melloInsurance

Serving our clients, Serving our community

Lyndon Block

What do I need to know when buying a new home?


Buying a home is one of the most exciting and stressful moments in our lives. It is a monumental moment that we will never forget and when you have finally decided to purchase, there are a number of things to consider. Things you should know before buying, what to know during the purchase process, and what to know after you’ve bought the home. So let’s get started on some pointers to help you out as you navigate these waters.

“Window Shopping”

In the beginning phase, you are looking for a variety of homes that fit the mould that you have envisioned in your mind. Make sure you do your research on the following items so you understand what’s important. Having a credible realtor is a huge benefit when searching for your dream home.

  • Location
    This is one of the most important rules to follow when purchasing a home. “Location, location, location” is the mantra in real estate. The reason is for resale value. Many people want to believe that the home they purchase will be their forever home, but time will show you that your life and your needs change over time and you may need to adapt to those requirements. (ie. You have children and no longer fit your home).

    Whether you purchase in a rural area, small town, or urban area, this will impact the cost of the home and the resale ability.

    It’s also important for your ease of access for personal reasons. Ie. Where you work. Where your daycare/school is. Where your family lives.
  • Price
    Before you get too deep into searching for a home, you’ll want to go to a financial institution to find out how much you can reasonably afford. The bank will use your assets and liabilities along with your income information to find out how much borrowing power you have and what value of home you can realistically afford. They will then tell you your “pre-approved limit.” Now you know your budget and can start looking at homes in your price range.
  • Type of Construction
    The year built, heating type, foundation, framing material, etc. are important factors to note in how the home was built. You do not want to buy a house that could possibly fall apart shortly after purchasing it due to years of depreciation or poor workmanship (unless your plans are for demolition).

    This is where you will want to hire a certified building inspector. They will inspect the integrity of the home and will point out any potential threats or issues in the home, such as moisture/mold issues, poor foundation, unsafe fireplace, outdated furnace, or a roof that has hit its life expectancy. If the home has issues, you can use these factors to negotiate a fair price on the home, or if they are too major to fix, this inspection has saved you the headache of buying a home with serious issues. Most realtors have inspectors handy for your use.
  • Lot Setbacks & Surveyors Certificate
    When a house is built, there are general construction rules that are in place to make sure the home is built to building code and to the regulations set out by the municipality. In most areas, you are required to have building permits and documentation indicating you’ve followed their bylaws when the home was built. Finding out this information can prevent headaches if the detached garage or fence was built across your property line or on your neighbours property. Civic disputes can cause frustrations between neighbours and will cause financial hardship if you have to tear down buildings or fences to meet the building bylaws. Again, the realtor is your friend here and will help make sure the home is built to the guidelines of the municipality.

I’ve found my house! Now what? 

After you’ve found the perfect house, in the perfect location, you can start the purchasing process. With the help of your realtor, you can make an offer to buy the home, and if seller accepts, you can start on these next steps.

  • Financial Requirements
    After the offer is accepted, there will be a timeline for your meet the list of requirements to close the sale. This means you need to obtain financial approval for the house you’ve made an offer on. The financial institution will likely do an appraisal of the home to see what the value of the home is and if the offer you made is appropriate or not. If it is, and it fits within your budget, they will hopefully approve your loan. A down payment is generally required and can vary between 5-25% of the home value. You may have access to CMHC, which will insure your loan and allow you to have a lower down payment. (However, they charge a large fee for this service that is amortized in your mortgage payments). 

    Rule of thumb – the bank will want to make sure that the loan payments and debt load you carry are no higher than 40% of your monthly income. That way you can still survive and don’t become “mortgage broke.”

  • Insurance Requirements
    At this point, the financial institution has approved your purchase to buy the home. Now you need to make sure the home is actually insurable. This is where you need to find a reliable insurance broker (us!) to help get you insured. Insurance companies have set criteria that need to be met when insuring a home. If the home is in too rough of shape, too old, has unsafe heating or construction, the home may not be insurable.

