The Malibu Real Estate Blog

Here’s a topic that everyone in Malibu should understand better.
Fire Insurance.
As I type this, an early season fire storm is ripping through the mountains of Santa Barbara and is threatening thousands of homes.
When you live in the foot hills of California you need to be diligent about brush clearance, fire resistant landscaping, and having a good insurance policy that you completely understand.
Below is an article that a friend in the business wrote for the blog.

Fire Insurance: Knowing what it covers can make all the difference

A lot of emphasis is placed on having auto insurance, but people tend to forget about insuring their biggest investment. Fire insurance on your home can make a huge difference if something drastic happens. This is an area where it certainly pays to be safe, rather than sorry.

Who Needs Fire Insurance?
California insurance became topic of discussion during 2008 when wildfires tore through thousands of acres, burning homes all along its path. People in the Malibu area, including Corral Canyon, Latigo Canyon and the Malibu Bowl area, were hit especially hard. Hundreds of people lost their homes in the devastation. Many of those homes had high values attached to them.

While California insurance options provide for plenty of fire coverage, it is imperative that people be proactive and put policies in place right away. Just as those living in Malibu never expected a fire would knock on their door, there is no way for others in the state to anticipate where it might happen next. In fact, according to the Federal Emergency Management Agency (FEMA), there is roughly $8.6 billion worth of direct property loss each year resulting from fires. That statistic highlights how important it is to obtain insurance, whether you own, rent, or have a business.

How to Get Coverage
When it comes to finding a fire insurance policy that is right for you, start by gathering quotes. You will need to obtain quotes from several companies and compare what each offers. It is important to understand whether your property is being insured for the replacement value or the cash value. Pay attention to this detail; it could make a big difference later, if there is a fire.

Replacement value covers what it costs to replace the home by having it re-built, without market fluctuations being taken into consideration. On the flip side, a cash value policy only pays for the property’s fair market value at the time of the incident. This could become a problem, with home values decreasing so rapidly around the country. The key is to know the insurance policy and be aware of exactly what would happen if the home was to be destroyed in a fire.

Playing It Safe
Those who lost their homes to the 2008 California wildfires are well aware of fire insurance now, even if they weren’t previously. You can avoid many potential problems by making sure you have proper fire insurance on your property. Take care of it today, then hope you never need to use it.

Luxury Home Insurance

Just as elite and expensive cars require special insurance, so too do the luxury homes of Malibu.  From an insurer’s point of view, however, a house isn’t a luxury home just because it came with a high price or an enormous amount of square footage. Instead, a luxury home must have one or more of the following features: fine architectural detailing or uncommon construction details, high-quality construction, significant age, and contents that include fine art, collectibles or antiques. If your home meets this description, you should be shopping for a luxury home policy.

While all luxury home policies still cover all of the same perils and conditions as basic homeowners insurance policies, albeit at higher limits and values, there are certain things you must discuss with an agent up-front. Specifically, they are:

·      Contents: Be sure that your policy will give you enough to replace, not just your home, but also its contents, including valuable collectibles, antiques, and art. Go over each type of personal property and ask how the policy valuation clause works. Just last week I walked it to a Malibu Beach home with an impressive Warhol collection of Art.

·      You want a policy with guaranteed replacement cost on the structure itself with no limit, and replacement cost on the contents without limits like “actual cash value” on antiques. You will need to pay special attention to the limits on sub-classes of contents, like furs, jewelry, and silver, as well. Go in with an itemized list, if possible, and keep your list current as annual renewal dates roll around.

·      Age: With antique homes, it is imperative that you make sure your policy will pay to upgrade the construction to meet current building codes after a loss. This includes upgrades in undamaged portions of the house, if local building authorities so mandate.

·      Appraisal: While many insurance companies use a copy of the real estate appraisal done when you built or bought your house, with a luxury or antique home you may be better served if the insurer sends an appraiser of their own out to assess your property, and document not just the value, but also the construction details of your home. This will go a long way toward expediting your settlement if a loss occurs and you must make a claim. It will also insure that your coverage is really enough to replace your home in the event of a total loss.

Luxury home policies will cover every normal peril named on a standard homeowners insurance policy, but one thing they do not generally include is coverage for mudslides. Mudslides and landslides are considered flood-related perils, and are usually only covered within flood insurance policies, something you should consider adding to your insurance portfolio, especially if your home is in a flood zone.

Finding cheap insurance on a luxury home and its special contents, is more difficult than insuring the average single family home in a suburban subdivision, but this is because both the structure and the items inside cost more to replace. By being an active participant in the process, you will ensure that your home insurance meets your needs.