Aloha - Insurance and Zone 2

[John S. Rabi]

Just remember, there is no insurance for the land. There is the homeowners coverage and there is the lenders coverage, and I believe the lenders can't require you to have them insured for more than the amount of the loan.
PS. The State does not require you to have any kind of insurance.

Aloha,
John S. Rabi, GM,ARB,BFT,CM,CBR,FHS,PB
808.989.1314
http://www.JohnRabi.com
Typically Tropical Properties
"The Next Level of Service!"

[Devany]

Actually, we had to have the same kind of coverage in CA and IL. I think it is common. If you get lesser coverage, then you are up S**t creek when it comes time to replace things. Nothing costs as little as you paid for it. Lenders want to be sure you are 'over insured' when it comes to your dwelling.

quote:

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Originally posted by freespirit

Thankyou - I understand more about why lenders would require replacement value.

So Hawaii insurance does not offer homeowners to select their coverage amounts? Meaning if I pay off my home and only want enough insurance coverage to cover the cost of what I paid for the Land/house that I could not opt to do so?

A Homeowner is forced to cover in full replacement value period even if they own the property free and clear?

I have never heard of anything like that before - I realize Hawaii in a sense likes to do things differently but to me that sounds "Like where is the land of the Free and the Freedom" that our country was built upon? I must be misunderstanding you on that part.

I also don't understand lets say a 1000 Sq ft home they do a flat rate times sq ft to calculate the coverage then times that by a certain amount (goes up only slightly based on age).

Lets say Mr. Smith his 1,000 Sq foot home is only a couple years old and and his loan balance is $150,000. And they calculate his insured replacement value at $189,000. Premium about $2100 per year. Mr. Smith paid $175,000 for his home.

Then Mr. Peterson buys a home 1,000 sq foot home and his loan balance is $20,000 and the sq ft. but that home is 40 years old very modest/basic built home and is calulated only slightly lower by X$ amount per foot and they calculate his insured replacment coverage needed would be $173,000. Premium about $1900.00 per year. Mr. Peterson paid $60,000 for his home.

This would mean both Mr. Smith and Mr. Petersons insurnace premiums would be only slightly different? According to the couple Insurance agencies I talked to the coverage amount would only be slightly higher for the new house like $10 more per sq ft. making the premiums only like about $100 per year difference for the new house versas the old one. What if either Mr. Smith or Mr. Peterson own their homes and would opt to not rebuild should their homes be totally destroyed. Would they have to rebuild? would the insurance carriers not give them any pay out unless it was to rebuild should it all be destroyed? Can a home owner choose to not have insurance on the house part but just get insurance for value of their belongings?

Sorry just trying to understand how it works is all as I have never heard of any place in the USA that forces a certain coverage on homeowners. So if you own the property you can either choose "no Insurance" or you can only be covered if you opt for full replacement value? [?] Or am I understanding it totally wrong (which I hope). I would think insurance agencies would all go broke doing it that way.

Thank you for any input.

Laurie

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Aloha au i Hawai`i,
devany

www.myhawaiianhome.blogspot.com
www.eastbaypotters.blogspot.com

[freespirit]

Thank you all!

I understand totally now. It is like any other place when it comes to insurance. Wish I would have known about shopping for various lenders and their insurance requirements. I went through a loan broker and even as of now do not have a clue what financial institution I will be getting my loan through as all my contact is made through my loan broker. Is this something my loan broker should have told me before she sent them my loan application?

I guess one lives and learns.

Thank you,
Laurie

[Devany]

We have used a loan broker before, but like anything else, you need to do your homework on that person and what they are offering. Maybe they are getting you a better rate? Maybe they are working with "high risk" properties(foreclosures)? One thing that happened with us, and it is common today, is our original loan was sold three times in 9 years. Meaning we had a different company/bank to pay every time it was sold and that was a little bit of a hassle. However,it finally ended up in the hands of our own Chicago Bank over time. While it is something that you have no control over, it also can make a difference if your loan ends up in the hands of a shady company. If you deal directly with a lending institution that you know and trust, then you stand a better chance of keeping the same mortgager over the time of the loan.

You are right Laurie, one does live and learn... it is a constant process for all of us. Life is full of lessons.

Aloha au i Hawai`i,
devany

www.myhawaiianhome.blogspot.com
www.eastbaypotters.blogspot.com

[Dan De Soto]

Laurie,

It was good talking to you the other day. Our new lava zone program should be up in a week or so. I will contact you then to see if I can help.

In my experience it doesn’t make sense to shop for lenders insurance requirements. Some loan officers say hurricane coverage is not required then after the loan closes the lender audits the account and imposes the requirement. Also, loans truly without hurricane requirements are usually from lenders who will sell the loan immediately, usually to a lender who has the hurricane requirement. Bottom line; plan on having to pay for hurricane coverage. Here are some of the larger lenders that require hurricane; bank of Hawaii, First Hawaiian, Bank of America / Countrywide, Wells fargo, Chase Financial, Americas Servicing Co, Indymac Bank, Quicken, Ditech, American Savings Bank, and more


Dan De Soto
Mutual Underwriters
Insurance Agent
www.insurancehi.com
dan@mutualunderwriters.com
Tel: 808-961-3207
Fax: 808-969-1120
275 Ponahawai St., Ste#105
Hilo, HI 96720