    Our online insurance provider – Mello Insurance – is a quick & easy way to see if your home will be able to be insured or not. In under 10 minutes you’ll know if you can easily insure your home or if it does not meet the basic standards. If that is the case, you may need to contact one of our brokers to do a more thorough investigation to find a solution on how to insure the home (if there is one). For example, if the home has a freestanding wood stove in the living room. Most insurance companies will require it to be inspected by the broker, or sometimes from a certified WETT inspector. Mello’s algorithm cannot quote a home that has this type of heating risk prior to it being inspected, therefore would require broker intervention. If the wood stove later passes inspection, the home would then be insurable.    If the house is a bit older (1960 or older), insurance companies typically require updates to be done to your plumbing, heating, roofing, windows & electrical to obtain Guaranteed Replacement Cost. This is important when buying an insurance policy, as you want to make sure if your home burns down, you have coverage to rebuild your home to the way it was prior to the loss with new/similar material. Once the insurance requirements are met, your lawyer and financial institution will require confirmation of insurance in order to finalize the mortgage.

YAY! I’m in my new house. What else is there to worry about? 

Very exciting, you are now a proud new homeowner. Now that the searching and purchasing process is over, you have the responsibility to maintain and look after this home. Here are some basics that you’ll need to know.

  • Taxes & Utilities
    These are now your responsibility. You are required to pay the annual property taxes, power, heat, internet/phone, insurance, mortgage and other monthly expenses that come with owning a property. Make sure you research what those average costs can be, because they can start to add up. Depending on the location, your property taxes alone could be $300-$500 per month.     
  • Maintenance
    Insurance is there to cover you for any sudden and accidental insured peril. They are not a maintenance policy. This can sometimes generate confusion. For example, if your asphalt shingles are 25 years old and need to be replaced, but a hail storm comes along and damages your roof. The insurance company may pay you for some damages, but the settlement might be minimal as the life expectancy of the roof has reached its limit. This may also cause a problem if the roof is missing shingles and you do nothing to repair the roof, and it begins to leak, the insurance company may notice you have not properly maintained your property and could limit/exclude coverage because the roof was not maintained.

    Make sure you are doing your part as a homeowner to prevent damage or loss to your home. (Snow removal, cut trees and lawn, clean eavestroughs and furnace filters, install security systems, sump pumps, etc.) By doing these things, it will help build a strong relationship with your insurance provider and if you unfortunately do have a claim outside your control, you will want to have a strong relationship with your insurer.
  • Community & Neighbourhood
    Living in a community requires a certain relationship with those surrounding you. You will want to build strong relationships with those in your community. If you leave on a winter vacation, you will need to have someone checking on your house. No better than your next door neighbour. By attending, helping, and supporting your community, you add security and protection to your home and your family. These qualities are priceless. 

 There are lots of things to think about when buying a home. I hope this breakdown provides insight and some guidance as you navigate through these exciting times. Thanks for reading!

 

Windstorm, the day of “wreck-oning”

Over the weekend and into the beginning of this week, we have experienced some serious windstorms and plough winds across the province. Winds exceeding over 90km/hr in some places.

Many things can go wrong during these windstorms. Debris can go flying into vehicles and damage them. Aka: Shopping carts. More dramatically: Trampolines can go flying into neighbours yards or houses. Been there done that, bought the T-shirt. Therefore, it  is important to carry adequate liability coverage, volunteer property damage, and it is also important to insure your home and belongings in case the wind is strong enough to cause serious damage to your home, belongings or other property you own. 

Well the damage has already occurred, what do I do now? 

If the damage is simply cosmetic, you should try and fix it yourself or hire a contractor to provide an estimate on the damage. We have a “find a contractor” form on our website you can use to find a contractor if you do not have a referral and are unable to find one. Scroll to the bottom of our claims page and clock on the “find a contractor” icon.

