide

Home insurance vs home warrantyA home warranty and a home insurance policy are two very different types of protection that you can purchase for your home. Understanding the difference between the two is extremely important for any homeowner looking to adequately protect their home and belongings.

Home Warranty 101
A home warranty is a type of protection plan that a homeowner can purchase in order to protect them against costly financial repairs and replacement of household appliances and systems that fail due to normal wear and tear. The homeowner pays a lump premium for the policy each year and in the event that a covered appliance or system breaks down, they would contact their home warranty company to file a claim. The home warranty company then arranges for a specialized technician to come to your home and assess the repair. If the claim is covered under the warranty, the repairs would be made or in the event that the item couldn’t be repaired- it would be replaced. The homeowner typically pays one flat service fee ($60, $100, etc.) every time a claim is fulfilled however, additional labor and material charges are covered under the warranty.

The lowdown on homeowners insurance
Like a home warranty, a homeowners insurance policy offers financial protection for your home, however, the coverage varies greatly from those of a home warranty. A homeowners policy protects you from major damage caused to your home by various perils such as wind, hail, fire and theft– all of which are listed in your policy.  A standard homeowners policy typically covers the structure of your home; additional structures on your property including sheds and garages; and your personal property such as furniture, clothing and electronics.In addition, a homeowners insurance policy provides liability protection which protects you financially in the event of a lawsuit up to the limits in your policy. It also includes MedPay which covers some medical expenses for someone who is hurt on your property and doesn’t file a lawsuit. Finally, in the event of a covered claim, standard homeowners insurance usually provides loss of use coverage which helps pay for alternate living expenses you may incur when your home is being renovated or repaired such as hotel charges, take-out, dry cleaning services, etc. There are limits on all of these types of coverage which vary from policy to policy.

Are they required?
Because of the vast amount of damage and destruction that severe weather and fire can have on your home, most bank require that a mortgage holder carry a homeowners insurance policy on a property to protect the investment made in the property. Even when a homeowners policy is not required by a bank, it is widely accepted that homeowners should always carry a homeowners insurance policy to protect their personal investment in their home in the event of a partial or total loss.

A home warranty on the other hand is typically not required to be held on any property. However, many home professionals reccomend purchasing a warranty to help protect against unexpected breakdowns in expensive appliances such as heating furnaces and central A/C systems. Sometimes a homeowner trying to sell their home will purchase a home warranty on behalf of the buyer to give them some added reassurement that if something were to break in the first year, it would be taken care of.

Costa Concordia leaves many asking about travel insurance

After the recent cruise ship disaster many travelers are left wondering how such a thing could have happened. And while Titanic-like disasters like these are extremely uncommon, there are many things that can interrupt a cruise or other vacation which occur much more frequently. If you’ve ever considered travel insurance, you’re most likely wondering about it more so now. Here are a few common travel mishaps that travel insurance can often help with:

Cancellations/Interruptions: This is typically the top reason that most people purchase travel insurance. If you are planning a big trip you always have to consider that something, anything, could go wrong at the last minute. If it did, would you lose all of the money you paid up front already? Travel insurance typically reimburses you in the event that you have to cancel your trip (or cut it short) due to:

  • Sickness, injury or death of a family member or you
  • Loss of a job or change in work schedule that doesn’t allow you to take vacation
  • Jury duty
  • Hurricane damage to your destination

Medical Expenses: If you are traveling abroad and a medical emergency occurs you could be faced with the reality that most health insurance policies (including Medicare) won’t cover you when you are outside of the United States. Travel insurance policies typically reimburse you for uncovered medical expenses up to the coverage limit purchases.

Baggage Loss: This portion of a travel insurance policy reimburses you in the event that your bags are lost or delayed and you must purchase personal belongings to replace them.

24/7 Assistance: If you experience any type of travel emergency, a travel insurance policy would provide you with a 24/7 “lifeline” to call in order to get advice, directions and accommodations that you need.

Evacuations: This type of coverage is most often needed on a cruise when someone experiences a medical emergency and must be transported (often by helicopter) off of the ship to a nearby hospital. This type of medical evacuation is not covered by a standard health insurance plan so in the event you needed one, a travel insurance policy would typically cover it.

Trip Delay: Last but not least, most travel insurance plans will provide you with reimbursement in the event that your flight is delayed and you incur costs for hotels, food, etc.

Note: Like other insurance plans, travel insurance policies do have coverage limits and the amount of reimbursement you are eligible for depends on the amount of coverage you purchased, not necessarily the total cost of out of pocket expenses.

What you don’t know about your auto insurance policy

Know your auto insurance coverage

When it comes to your auto insurance policy there are a lot of scenarios that your insurance company must consider when determining what should be included and excluded from your coverage. It’s important to know that coverage varies greatly depending on the policy and insurance laws in your state. Here are a few we’ve come across that could apply to your policy:

Burglary: So, we all know that if your vehicle is stolen you need comprehensive or ‘other than collision’ (OTC) coverage in order to be covered for the loss. However, many people falsely believe that if their car is burglarized for items such as iPods, GPS, or other items commonly kept in the car that these will be covered under their auto insurance policy. The truth is, typically no part of your car insurance policy offers coverage for theft of personal items. Your policy may cover items that are permanently attached to the car (installed stereo, speakers, etc.) however, an iPod or detachable GPS would not be covered. For a loss such as this, you would want to consult your homeowners insurance policy.

