WHAT BUYERS AND SELLERS NEED TO LOOK FOR 
WHEN CHOOSING HOMEOWNER'S INSURANCE

Whenever I guide someone through the process of selling or buying a property in Incline Village I always take a close look at the issue of homeowner's insurance. What can seem like a routine or mundane matter in most of America is of great importance and fraught with many issues that are unique to resort areas and especially the Lake Tahoe Basin.

The first thing to look at is the issue of complaints and claims satisfaction and how different companies rate. The statistics compiled by the State of CA department of Insurance for 2004 (the most current year available) show Kemper Insurance at the top end of the spectrum with 0 justified complaints for homeowners insurance in 2004. In contrast, a couple of huge nationwide firms, State Farm and Allstate, are tied with the 3rd highest number of justified complaints of all 50 insurance companies in the study in 2004. If you are using or contemplating using either one of those firms you may wish to get bids from other companies and look at who would do the best job for you as your insurer.

Another important thing to look for with homeowner's insurance is making certain that you have medical payments coverage of $25,000, not the standard $1,000 that comes with most policies.  For less than $50 a year extra, you can bump your medical payments coverage up to 25K.  In most cases, your insurance company will pay without contest medical bills up to the limits of the medical payments coverage.  If you only have a $1,000 policy limit, and someone gets hurt and the medical expenses exceed $1,000, then you'll get sued for the medical bills of anyone who gets injured on your property.  

Your insurance company may not advocate on your behalf depending on the cause of the injury.  So, you could personally be liable if your insurance company hangs you out to fend for yourself.  I'm dealing with a case right now where State Farm Insurance is trying to blame the seller of a property and avoid making payment under the liability provisions of the policy.  

State Farm is claiming that under the homeowner's insurance policy that they sold, their liability insurance does not cover premises liability.  Their claim is that the seller is financially responsible for the medical expenses incurred when the real estate agent showing the property was injured by ice falling off the roof above the front door.  The seller failed to remove snow and ice above the entryway while his property was for sale and the agent was nearly killed when his head was split open by a block of ice that slid off the roof.  The agent's medical bills exceeded the cost of the medical payments coverage and State Farm told the agent he should be suing the seller, not State Farm Insurance.  Play it safe and spend a bit more to increase the medical payments coverage and give yourself some peace of mind.

Sometimes, your specific geographic location may bring up issues such as a proclivity for flood, wild fire, high crime or some other aspect of insurability that is unique to your community.  A great example of a homeowners insurance issue which pertains directly to Lake Tahoe and other Mountain Resort areas is the insurability of properties with shake roofs. Originally, it was part of the local regulations that all residential properties in Incline Village, NV at Lake Tahoe had to have shake roofs so as to blend in with the mountain environment. Current wisdom, (which should have been the case from the beginning) is that wood shake roofs are a hazard in the residential/wild land interface due to fire danger. However, there are still a large percentage of properties in Incline Village with shake roofs and not every insurance company will write a policy on your home if you are buying a place with a shake roof.

For sellers this can be a disaster, since you could have a much harder time selling your property unless you either replace the roof or agree in the purchase contract to provide a credit to the buyer for a new roof. If you're a buyer, homes that pose insurability problems become less desirable if you can't get affordable insurance or need to immediately incur a huge cash expense such as a roof replacement at the time of purchase just to get insurance. When I bought my house in 2005 with a shake roof this was a huge issue and only American Family Insurance would write a policy for my property.

Dig beneath the surface when you are searching for homeowner's insurance and don't be fooled just by thinking a company has been around for a long time and has offices in every major city that they are a good insurance company.  When the day comes that you or an injured party has to make a claim, you will want the company that stands behind the policy, not the company with the fancy slogan or cute logo.  In the case of the injured real estate agent who is suing State Farm for his medical expenses, he's coined a new phrase to sum up the situation:

    "Like a bad neighbor, State Farm's a nightmare."