If damage is extensive, you should make sure you try to prevent any further damage from happening. Such as tarping & sealing off an exposed roof. Making sure no water can enter the home or further damage can occur to existing shingles. Make sure no trees or other objects will fall or harm any other property. By taking some proactive measures, you’re helping yourself from additional hassle on future damages, as well as helping your insurance company save some money from unnecessary costs in the claim; this will undoubtedly strengthen the partnership between you.   

The next step is contacting your insurance broker. They will begin a claims process with your insurance carrier to assess the damages, review your coverage & deductible, and if everything is covered they will proceed with the claim. The insurer will work with you to either negotiate an actual cash settlement or a strategy to begin replacing/repairing the damage to your home to recapture replacement cost coverage (if applicable). When rebuilding/repairing the damages, the insurance company usually requires 3 contractors quotes to get an adequate idea on the costs to repair the damages. If you cannot find 3 contractors, feel free to use our app again to obtain these quotes.

How can I prevent damage from happening again? 

There is no “sure-fire” way of preventing a windstorm claim. However, using high wind-rated materials, (metal shingles, hurricane truss straps, bin anchors etc) while keeping your belongings anchored or stored in a safe environment will help dramatically reduce the chance of a wind claim.

To show you how extensive wind damage can be, here is an example of a severe windstorm in Ontario and Quebec 2 years ago:

  • May 4-5, 2018, wind gusts of up to 126 km/h in southern Ontario and Quebec, which knocked out power for 600,000 hydro customers. Combining that loss with the tornadoes in those two provinces and insured losses from just those two wind events were close to $1 billion – about half of the approximately $1.9 billion in total insured losses for the year.

These claims costs, unfortunately, impact our national insurance rates and markets. Many insurance companies have scaled to a nationwide size and to mitigate these catastrophic losses, we all end up paying a small portion, in one way or another. In Saskatchewan, we may not have damages that add up to this wild amount, as we are less populated and more spread out, but we can have serious wind losses here as well.

  • For example, in 2010, Saskatchewan had over $100 million of weather related insurance claims alone. 

The forecast helps us be mindful of what could happen, but we can never predict the weather exactly. It is important to use the tools and information we are given to make smart decisions.. All we can do is make the best with what we’ve got. That being said, there are things that are in your control, such as: making sure your policy is “air-tight,” please review your coverage and deductibles to make sure you understand and are prepared for a potential claim, and then make sure you prepare your home, business, outbuildings and belongings so that you can be ready for the next windstorm. 

Thanks for reading. Stay safe out there!

The State of Emergency

No matter how smart we become or how much data we collect, surprises are imminent. We cannot predict everything, we cannot prevent every bad thing from happening. This COVID-19 is a prime example of that. Mother Nature also has a wicked side to her.

Flooding, Wildfires, Hurricanes, Earthquakes, Volcanoes, Hailstorms, Plow Winds, Tornados, Ice Storms.

As humans, we learn, change, adapt to these situations and that helps us be more prepared moving forward. For example: In construction, building codes have changed dramatically in the past 50 years, to help prevent fire losses with the use of better material, wiring, automatic breakers, smoke detectors, along with the quicker response and better equipment from local fire departments, etc.

However, these large catastrophic losses come without warning and have serious repercussions: Slave Lake Wildfire, Calgary Flood, Fort McMurray Fire and the more recent Ice Jam/Flood this spring.

There are a few things that insurance companies put in place during and after these events that affect us. When a “State of Emergency” is declared, Insurance companies limit what insurance agents and brokers are able to insure. They reduce our “binding authority” and require additional information on the risk and sometimes reject insurance on certain areas depending on the circumstances. For example, if there is an ongoing wildfire, most insurance companies put a radius restriction on any new insurance. If you wanted to insure a cabin or home and your property was within 50km of the wildfire, you would likely be unable to insure it. This radius restriction varies from insurance company to insurance company, and some may reject insuring the risk entirely based on GPS coordinates.

