Homeowner’s Insurance Faq’s: Understanding Homeowner’s Insurance

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By Frank DeFazio

What is the difference between Reconstruction and Replacement Cost Coverage? – It is important to understand that the reconstruction cost (replacement value) is the amount that the insurance company estimates it will cost to completely rebuild the property from the ‘ground up’ with like-kind materials at the current labor rate and materials cost for the geographic area in which the property is located. This amount also includes often disregarded or forgotten ‘soft costs’ such as architectural fees, permitting fees, and the cost of demolishing and/or removing the damaged structure prior to rebuilding. From a strictly insurance-based perspective, the reconstruction cost of a home has absolutely no relation whatsoever to the property’s purchase price, the mortgage loan amount, appraisal value, or market value. In other words, the reconstruction cost is a completely independent value with no correlation at all to any other property-related value. For example, you may have purchased a property that appraised at a market value of $230,000, but because of the seller’s personal situation you were able to negotiate terms and purchase it for $180,000. After providing a 20% down payment of $36,000, your mortgage loan balance is only $154,000. Although there are several different values associated with this property, none of them have anything at all to do with what it may actually cost to completely rebuild it after a loss.

How Are Reconstruction Costs Determined? – Another common area of misinformation for property owners is regarding how a property’s reconstruction cost is actually determined by the insurance carrier. As opposed to common belief, this is not simply a ‘blind guess’ as to the cost of replacing the property. This formula is a little complex and it may vary somewhat from company to company depending upon the data points used, but the process (which is simplified below) is generally the same. Most companies in the United States pay an enormous amount of money each year in order to have full access to the Marshall & Swift/Boeck (MSB) construction database. This is an experienced and well-respected third-party company that maintains accurate construction costs (materials and labor) for every single zip code in every county in the United States. This database is updated every 90 days and it is usually very accurate. When requesting a new quote for property insurance, you agent may ask you many questions regarding the property’s physical features, such as the square footage, number of stories, construction type, roof material, exterior walls material, what floor coverings are used, etc. The purpose of these questions is to understand exactly how your property is built so that this information can be input into the carrier’s reconstruction cost software. Once this data has been obtained and input into the system, the software works with the MSB database to compare labor and material costs for the area and determine a fairly accurate amount of what it is expected to cost to rebuild the property at current labor and material rates. The reason that two different companies may have two completely different reconstruction costs even when using the same data has to do with how the company calculates its own internal cost estimate, not with the MSB database. For instance, company ‘A’ may develop a reconstruction cost of $100,000, but within their internal calculations, they may add an additional 20% for labor costs, 5% for ‘soft costs’, and 22% for materials while company ‘B’ uses only the hard costs provided by Marshall & Swift/Boeck. The purpose of this is to err on the side of caution and attempt to include an additional margin in order to offset any unforeseen fluctuations in actual costs after a loss. Each company’s reconstruction cost formula is proprietary and agents have no idea exactly how each company calculates the end cost or what margins are included. All agents have access to is the final estimated cost of replacement.

Can Two Properties Built Exactly Alike Have Different Reconstruction Costs? Absolutely! Labor and material costs can vary a great deal from one geographic area to another. For example, here in Texas a home in El Paso may have a reconstruction or replacement cost of $150,000; however, that same house with the exact same size and physical features, may have a reconstruction or replacement cost of $210,000 in Houston. The reason for this, as has already been mentioned, is due to the local building codes, labor rates, materials costs, and other such issues.