New Wheels: If you traded in your vehicle and are about to drive the new one off the lot- do you need to call your agent first to list your new vehicle on your policy?  In many states a new vehicle is covered automatically if it replaces a previously covered vehicle, however, only for a short time period (sometimes 30 days) after initial purchase until you list it on your policy.  If you fail to list the vehicle on your policy within that window of time you will be driving uninsured.

Territorial Limits: Taking a road trip to Cancun this Spring break to avoid airfare? Talk to you agent before taking your vehicle over the border as oftentimes coverage is excluded outside of the U.S.

Road Rage Doesn’t Pay: Many states will exclude bodily injury and property damage coverage in excess of the minimum limits required for accidents that were caused intentionally by, or at the direction of, the insured– AKA “road rage”.

May I?: Ever wonder when you lend your car out to your neighbor if they would be covered if they crashed it? Typically if someone gets into an accident while borrowing your car with your permission, they will be covered as an insured driver. However, if someone borrowed your car without your permission or stole your vehicle and experienced an accident- your policy would probably not cover it.

5 life changes that should signal a call to your insurance agent

Most people don’t spend a great deal of time thinking about their insurance on a regular basis. There are, however, a few life changes that should cue you to give your agent a call and review your policy. Do you know what they are?

#1- Drivers in your Household
A change in the number of drivers in your household can greatly affect your auto insurance policy. For example, if a teenage son or daughter has just recently earned their drivers license you need to update your insurance policy right away. Even if they don’t have their own vehicle or are not allowed to operate yours, they are still considered drivers living in your home and must be included on your policy. Likewise, if a driver moves out of your home you will want to remove them from your auto policy. Whether this be a child going out on their own, or a roommate that is no longer residing with you- you’ll want to tell your insurance agent.

#2- Marriage and Divorce
Whenever your marital status changes you will want to review all of your insurance policies including automobile, homeowners, life and health. Make sure your policies accurately represent your current living situation and make any changes needed to insured persons, beneficiaries, etc. (Tip: Married couples typically benefit from insurance discounts on their auto policy, so be sure to ask your agent if you aren’t already taking advantage).

#3- Moving into a new home
Moving into a new home is an exciting adventure, however, you want to make sure your home and your possessions are insured against various perils. If you are purchasing a home, start shopping for homeowners insurance early so you can get a great rate on adequate coverage. If you are renting a home, ask your insurance agent about renter’s insurance to make sure you have coverage for your personal possessions.

#4- A new baby
In the early weeks you may be thinking of nothing else than sleep, however, it’s important to think about your changing insurance needs with a new child in your life. Most importantly, you want to consider your options for health insurance to be sure the child is covered. You will probably want to look into this before delivery to make sure you have adequate coverage for the hospital. Secondly, especially if this is your first child, you will want to think about a life insurance plan. In the event you and/or your spouse passed away, would there be the funds necessary for your child?

#5- A new job
Most people wouldn’t think of insurance as a major concern when switching jobs but there are actually a few items to take into account when changing professions and/or places of work. First, if you are taking advantage of company health insurance benefits before and after the switch, you will want to consider the change in coverage, premiums and plan differences. Secondly, if you have had a significant pay decrease you may want to review your insurance deductibles to make sure they still represent a figure you are comfortable paying out of pocket in the event of a claim. Lastly, if you start your own business you will want to look into business insurance to protect your business against common losses.

What you want to know before you file an insurance claim

When it comes to personal property insurance, whether it be for your home or auto, there are certain things you should know about your policy before disaster strikes. Otherwise, you could get stuck in a surprisingly unfortunate situation when it comes time to file a claim.

#1 Coverage limits- So, you know you have dwelling coverage on your home which covers the structure of your home in the event of a covered loss, for example, a house fire. However, did you know that your home is only covered up to the limits stated in your policy? When you first purchase your homeowners insurance policy, your agent should best determine the coverage limits by calculating your home’s replacement value. Sometimes when a policy renews over the course of a few years these coverage limits no longer adequately cover the home. Review your policy regularly and talk to your agent about your limits.

#2 Deductibles- When you purchased your auto insurance policy did you increase your deductibles as high as possible to pay the lower premium? When it comes time to file a claim you may be regretting this decision. Keep in mind that in the event of a covered claim, you are still responsible for paying your policy deductibles before your policy will begin paying towards your claim. For example, if you are involved in a covered auto accident that involves $5,000 worth of damage but you have a $1,000 deductible on your policy, you are responsible for the first $1,000. Your policy would only pay out $4,000 towards that claim.

#3 Exclusions- Every insurance policy excludes certain items or events for coverage. For example, a standard homeowners policy does not typically cover damage caused by sewer and drain backup. You may be able to purchase additional coverage for these types of exclusions that a standard policy doesn’t cover.

#4 Covered Perils- Don’t wait for a flood to strike, for example, before finding out that your homeowners insurance doesn’t cover flood damage (which is typical of all home insurance policies).  Read your policy thoroughly to understand what perils are covered and what perils are not covered so you know when and where you may want to purchase additional coverage.