Therefore, it is always important to carry insurance PRIOR to any potential loss. We cannot backdate insurance. If this was possible, insurance wouldn’t exist as they would all be out of money. You need to buy insurance while things are good in hope for nothing bad to happen. And if it does, you’ll survive financially, because you were prepared and have the proper protection in place. 

The next thing insurance companies will do, is after the dust settles from a catastrophe, they study the data. They study trends, locations, risks, behaviours, construction details, etc., and come up with a strategic plan on what they will be doing in the future. If claims costs surpass revenue, they will have to make changes. Rates will increase, appetites will change, and this is usually when a hard market surfaces.

So what is a “hard market?”

A hard insurance market represents a high demand for insurance coverage with a  low supply. Insurance carriers implement strict underwriting standards and issue a limited number of policies. Premiums are high and insurers are disinclined to negotiate terms.

As most of you may have noticed, insurance premiums continue to rise and the requirements  insurers ask for, have become more and more demanding. That is because we are in the middle of a hard market. High claims costs from CAT losses, combined with the high value claims in the auto sector (hail losses and higher costs to repair due to technology/sensors in vehicles), has caused insurance companies to struggle and make changes. Therefore, it is more difficult to buy insurance and the price continues to rise.

As much as we don’t want to believe it, our insurance rates that we pay, are based on our own property, claims and behaviour, IN ADDITION to the claims and losses of others. That is the foundation of insurance. We pool money together to help those who suffer from unfortunate circumstances. 

So what happens next?

Our hope is that these weather related CAT losses taper off (hard to predict), and claims related to human error can be predicted, corrected & prevented. The COVID-19 crisis has reduced auto related risks as fewer people are driving, so that may result in lesser claims and potential revenue for insurance companies. (cross fingers)

We never can predict what the future brings, but we can plan for the worst and hope for the best. We buy our insurance ahead of time, we build or repair our homes stronger with better material, use better equipment and HOPEFULLY we reduce or maybe even eliminate the possibility of a claim from arising. If we each do our part, we can make the future brighter.

Spring Cleaning & Maintenance

Now that the snow and ice has almost all melted, it is important to take a look around our home to see if there are any repairs, updates or any cleaning required. We have more time than we have ever had at home, so we should be checking off these items before we start to get busy again. 

  • Landscaping: Cut and trim all vegetation and overgrown bushes from structures. Power raking and aerating your lawn is also a good idea if it hasn’t been done in a while.
  • Deck and Porches: Check your deck, patios, porches, stairs, and railings for any loose members and for any deterioration. Wood decks and fences need to be treated every 4-6 years, depending on how much exposure they get to sun and rain.
  • Sprinklers: Check your lawn sprinkler system for leaky valves, exposed lines, and improperly working sprinkler heads. If there is an area of your yard that collects too much water or doesn’t get enough, run the sprinklers to figure out the problem. If it’s not something you can fix yourself, call a professional before your lawn needs the water.
  • Gutters and downspouts: Pull out any leaves and debris from your gutters and downspouts. Re-attach gutters that have pulled away from the house. Run a hose on the roof and check for proper drainage. If a leak exists, dry the area and use caulking or epoxy to seal the leak.
  • Roof: Inspect roof surface, flashing, eaves, and soffits. Perform a thorough cleaning. Check flashings around all surface projections and sidewalls. Check for any loose shingles that may have been damaged from our Saskatchewan winds.
  • Foundation: Check the foundation walls, floors, concrete, and masonry for cracking, heaving, or any deterioration. If you can slide a nickel into a crack in your concrete floor, slab or foundation call a foundation repair professional near you immediately.
  • Siding: Clean siding with a pressure washer to keep mold from growing. Check all wood surfaces for weathering and paint failure. If wood is showing through, sand the immediate area and apply a primer coat before painting. If paint is peeling, scrape loose paint and sand smooth before painting.
  • Exterior caulking: Inspect caulking and replace if deteriorating. Scrape out all of the eroding caulk and recaulk needed area.
  • Window sills, door sills, and thresholds: Fill cracks, caulk edges, repaint or replace if necessary.
  • Window and door screens: Clean screening and check for holes. If holes are bigger than a quarter, that is plenty of room for bugs to climb in. Patch holes or replace the screen. Save the bad screen to patch holes next year.