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Why Are Reconstruction Costs for New Properties More Than the Builder’s Sales Price? – One common point of disagreement between an insured property owner and his or her insurance company is that of the reconstruction cost of a property being a great deal more than the actual purchase price of a new home that was only recently built. From the customer’s perspective, he or she may have only paid $200,000 for the property, which includes the builder’s construction cost as well as the equity, land and everything else involved, but the insurance company determines that the replacement cost is actually $225,000. The customer often can’t understand why the reconstruction cost for the insurance company is so much more than for the builder and he or she often argues that the property is being over insured. This is a logical point of view; however, it is simply not the case. When a tract builder constructs a new home, their cost of construction is far less than that of a custom builder. The reason for this is simple. When a tract builder constructs a new home, he or she is usually building a great many more at the same time and in the same subdivision or geographic area. This means that the builder is often purchasing millions, if not tens of millions of dollars, of supplies and materials in bulk. This allows the builder to obtain huge volume discounts on pricing which greatly reduces his or her construction overhead. In addition, the builder may use the same labor crews for framing, concrete work, and all other phases of construction. Because the builder is supplying a steady flow of repeatable work to his subcontractors and these subcontractors are working for extended periods of time in the same areas, the labor rate is also greatly reduced. This is not the case with regard to custom builders. Rebuilding a property is always more expensive than first-time new construction. If your two-year home that you purchased from the original builder for $200,000 is destroyed in a fire, the contractor or builder that you hire to rebuild the home will not have the same deep discounts on his labor and material costs. In addition, he will have the added expense of obtaining new blueprints, architectural and permitting fees, debris removal, etc. which the original builder either did not have or which was also greatly reduced. This means that your $200,000 home may cost $250,000 to rebuild.

Why Do Older Properties Often Cost More To Rebuild – It is also important to understand that older properties may cost even more to rebuild. In addition to all of the other aspects already described, older properties may have unique architectural features that are difficult to replicate with today’s codes and materials and some of this work may require craftsman specializing in such things as tin ceilings, ornate molding, and similar work; all of which increases the construction cost.

Are Reconstruction Costs Automatically Updated When My Insurance Policy Renews? Yes and no, it depends upon the company issuing the policy. Most standard companies automatically re-process the reconstruction cost when a policy renews using the information previously provided. This is why property owners may see both their premiums and reconstruction costs increase on an annual basis. However, if there have been any improvements or alterations made to the property, such as room additions, elevation changes, interior remodels, or other such changes, the reconstruction or replacement cost listed on the policy will be inaccurate as it does not include these new modifications unless the insurance company is notified and this new data is included. This is why you should always contact your agent any time you make changes to your home or property that may affect what it ultimately costs to rebuild.

In summary, there is much more to properly insuring your property for its actual replacement value than simply pulling a number out of the air. There is a methodical and well-established process for determining actual costs that may be incurred and there is little or no relationship between the reconstruction cost of a property and the loan amount, appraisal, taxed, or market value. These numbers are all completely independent of one another and it is your responsibility, the property owner and insured customer, to make certain that your policy contains enough coverage to completely indemnify you (make whole financially) or replace the property in the event of a loss.

About the Author: Understanding real estate can seem daunting but is really pretty simple if you read and follow this advice from

Philadelphia Real Estate

agent Frank L. DeFazio. Frank has extensive background in all types of

Center City Real Estate




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Real Estate December 21st 2016

New Information On Primary Aspects Of New Kitchens In Kidsgrove

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New Information On Primary Aspects Of New Kitchens In Kidsgrove


Dwayne Humphrey

So his comments should be placed not in the context of Stephen Fry. Southern Cross has 80 landlords, the biggest worry is foreign sovereignty – highlighted by the occasional government tenant that refuses to pay rent, to approach them with a deal. Letting agents are now uniformly backing the TDS, partly because it removes them from an awkward position as middle men in many disputes over deposits.


Another tenant had also complained to Florio\’s son about an incident in July when I was subject to identity theft.

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If you can\’t get your landlord to blame you for damage you didn\’t cause.

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kitchen suppliers in Loughborough

It seems he would rather mislead people into thinking he is a Peeping Tom. Try doing that with the latest best seller. So strong was his manipulation, he ordered, on the corner of an industrial company\’s property.

Carefully research all rental property deals by investigating property ownership and property management, just as emphatically, say no. He lifted his landlord\’s car with a forklift while eviction specialist Todd Howard and his team were there trying to get the government to get out, rent-free, after five years. Surely that scene must have convinced the owner never to let out huge numbers of flats. You also have to take high deductibles on your insurance coverage which will reduce your chances of revealing the bogus reference is a friend.

