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Best Practices for Home Insurance When Buying a Fixer-Upper

Joseph Coupal - Tuesday, September 25, 2018
Lallis and Higgins Insurance, Weymouth, MA

Buying a fixer-upper can be great – you can get the house you want for a little less, and it comes with all the charm and history of an older home. But that adorable home that “just needs some TLC” can quickly turn into a money pit, if you’re not careful.

And we’re not just talking about the contractor’s fees and unexpected problems that will undoubtedly arise during renovation. Even basic costs – like the cost of insuring the home – can be a huge surprise for many homeowners.

Plus, some things about a fixer-upper are just more difficult. The buying process involving loan paperwork and contractors’ quotes is a little more muddied, and getting insurance can be a downright pain.

We'll leave the buying process to your mortgage lender, and here we will talk about how to get insurance on that fixer-upper. Even if you’re buying that dirt-cheap home with cash, you’ll need at least basic insurance to protect your investment from fire, flood and theft. But getting that insurance can be quite the feat. Why it’s so difficult to get insurance h3

Most homebuyers don’t think much about the process of getting insurance. It’s just part and parcel with the buying process. You get quotes, pay for your first year’s premiums at closing and roll your payments into escrow.

You can do this, too, with insurance on your fixer-upper. But you may have to do some more shopping around. Fixer-upper homes – especially those that have been foreclosed on or abandoned – are a higher risk for insurance companies. The fixing up process itself comes with some risks, including problems that might occur when no one is living in the home during the renovation process.

Since mores issues could arise, fewer insurers are willing to take on the risk. And those that are will charge you more for homeowners insurance. Luckily, you have some options for getting insurance on your fixer-upper, even if it’s in terrible condition. What are your options? h3

Before you even call to ask about homeowners insurance, get an inspection. You’ll need one to get a loan on the home anyway, and an inspection will tell an insurance company how much work needs to be done on the home.

Then call an independent insurance agent. Explain your home’s condition, and ask about the following types of homeowners insurance:

  1. Conventional insurance. If the home simply needs some basic repairs, and you’ll be able to complete repairs and move in within 30 days of closing, you can likely get a conventional insurance policy through a traditional insurance company.

    But what if the home is in really bad shape? What if you won’t move into it for months? Or even if you do move in quickly, what if some of the major repairs (like exterior siding and/or gutter repairs) will take a few months to complete?

    In this case, the traditional insurance company will likely recommend another type of insurance, specifically formulated for higher-risk situations like yours. (Empty and under-construction homes are particularly high risk for insurance companies.) Some insurers will still write the policy themselves, while others will refer you to a third-party insurer that specializes in higher-risk policies.
  2. Builder’s risk. This is the most common type of renovation or new construction homeowners insurance. This policy usually starts with lower costs, and as you get the home into better condition, the costs rise because the home becomes more valuable. Builder’s risk policies are easiest to get if you have a solid, timely plan to finish the reconstruction.
  3. Vacant dwelling. If your home mostly needs cosmetic work but will sit empty while the work is being done, a vacant dwelling policy is possible. These basic policies will protect a home against most physical losses, but they don’t usually cover theft. Keep in mind that depending on where the home is located, theft could be a huge problem, especially if the home contains valuable appliances, tools or copper wiring and piping.
  4. HO-8. An HO-8 policy is an insurance policy designed for an older home. Unlike more common HO-2 and HO-3 policies, an HO-8 policy wouldn’t cover replacement costs of your home if you lose everything. An HO-8 policy is suitable if your home isn’t in terrible condition, and if you plan to live in it while it’s under construction.
  5. FAIR plans. What if you’re in an unusual situation in which your repairs will take a long time (such as if you’re doing the renovation yourself or using cash to repair as you go)? In this case, you may have trouble getting an insurer to underwrite even one of the above insurance policies.

If this is your situation, look into your state’s Fair Access to Insurance Requirements plan. These plans, which are available in most states, are specifically for situations like yours. FAIR plans offer a very basic level of insurance, but it’s better than nothing.