If you notice significant damage to your home during the inspection. Please contact your insurance broker to file a claim. You have 1-2 years to claim any damage to your home if the damage is covered under your home insurance policy.

Protect yourself from water runoff & spring thaw

April has come in with a very “heavy” vibe to it. Heavy – with the eerie feelings we are having doing daily “unconscious” tasks like fueling up our vehicle, buying groceries, grabbing a coffee, just breathing in public, or being aware of how “moistly” we speak. It has also brought a heavy amount of snowfall. Now that the warmer weather is approaching, we may find ourselves with a water problem or runoff issues.

Over the past few years, our provincial government has slowly transferred responsibility of their PDAP flood program and put that burden on the public to now buy flood insurance. Not all people have purchased this coverage as they feel like they are on higher ground, or do not have a basement in their home/cabin/business, or they’re generally not concerned. It is important to be prepared for these events regardless of your position, and even if you HAVE purchased the coverage, you should still take precautions and try to prevent a potential loss as not all water losses are covered; even under this new water protection coverage.

What should I do to prevent damage to my home or place of business?
As a property owner, there are a number of things you should do to help prevent water damage.

  • Remove built-up snow/ice from the roof/eavestroughs to prevent ice damming.
  • Make sure downspouts are cleaned out, connected properly and are directed away from the building.
  • Shovel snow away from the perimeter of the building.
  • Confirm slope of the landscaping around the building sheds water away from the building.
  • Install a sump pump, pipe it away from property and have a backup power supply installed for added protection. If you already have a sump pump, test it to make sure it is working and ready to go.
  • Install a backup inline valve in your sewer line to prevent sewer water backing up into your basement.

What happens if I do these preventative measures and I still end up having water in my basement?

You can do everything right and still have a claim on your property. This is why insurance exists. They are not maintenance policies, but sudden and accidental policies to protect you from the unforeseen. If you have water protection coverage on your policy, you could potentially be covered for the following:

  • Surface water – This is where water on the surface of the ground enters the dwelling through a point, at or above, the surface of the ground.
  • Flood – This is damage caused by the rising of, breaking out or overflow of any body of water. 
  • Ground Water – damage to the home caused by water entering the home beneath the surface of the ground. Coverage will be provided only when it’s sudden and accidental, and it happens at the same time as a flood or surface water incident. 
  • Sewer Backup – Water or sewage accidentally discharged or escaped from the sewer, sump or septic tank.

However, that being said, not everything is covered. There is some confusion surrounding groundwater and the term “seepage.” Seepage is not usually covered. Some companies have started to develop some type of coverage for this peril, but most continue to exclude it.  Seepage, by definition, is the process by which a liquid (water) leaks slowly through a porous substance. Ie – Concrete Foundation. It is a slow constant process and therefore, not sudden and accidental. 

This is why it is important to have water shedding away from the foundation of the home. The more the water gathers around the house, the more likely it is, that you could have water seeping through a hole in your foundation and potentially have a water loss in your home. Sump pumps are a must nowadays with the high water table in the ground. Many locations like Warman or Martensville have a higher water table and the sump pumps in those areas are actively being used this time of year. So make sure they are maintained and ready for the season.

If you do have a water issue and need to submit a potential claim, please fill out our claim form online and submit it to our office, we will pass that information along to your insurance provider and we can get the process started. Please note that if you proceed with the claim, you will be responsible to pay for your deductible as that is your portion you are responsible for. 

If you have any further questions in regards to your policy or this coverage in particular, please contact your broker or request a copy of your wordings to review the coverage you have on your policy with your insurance carrier.

