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Do you remember the big hail storm that
caused hundreds of millions of dollars in damage around Fort Worth during
Mayfest '95?
What about the tornado that ripped through
downtown Fort Worth and bounced into Arlington and eastern Tarrant County in
March 2000?
How about the millions of people affected by the
floods from Tropical Storm Allison that dunked Houston in June 2001?
Hopefully you were fortunate enough to dodge
the latest economic terror that rained down on North Texans in form of hail
during early April 2003?
Maybe you've been fortunate enough to dodge all
of these natural disasters...so far. But sooner or
later, Texas weather will get you somehow...someway. Hopefully
you'll never see a tornado, be forced to re-roof your home or put new
glass in your car, but sometimes the damage can be just as financially
damaging and happen with far less fanfare. In a fraction of a second, a
power surge or shot of static electricity in your power or phone lines can
turn all of your electronics into useless (and sometimes, smoking) pieces of
plastic and metal...and cost thousands of dollars to replace. So let's
see if we can minimize the financial impact and turn you into a model of
"Texas preparedness."
Electronics:
There's only so much that you can reasonably control and take
effective financial precautions against. Here's some ideas that you
might not have thought of that could save you some major dough in the years
ahead...
Computers
and high-end television/stereo equipment: If you don't invest
in a quality surge protector (other common terms that are thrown around
include "power conditioner" or "spike
arrestor"), you're asking for heartache someday in the
not-so-distant future. If you go cheap in this area, you're wasting your
money...especially since the better (yes, more expensive) surge
protectors will also offer some form of insurance/warranty that will protect
the equipment you're trying to protect. Some of the warranties cover as
much as $25,000 in equipment and last up to 10 years...so do your homework!
Some great places to go for more information about surge protectors?
For
reviews on specific models offered: The old stand-by in
American electronics testing, Underwriter's
Laboratories (UL) still is at the top of the
evaluations-you-can-trust heap. Bookmark their website at www.ul.com and
get to work. Another trusted destination for savvy cyber-shoppers is www.zd.net,
a free site that's loaded full of reviews and feedback from consumers that
have actually used the product.
Looking
for surge protectors actually worth investing in?
Once again, it pays to spend a few extra dollars in this area and buy an item
that's actually got a chance of protecting you from disaster and if it fails,
will pay for the damages incurred. Places like CompUSA,
BestBuy,
OfficeMax
and Office
Depot (among others) will have varying models immediately
available for sale. Note that the higher-end surge protectors for
computers will come as part of a Uniterruptable Power Supplies (also knowns as
UPS) units. These UPS units double as battery back-ups for your computer
system, providing you enough juice to power down your equipment in the event
of a power failure. The big names in UPS units include APC
(their website is www.apcc.com),
MGE
UPS Systems (their website is www.mgeups.com)
and Belkin
(website location is, you guessed it: www.belkin.com)
Two more electronics-related thoughts:
Sometimes a surge protector just isn't enough, especially with some of the
light shows we have in Texas, courtesy of Mother Nature. Ben's
Bottom Line? If you know there's some potentially
bad weather rolling in, unplug your electronics
and skip the potential brain-damage. And remember,
any items connected to the phone line (computers, answering machines,
cordless phones, satellite dish base units, cable connections (computers, TVs
and stereo equipment) are still at risk even if you unplug their power
cords from the wall. Any connection to the outside world (i.e. phone or
cable connections) can provide an equally-devastating conduit for instant
static electricity destruction.
Cars, trucks, boats or other motor
vehicles: Can we just get the obvious out of the way
early? Parking your vehicles in a safe area especially when you know bad
weather's on the way just makes sense. But it can also positively impact
your pocketbook, too. Most auto insurers will either extend discounts to
consumers that park their vehicles in covered areas or, conversely, will
charge you more if you don't. If you're unfortunate enough to live in a
situation that doesn't allow you this added protection, make sure you know the
quickest route to the closest parking garage that will allow you to take
refuge during a storm. At least you might be able to avoid the add
stress and inconvenience of hail-inflicted body damage.
When was the last time you reviewed your
automobile insurance? Take the time to review your
coverages with your insurance agent, and get a clear understanding of what's
covered and what's not. If your car is a classic (okay, that's a nicer
way of saying it's an older model) it might not make sense to insure it with
full coverage. If you are driving an older vehicle, many
consumers think that it makes (financial) sense to continue to cover it
under comprehensive coverage, but raising the deductible to a higher
limit in order to lower the premium. In most cases this strategy isn't
usually worth the amount of money expended on the insurance...but each
consumer needs to make their own insure/self-insure decisions based on the
value of the car, the cost of fixing it in the event of major loss, and the
net cost year-to-year for absorbing this level of risk.
The floods that seems to slam Houston, San
Antonio, Austin and other unfortunate Texas locales every Spring can open up a
whole new area of commerce...for the bad guys:
Did you ever wonder what happens to all of those cars you see on TV that are
floating down the street or in a parking garage? Once the owner has
settled with their insurance company, the cars are supposed to
"totaled" by wrecking/salvage yards hired by the insurer to
"part out" (sell off parts) the damaged cars in an attempt to
recover part of their losses.
Unfortunately, rogue salvage yards that trade in totaled cars will end up
"washing" the title of the car. A valid, negotiable car
title is supposed to be light blue in color; vehicles that have been
"totaled" by the insurance company take on three different shades of "flood
titles": If the car has been damaged 60% (or less) the State of Texas
will issue a green flood title;
up to 85% damage gets a purple-colored title
and 90% or worse, a brown title. Unscrupulous
car-types will "wash" these damaged titles through a series of paper
transactions in other states, eventually delivering a "clean" blue
title on a water-damaged vehicle to an unsuspecting consumer that thinks
they're getting a good deal, when in fact, they're financial nightmare is
about to begin.
