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Climate Change Impact on Real Estate Properties

By Dez Duran-Lamanilao

Image source: WXXI News

The effects of climate change in the US has been the subject of debates and discussions by experts, environmentalists, and ordinary citizens for years now. The National Climate Assessment report, which was directed by a 60-member Federal Advisory Committee, reveals that the US average temperature has grown by 1.3 to 1.9 degrees Fahrenheit since 1895, with most of the increase happening in 1970. As a result, Americans have become aware of how climate change could impact US real estate prices, given the continuous rise in sea-level over the years.

This threat creates bigger issues for waterfront real estate properties. In fact, a 2015 study from the University of North Carolina Wilmington found that oceanfront property values in the US could decrease if federal subsidies were removed. Higher insurance costs and surges in property values will obviously follow.

A study using data from Zillow, while still under peer review, found that properties exposed to increasing sea levels sell at a 7 percent discount to comparable properties that are not exposed to climate-related risk. In Alabama for example, a wide range of impacts of climate change have been observed, as outlined in the website of Sierra Club – Alabama Chapter, in terms of temperature, heat and wildfire, drought and precipitation, agriculture and farming, forestry and ecosystems, and sea level rise and coastal flooding.

More wildfires, unforeseen calamities and floods are expected to worsen the situation, so real estate developers and property owners alike are continuously finding ways to deal with this looming scenario. If you are a shoreline owner, you can start taking precautionary steps to avoid the possible losses associated with calamities brought about by climate change. Keeping the surrounding area of the property as natural as possible, maintaining and taking care of your property’s health and biodiversity, and managing pests to prevent the occurrence of diseases are just a few examples.

Finally, do not wait for catastrophic events to happen before you consider protecting your property, whether you intend to sell it in the future, rent it out or just simply keep it. Talk to an expert that specializes in writing high risk coastal properties, so you can secure the best insurance coverage there is.

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Getting Insurance for Your Second Home | Vacation Home Insurance

By Dez Duran-Lamanilao

Image source: Zillow

Whether you are leasing your second home to seasonal travelers or keeps it exclusively for family use, there is always the risk of damage or loss from natural calamities, theft, and other unforeseen incidents or disasters. If you belong to the cautious group of homeowners, these threats may be enough to justify buying a second insurance for your vacation home.

What are the factors to consider when getting insurance for your second home?

  1. Check first your primary home insurance policy. Ask your insurer if the existing policy can cover a second home. Otherwise, you will have to purchase another insurance.
  2. If you are renting your home, consider a comprehensive insurance policy that will protect your property from fire, hailstorm, and any other catastrophe. The best way to deal with this is to determine first the risks to your home.
  3. Verify how much you need to spend if you add personal liability coverage. This will help minimize the costs if you are sued by someone following injuries obtained within your property.
  4. Be specific on what you want to insure. Second homes are usually covered by a more restricted type of policy called “named perils,” which means incidents not indicated in the list will likely not be covered.
  5. Note that vacation or second homes tend to be more expensive to insure because they are either located in an earthquake- or flood-prone (waterfront) area or would normally feature special amenities such as pools and hot tubs.
  6. Never misrepresent facts when talking to your insurer. This may delay or void your rights when you make claims in the future. The savings you are hoping to get will not be worth the risk.
  7. Ask your agent about a personal umbrella policy (PUP) for greater liability protection. However, PUPs generally cover incidents related to personal negligence. For vacation rental activities, a specific umbrella (commercial) will be required.

Before the family gets busy preparing for that much-needed vacation, check with your insurer your available options if you wish to insure your second home. Protect your investment. Call an agent now.