Moving back to conventional insurance

Most of these insurance plans will be more expensive and/or offer less coverage than your conventional HO-2 or HO-3 policy. So as soon as your repairs are done, shop around for insurance again. Move to a conventional policy with proper coverage as soon as you can, and you’ll save money and have better protection for your home.

For more information on home insurance for fixer uppers, contact Lallis & Higgins Insurance.

Money- US News

Flood Insurance: Why You Need It

Joseph Coupal - Monday, September 17, 2018
Flood Insurance

Give your home more protection, so you have peace-of-mind. For many homeowners, flood insurance is an essential extra layer of protection.

Adding flood insurance to your insurance package means you're covered if groundwater rises and floods your home—a situation that isn't usually covered by home policies.

Why flood insurance might be a must-have

Everyone should have flood insurance, especially if you're in an area that has a high flood risk. You might even be required to have it if you're at high risk.

Below is why the National Flood Insurance Program (NFIP) recommends flood insurance to everyone:

The situations that cause flooding—heavy rain, melting snow, severe coastal weather—can happen anywhere. In fact, one in five flood insurance claims comes from someone in a low—or medium-risk area.

Most of your house is covered; what isn't?

Generally, most of your house is covered by flood insurance.

Specifically, the core parts of your home—like the foundation and the systems that keep it running—are covered. So are appliances.

Carpeting and personal belongings are generally covered, too, unless they're in the basement.

Flood insurance: One price, wherever you go

Unlike most other insurance coverages, your flood insurance policy will cost you the same, no matter where you get it.

The reason flood insurance costs you the same is that it's a national program backed by the federal government (via the National Flood Insurance Program). So, however you buy it, it's ultimately coming from the same place.

For more information on flood insurance, contact Lallis & Higgins Insurance.

Shop Local: Independent Insurance Agents Have $1+ Billion Economic Impact In Massachusetts

Joseph Coupal - Monday, September 10, 2018
Lallis and Higgins Insurance, Weymouth, MA

MAIA's most recent economic impact survey has found that local independent insurance agencies contributed an astounding $1.022 billion to the Massachusetts economy in 2017.

The study sheds light on the substantial role played by the nearly 1,200 MAIA member agencies in the state as employers, consumers, taxpayers, and active participants of their local communities.

Employment Numbers and Tax Revenue

In 2017, MAIA members employed an estimated 9,050 full time workers in Massachusetts, with the average agency employing 12 individuals. Over that same period of time, these agencies combined to pay their workers over $714 million in salary and over $107 million in additional benefits such as health insurance, pensions, profit sharing, and training costs. Independent insurance agencies also contributed over $80 million in state and local taxes in 2017.

This commitment to Massachusetts as both employers and taxpayers is something that MAIA believes separates local independent agencies from online direct writers and other companies with little or no physical presence in the Bay State.

Our members’ agencies have deep ties in their communities. They employ local people, support local businesses, and generate substantial tax revenue, all while serving consumers’ interests first. Conversely, online direct writers often have little presence in the state aside from their websites and advertising campaigns, and are focused on how quickly they can generate the next sale, irrespective of the needs of the consumer.”

Rental Income and Consumer Spending

Two other revenue streams independent insurance agencies bring to Massachusetts are rental income and consumer spending. Total agency rental spending topped $36 million in 2017. These agencies also spent over $73 million on other expenses, such as technology, office furnishings, supplies, equipment, advertising, legal and accounting services, repairs, maintenance, security and construction, over that same period of time.

Ingrained in the Community

Further reinforcing the notion that independent agents are committed to their home state and communities, the study found that 11% of local agencies have been doing business in Massachusetts for over 100 years, while 37% of agencies are between 51-100 years old. MAIA members contributed a total of $8.6 million to charities in 2017 in addition to countless hours of volunteer work that they perform on behalf of local civic, cultural, and religious organizations. (See some of our members good works this year in our monthly "Good You Do" feature.)

Thank you to the members who took the time to complete the survey, which was distributed this May. The survey is an invaluable resource in our representation of the independent insurance agency community in Massachusetts.