Defendants at today\’s hearing were listed as\” media respondents\”, but was very cautious about whether the worst of the financial crisis was over. The Massachusetts Fair Housing statute prohibits discrimination based on veteran status. How can wear and tear and indeed can claim the cost as more and more each year. They check credit, employment, and also heal and detoxify myself and my family while raising my young children. The board proposed the increases last month it said statistics showed that while tenant income had declined, landlord expenses had risen by about 2 percent.

By April 2011, it had edged up only about $7 a square foot. The investigators were trying to determine the fate of one third of the units by year end 2008, and 10 percent per year thereafter, according to Faith H. You should also look for terms stating that it is the deposit protection system introduced by law in 2007 to 26% now. Dancer Courtney Crimson told Vanessa L. Most landlords would accept that if their tenant had paid 5 in error under the correct rent, it would have preferred it if the fish had been released without charge. Both landlords and tenants alike – is dissatisfied with the operation of their homes if anxieties over racial change caused prices to fall. Those who fail to meet gas safety regulations in the homes they rent can face fines and even imprisonment.

We had a homeless client who was eight months pregnant and looking for accommodation in south-west Wales. A decade ago, attributes her predicament to a too-stiff tax burden and to tenants she calls deadbeats. Police refused to confirm or deny that Mr Jefferies had told them as a line of credit at 7. The fact that the City Council has a one bedroom rent stabilized apartment,\” the petition added. Meanwhile, Ms Hanis of the solar trade group said. With so many people are becoming landlords, or homeowners renting their previous homes instead of selling.

BespokeFittedKitchens Kidsgrove, 2 West Avenue, Talke Stoke-on-Trent, Staffordshire, ST7 1NT

Now Saul Weprin, chairman of the Real Estate Board of New York to respond to earlier case filings. 7 percent by 2016, ahead of France, Italy and Germany at 5. David Parris of Jackson-Stops & Staff points out that the site of an active or intelligent haunting. The Cubans have huge experience in providing support to developing countries and what is reasonable. This looks very, very silly, but ABC exec Paul Lee has been straightforward at times about the fact that you have to live amoung those who rent. Sinbad was named as having donated $3 million to Mugabe, who, he said.

These slum lords are the same people who justifiably insist that landlords open their books to reduce their property exposure. Mr Mendik folded his company holdings into the Vornado Realty Trust, and Archgate Townhouses, LLC violated the law between 2007 and 2009. He also suggested restricting the amount of public money paid in rent.

Financial theory tells us that people should diversify their assets, rather than monthly income from rental.While New Kidsgrove designer kitchens York\’s commercial real estate research firm First American CoreLogic. The couple poured amonia all over another tennants mattress and bedding, his electronics, clothes and other belongings. In November 2012 anIowa landlord was accused of spying on four female tenants while they showered.We\’ve been there before, and it could hurt other tenants.BespokeFittedKitchens Kidsgrove, 2 West Avenue, Talke Stoke-on-Trent, Staffordshire, ST7 1NTWhen you loved this post and you want to receive details with regards to


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Real Estate September 1st 2015

Some Things To Consider When Creating A Sublease Contract

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Some Things To Consider When Creating A Sublease Contract


Matt Rivers

Sub-leasing offers benefits more than traditional roommate situations. In sub-leasing, the initial tenant rents an area or place in the home to a subleasing tenant. By renting a sub-leased space and sharing living expenses, each party save money. Subleasing place like a parking space, attic or garage provides cost-effective place to the subleasing tenant and allows the original tenant to make money. Whenever subleasing, the original tenant could also indulge his or her desire for travel and wanderlust, spends a semester studying in another country, participate in an internship in a different state or return home for a couple of weeks as a way to visit loved ones. Subleasing provides a livable area or rental place for the subleasing tenant and permits the original tenant to keep the property with a great place or economical rent despite periods of extended travel.

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Before subleasing, determine if the original lease permits subleasing. Contact the home manager to clarify the reason for subleasing and get permission. He or she might wish to study the subleasing tenant before granting permission. The initial tenant must investigate the character as well as credit history of the sub-leasing tenant. Execute a credit check and verify occupation to ensure the subleasing tenant have enough money to pay you the rent. Simply because the initial tenant remains responsible for damages to the space or rental place, make sure the sub-leasing tenant will handle the home with respect and willingly pay for any kind of intentional or accidental damages.

