My mortgage company requires me to have $ worth of insurance on my home. Is that true?

I face this question every day here in Arizona and here is my answer.

Most mortgage companies require you to have replacement cost coverage on your home. Replacement cost means if your home is totally destroyed, do you have enough coverage to replace the premises. When an insurance company insures your home, they run a cost estimator (sometimes called a RCT) to determine the replacement cost for your home. That includes, but not limited to, type of kitchen and bath rooms (basic, average, semi custom, custom or designer and how many), basement or cement slab, shingle or tile roof, type and quantity of windows and doors, and if you have a one/two/or three car garage or carport. The RCT system then tells your agent how much it would cost to replace your home.

At our agency, we go a step farther. We take that number and view your home via the internet to determine if that number is correct. Most of the time, we add between 2-5% more just to be safe. We also have something called Building Structure Extended Limits, which allows us to increase your replacement cost coverage by 120% or 140%, at very low additional cost.

Now to the real answer to this coverage question. Here is AZ State Law 44-1208:

44-120844-1208.  Loans secured by real estate; prohibited practices; insurance

Except for consumer lender loans regulated pursuant to section 6-636, for any loan that is secured by real property, a person shall not require as a condition of the loan that the borrower obtain property insurance coverage in an amount that exceeds the replacement cost of the improvements as established by the property insurer. 44-1208

This law simply states that no matter what the loan amount is on your home, in AZ, you cannot be required to carry more insurance than the replacement cost, as determined by your insurer.  

Hope this answer helps.

ABC's of Condo Insurance in AZ

Ever wonder exactly what the different coverage are for on your policy? Here is a helpful description that is easy to understand. If you have questions about your policy, just give me a call and I will be happy to go over it with you.

BASIC COVERAGE

Building Property Protection.  Coverage includes  the condo you live in. With most condo's, you are responsible for the sheet rock in, which includes things as sheet rock, wiring, plumbing fixtures, flooring, cabinets, electrical fixtures and more. Most condo associations are responsible for the roof, outside walls and common areas.


Personal Property Protection.  Coverage includes loss of furniture, clothing and other contents if stolen or damaged; this coverage is usually 60% of the dwelling coverage. There are limits on certain personal property such as jewelry, computers, guns and cash.


Additional Living Expenses.  Coverage that reimburses you for reasonable increases in living expenses when a covered loss occurs which makes your condo uninhabitable. This coverage may include payments for the cost of rent, hotel, food and other expenses.


Guest Medical Payments.  Coverage payments for necessary medical expenses including surgery, x-rays and dental work if a guest is injured on your property.


Family Liability Coverage.  Coverage to protect you if you are sued for damages after someone is  injured on your property.


Scheduled Personal Property.   Coverage that protects certain personal property such as jewelry you have itemized on your policy in case of loss, theft or mysterious disappearance.


Loss Assessment.   Allstate will pay for your share of any special assessments charged to you from the condo association, up to the limits on your policy, subject to a small deductible.


Extended Protection.   Your insurance company will pay your share of the condo association's Master Policy Deductible, up to the limits on your policy.


Deductibles.   The amount of co-insurance you have on your policy that you are responsible for any claim.

Hope this information is helpful.

If I plan to drive in Mexico, do I need to buy Mexican auto insurance?

With my agency located in Arizona, I get this question asked to me frequently. My answer is always YES. Here are a few facts that support my answer.

• Most American auto insurance companies will cover you and your car within 75 miles of the US / Mexican border.
• To my knowledge, the Mexican government does not recognize any American insurance companies.
• If you have an accident in Mexico, you are considered guilty (at fault) until proven innocent.
• You can be thrown in jail and your vehicle impounded and sold.

Mexican auto insurance can be purchased at many US insurance companies and also at the border with Mexico. An example of full coverage (liability, property damage, collision, travelers aid, interpreter, and lawyer if needed is about $55 for a 4 day stay. A small price to pay for peace of mind.

Also, if you have a lien on your vehicle, some lien holders will not allow you to take your vehicle into Mexico. Please check with them before you plan a trip.

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What do I need to know BEFORE I purchase insurance?

Purchasing insurance for your car, motorcycle or ATV is not only the law but also a task you should go into with a little bit of insurance knowledge. Our hope is to give you the tools to make the right decision for your individual needs and requirements.

Determining what company you choose to purchase your insurance from is the first step. Many people want the cheapest insurance possible. However, it is more important for you to get the right coverage rather than the cheapest insurance. What you should be concerned with are a combination of low cost, coverage designed for your specific needs, do you have an 800# or a real local agent, customer service, claims service and will your insurance company be there when you need them.

At The Harris Agency, we want you understand your coverage. That is why we try to examine and explain each of the coverage you currently have to make sure it fits your real needs. We have compiled a list of some of the coverage with an easy to understand description of these coverage; the more you are informed about your insurance needs, the smarter decision you can make.

Your Auto, Motorcycle, ATV insurance is required by law and by your lien holder on your vehicles. In AZ, state law requires you to have both BI (bodily Injury – coverage if you are at fault for an accident and your cause injuries to others) and PD (property damage – coverage if you are at fault for an accident and cause damage to others property). Arizona requires BI coverage of $15,000/$30,000 and PD coverage of $10,000. We recommend that the PD coverage be at least $25,000, which usually only costs less than $5.00 more every 6 months. 

UM/UN (Uninsured and Underinsured coverage) is not legally required but helps cover you if you are involved in an accident where the other party is at fault but does not have any or enough coverage to pay for your medical injuries. 

Collision coverage pays for damage to your vehicle (subject to a deductible) and Comprehensive coverage pays for glass repairs/replacement, theft, and vandalism to your vehicle (subject to a deductible, except if you have full glass coverage for your auto glass).

Your Home, Condo or Landlord property is the largest purchase you will ever make in your lifetime. Our hope is to give you the tools to make the right decision for your individual needs and requirements. Be sure your property insurance policy includes enough coverage to replace your property if totally destroyed (replacement cost), enough liability coverage to protect your assets in case of a law suit judgment due to a liability claim ($300,000 minimum if you have a pool), enough insurance to cover your personal property (clothing, furniture, jewelry, electronics), and a deductible you can handle if you do file a claim (coinsurance).

As a Renter, your insurance needs are different than a property owner’s needs. When you rent an apartment, condo or home, you are not insuring the property. Your only concerns are for your personal property (clothing, furniture, jewelry, electronics), liability coverage ($100,000 required by most apartment complexes), and a deductible you can handle if you file a claim (“coinsurance”). Most apartments require you to name them as “an additional insured” on your policy. That way, they receive  a copy of your policy with any policy changes. 

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