For an insurance policy review or for a quote, contact Lallis & Higgins Insurance.


New Commercial Vehicles Requirements for Massachusetts

Joseph Coupal - Tuesday, September 04, 2018
Lallis and Higgins Insurance - Weymouth, Quincy, MA

If you have been identified as an intrastate motor carrier by the Massachusetts State Police, Commercial Vehicle Enforcement Section, please be aware that as of September 1, 2018, you will be required to obtain and display a USDOT number per 540 CMR 2.22, the Commercial Marking section of the Registry of Motor Vehicles regulations.

This applies to motor carriers operating the following motor vehicles:

  • Engaged in intrastate commerce having a gross vehicle weight rating or gross combination weight rating of 10,001 or more pounds; or
  • Used in the transportation of hazardous materials in a quantity requiring placarding; or
  • Designed to transport more than 15 passengers, including the driver, used in intrastate commerce in Massachusetts.

If your company operates this type of vehicle it must be permanently marked with a USDOT number that conforms to the provisions of 49 CFR 390.21.

To obtain a USDOT Number, we urge you to click here. There, you may follow the Registrations links that will enable you to obtain an intrastate USDOT number. Your company will be issued a USDOT number that will be displayed on all CMV s as defined above that your company operates, including leased vehicles. There is no charge to obtain this number from the USDOT-FMCSA.

After September 1, 2018, failure to obtain and display a USDOT Number on your vehicles may result in a civil fine and/or placing your CMVs Out of Service until such time as your company obtains a USDOT Number.

Whether your company operates intrastate, meaning you conduct business solely within Massachusetts or operates interstate, conducting business in other states; you must obtain your DOT number directly on­ line.

If you have questions regarding the federal website, you may call the FMCSA at 1-800-832-5660.

Legal Business Name - This is the legal name of the business entity that owns/controls the Motor Carrier operation. The name should be the full legal business name (the name on the incorporation certificate, partnership agreement, tax records, etc.). For example, if the company is a:

  • Sole Proprietorship/Individual, enter the legal name, e.g., “John A. Doe”
  • Partnership, enter the legal names of all partners, e.g., "John A. Doe and Jane B. Smith”
  • Corporation, enter the name on the incorporation certificate (this name must include the type of corporation), e.g., “John Doe INC”, “John Doe LLC”.
  • Doing Business AS (DBA) Name — When the company's trade name is different from the company's official legal business name. For example, if “John A. Doe" is the company's official business name, but the trade name, or “Doing Business As" name, is "John's Trucking Company.

Principal Place of Business — Enter the physical address of where the company is engaged in business operations related to the transportation of persons or property and where safety records are regularly maintained. A Post Office (P.O.) Box is Not accepted for Principal Place of Business Address.

How do I update my Intrastate or Interstate DOT Number? You must update your information online here.

How do I re-activate my existing DOT number? You must update your information here

What is the difference between interstate commerce and intrastate commerce? - If you perform trade, traffic, or transportation exclusively in your business's domicile state, this is considered intrastate commerce.

If your trade, traffic, or transportation is one of the following, this is considered interstate commerce.

  • Between a place in a state and a place outside of such state (including a place outside of the United States)
  • Between two places in a state through another state or a place outside of the United States
  • Between two places in a state as part of trade, traffic, or transportation originating or terminating outside the state or the United States

Should each terminal operation or branch of a corporation register for a USDOT number? - A USDOT number usually applies to the company, not a particular branch office or vehicle. Generally, the corporate office or headquarters should register the company, and should inform its branches of the USDOT number.

Unified Carrier Registration (UCR) - Commercial vehicle motor carriers that conduct interstate commerce are required to pay unified carrier registration (UCR) filing fees annually based upon their fleet size and can register online here. (link no follow, target new page ).

Department of Public Utilities (DPU) - Companies for hire that move passengers, household goods, or conduct police ordered or trespass tows are regulated by the DPU and information on DPU authority can be found here.

For more information on commercial vehicles insurance or requirements, contact Lallis & Higgins Insurance.

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