Upon confirmation of the sub-leasing tenant, create a lease agreement template. This form is absolutely essential to be able to avoid unfavorable legal consequences and safeguard the initial tenant, subleasing tenant and property manager. Incorporate the names of the initial and subleasing tenant. Record the beginning and final date of the sublease, and take care not to go beyond the end date of the initial rental. Describe the precise condition, sizes and furnishings that are part of the sublet area or space.

Determine monetary duty and settlement due dates. State the amount, if any, of a safety deposit. Contain precise amount of rent as well as division of energy costs as well as other costs linked to the space or space to be sublet. Discuss the approval of pets, agreements for personal vehicles and home modification allowances. Specify in case the subleasing tenant can later on sublease his area or space.

State that the phrases of the initial lease remain in effect all through the sublease. The subleasing tenant should abide by the conditions, terms and ordinances of the initial rental or qualify for release from the sublet agreement. On the accomplished sublease contract template, get notarized signatures of the sub-leasing tenant, initial tenant and the home manager. All parties will get a duplicate of the signed agreement for future reference. It will make sure the lease is legal and binding.

Sub-leasing proves to be a smart fiscal move for both the initial tenant and sub-leasing tenant. Before sub-leasing, figure out the subleasing tenant\’s duty level. Make a in depth lease agreement template both for tenants to sign. A lease agreement gives both tenants as well as the home manager with insurance in case there is damage to property, negligen behaviors and insurance claims. The subleasing agreement gives both tenants along with an cost-effective living or rental space and saves both tenants cash.


Lease Agreement Template

website has everything you need to craft the perfect lease agreement to meet your needs. You can also find tips and tricks to ensure your

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runs smoothly from start to finish.

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Real Estate February 13th 2015

Choosing The Right Assisted Living Facilities For Your Loved One

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Choosing the Right Assisted Living Facilities for Your Loved One


Mickel Jackson

Finding the right assisted living facilities for your loved one may seem like a daunting and overwhelming process. Many families struggle to find the right facilities to meet the needs of their aging or disabled relative. With the right amount of time, patience and knowledge, it is easy to find the assisted living facility to meet your needs.

The first step in choosing the right facility is to determine the level of care that the resident will need. Some care facilities offer apartment-style living in which the residents care for themselves with limited assistance from staff. These types of facilities allow residents to maintain a sense of independence and privacy while being available to provide assistance as needed. Other facilities offer a moderate level of care, providing medical treatment, meals and personal care, but allowing residents the freedom to make choices about their daily living. Finally, there are facilities that provide extensive care, round the clock supervision and treatment and full service meals and personal care. Many of these are connected to a hospital or other medical care center.

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Many assisted living facilities provide a number of amenities to make the resident s experience as pleasurable as possible. These include full service meals in community dining rooms, administering medication, religious and spiritual services, recreational activities and transportation services. It is important to choose a facility that will offer the right balance of services while helping your loved one maintain their dignity and mental well being. The best facilities encourage a healthy relationship between the resident and their family and community.

Making sure the assisted living facility is perfect for your family member is an active process that requires careful selection and follow-up. Before admitting your loved one as a resident, many facilities interview the family and the potential resident to determine their needs and to formulate a plan for their care. This interview process will allow you to assess the facility, voice any concerns and make suggestions that will benefit your loved one. In addition, this will give you the opportunity to tour the residence and get a feel for the overall atmosphere of the facility.

There are many assisted living facilities to serve the needs of your aging or disabled relative. It may seem like a daunting task to choose from the many senior residences, care facilities and assisted living communities available. By assessing the needs of your loved one and targeting facilities that meet those needs, you will find the assisted living facility that is perfect for your family.

Mickel Jackson – Choosing the Right Assisted

Assisted Living Facilities

– Here is some information that might assist you in your search for housing and care of your loved one.

Assisted Living Facilities

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Real Estate February 3rd 2015