Even though the world has come to a halt, it is important to not stop ourselves, but to keep moving and focusing on protecting our assets and our family. Stay safe everyone.

Delivering Insurance in a “Socially Distant” environment.

The past 2.5 weeks, our cities, province, country and world have gone from a casual “it’s just a flu” response to full on “lockdown.” It seems surreal that we have all been “sent to our rooms,” so to speak, to help the healthcare system from collapsing.

These seem like drastic measures, and it is (at the cost of our economy), but keeping our loved ones healthy and our health care workers safe, is always more important than money (at least that’s the standards that I was raised with). “As long as you have your health, you can always make more money.” That being said, it is important to keep mentally and physically healthy during this time of self-isolation.

During this time, some businesses NEED to continue so that we can continue to live. Grocery Stores, Trucking Companies, Fuel Stations, Hospitals, Paramedics, Care-workers, etc. all need to continue to work despite putting themselves in harms way. To them, we are extremely grateful for their relentless & exhausting efforts during this time. There are a lot of other non-essential businesses that have had to adapt to the new norm and figure out how to work without going to work. This requires working from home or creating a delivery based system to their customers.

At Block’s Agencies, we fortunately had remote access capabilities, into our brokerage software already in place. We created data security measures to keep our data private and secure, and gave our teams the ability to access our client data from anywhere; giving us the ability to still operate as if nothing had changed.

During this stressful time, the government has made it very clear that gatherings and public outings should be minimized at all cost. So we have locked our doors to “self-isolate” and are trying our best to help flatten the curve. However, truckers still need to truck, drivers still need to drive and despite the lockdown, the world hasn’t stopped. So what are we doing to help deliver our customers the same service behind locked doors. Here is some Q&A to help answer some of those concerns:

Q.  I still need to renew my driver’s licenses and registrations. How can we do this?

A.  By calling, texting or emailing one of our branches (contact info at the bottom of this page) or by utilizing the MySGI tool on our website. You can text us at 306-992-2606.

Our team has call-forwarding and our email accounts are set up to track and monitor your requests. We can handle (pretty much) every situation for SGI inquiries, and if we can’t, we will find the source to help you out and get you looked after. Currently, we are asking clients to come pick up the licenses, registrations and plates outside our door. We have a drop-off / pickup area for people to pick up their new plates or other documentation that they may need.

Q.  What if I have an insurance claim? Is an adjuster still going to come out to investigate?

A.  It depends on the claim. Not all claims require someone in attendance, however, in the event that a large fire, accident or other event were to occur, there would likely be someone to attend the scene to make sure everything was looked after and that everybody was safe.

Q.  I bought a house. How can I get insurance on it? 

A.  If you call or email one of our branches or brokers, we can get you started remotely. We can set up a conference call or ZOOM conference to have a face-to-face meeting if that is what you would like. We have e-signature software set up and can handle all our applications and contracts via secure email.

Q.  Is this COVID-19 pandemic covered on my business policy as a “business interruption?”

A.  We would have to submit a claim request to your insurance provider to see if your policy wordings responded to this type of loss. However, based on the initial assessment of the insurance industry as a whole, it is rather unlikely as business interruption coverage responds when there is a direct loss from an insured peril (ie. fire or wind), then this coverage is triggered to that corresponding claim. Some wordings exclude pandemic, some are vague on the exclusion, so it is worth submitting the claim to see what the interpretation of your wordings will be.

Q. How long will your operations continue in this manner? When will things turn back to normal?

A.  As you can imagine, our operations will be decided on the recommendations of the Chief Health Officers of Canada and Saskatchewan. When they recommend that we can continue business as “usual.” We will update you and let you know when our doors have reopened.

We are grateful for your patience as we continue to navigate through these unknown waters. Your business is very important to us and we appreciate your support. Our people and our communities are our main priority and we want to be here for you during this stressful and chaotic time. Thank you for your continued patronage. It does not go unnoticed.