Ben's Best Bet? Never
touch a car if it's ever had any sort of water-related event in its
history. And here's another novel concept: Examine the vehicle's
title before purchasing! The state of Texas'
computer system is not identifying vehicles as flood damaged [yet], so always
ask to see the title. Consider using a private service that documents
vehicle histories. These services can research insurance claims on previously
damaged vehicles. Here's two of the best-known/most reputable in this arena: www.carfax.com
or www.experian.com. Plan on spending
around $15 for a copy of the car's title history. Also...consumers
wanting additional information about vehicle titles and registration:
Check with their local tax assessor/collector's office or contact the Texas
Department of Transportation: (512) 465-7611
Homeowner's and renter's insurance:
If you're not re-assessing your property/casualty insurance annually, chances
are good that you're probably woefully under-insured. Make sure
when you review your insurance policy that you ask your agent/insurance
company representative about the following areas of coverage:
There are three main areas of protection that
your homeowner's insurance provides:
* Structure of your home
- Giving you the financial means to repair or rebuild it when damaged
or destroyed
* Personal property -
You normally keep in your home, even when you take items somewhere else,
like on vacation
* Financial security
- If someone sues you because they are injured on your property,
you're covered up to the limits you choose
Know what your policy covers...and what is
doesn't: Homeowners, farm and ranch, renters,
windstorm/hail, and condominium policies do not
cover damage from rising waters. If you're concerned about
damage from rising water, buy flood insurance! Flood
policies have a 30-day waiting period before they become effective,
so don't wait until the water's creeping up the front sidewalk to
apply for coverage. For more information, contact your insurance agent
or call the federal National Flood
Insurance Program (NFIP) at (800)
427-4661 or visit the NFIP Web site at www.fema.gov/nfip..
If you live in a county on the Texas coast,
you might have to buy hail and windstorm coverage from a special
insurance pool called the Texas Windstorm Insurance Association
(TWIA): Here's a surprise...you can´t buy or change TWIA
coverage once a hurricane's entered the Gulf of Mexico. For more
information, call TWIA at (800) 788-8247.
Renter's insurance can provides similar
benefits for non-property owners: With the cost of
recovering from a fire, theft or any type of total loss, renter's
insurance is amazingly affordable and a good bet for smart (non owner)
consumers.
Love the house so much you want
to buy it? You'd better make sure you can insure it!
Texas made national news as a result of some major mold-related
lawsuits (and subsequent victories) pitting homeowners against their
insurance companies. Mold's been around for a long time, but thanks to
continued improvement in the science of home design, as well as
improvements in the types of materials and methods used for insulation,
today's homes are more "airtight" than ever before. And when
water damage or leaks develop, the liquid stays trapped inside, fueling
mold growth that demands aggressive clean-up and repair.
Ripping out walls, ceilings and floors can
cost thousands of dollars [the average claim costing almost $18,000] and
the insurance companies were [predictably] not terribly excited about
covering these repairs: Now that the insurance
industry's had its nose bloodied by consumers that have fought back and
won... big time. Mold problems which could've been solved for
several thousand dollars worth of repairs are now coming back to haunt
insurers, in the form of huge civil court awards. A Dripping Springs
family slapped Farmer's Insurance with a $32 million judgment last year
because of Farmer's failure to handle their mold claim properly.
Fine...but what does this have to do with your ability to buy a house?
Plenty.
There's a little-known database that the
insurance industry relies upon called CLUE:
Comprehensive Loss Underwriting Exchange. Owned by
Atlanta-based Equifax, CLUE's massive database tracks over 120 million
auto and homeowner's insurance claims. Industry estimates indicate the
CLUE system covers about 85% of the claims filed...meaning that water
pipe that may have busted during a stretch of cold weather a few winters
ago in the dream house you just put a earnest money down on could quite
conceivably block your ability to secure financing. More and more
insurance underwriters are scrutinizing the backgrounds of the
properties attempting to obtain coverage than ever before, motivated by
several factors. The fear of mold claims is big: If there has been water
damage in the past, this will flag a property fast.
Multiple claims at a particular address of
any type: Water damage, fire and our nemesis in
North Texas, hail can be another red flag. And finally, if there are
excessive losses in the neighborhood, this can give the prospective
insurer another reason to rate the property as a higher risk [meaning a
higher premium] or decline to cover it altogether. If you can't get the
property insured, you're never going to be able to finance it.
And if you are able to get it insured-but at a much higher annual
premium level-you'd better know this and factor this added cost into
your monthly house payment, or risk a rude and expensive
awakening in the near future.
One more thing: While I've
been addressing the purchasing side of the home buying equation, this
will have just as much impact on the selling side, too. With all of the
disclosure requirements nowadays, if you fail to note something big (in
your property's past) to the prospective buyer, you could be setting
yourself up for an expensive and distasteful courtroom experience if
something goes wrong and the lawsuits start piling on.
Do your homework...or else! I've
pounded consumers for years about doing their homework and spending
a few bucks to run a background check before buying a used car. It's
just as appropriate to start thinking the same way when
you're in the market to buy a pre-owned home. But
here's the rub: You're not
entitled to run one of these CLUE background checks unless you own the
property. Ben's solution?
Have your attorney or savvy-broker include language in the purchase
contract that makes your offer contingent on their providing you with a
copy of a current CLUE report within 10 days of signing the contract,
otherwise...? No deal.
Find out more about this topic, and how to get a copy of these CLUE
reports on my website: www.bendover.com/clueless.asp
The information on this page was provided by W.R.
Starkey Mortgage. Your
first-last-only stop for financing that home purchase...Ben's smartest
choice when re-financing your existing [or even
second/vacation] home!
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