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Homeowners Tips


A Home Inventory - Protect Your Property

Try this test. Close your eyes and try to remember everything in your home. It's not easy, is it?

No one really expects to be a victim of a fire, flood, hurricane or burglary. But such events do occur, and afterwards it might be difficult to remember everything that was destroyed or stolen. If disaster struck your home, would you be able to report exactly what you lost to police, to the IRS or to your insurance company?

We recommend a home inventory. The following tips will help you take your home inventory:

• The easiest way to take an inventory is to photograph or videotape your belongings.
• Many computer software packages have inventory systems to make the job easier.
• Make sure to open closets and cabinets as you go through each room.
• A list of serial numbers, model numbers, purchase prices and dates is also helpful.
• Keep a file of sales receipts or appraisals (especially important for electronics, jewelry, artwork and other expensive items).
• Store a copy of the inventory and other valuable papers in a safe-deposit box or vault, a copy with a friend or relative in a different city and a copy at home.
• Update your inventory regularly, especially after a new purchase.

An up-to-date inventory of your household furnishings and personal belongings can help to:

• Determine the value of your belongings and your personal insurance needs.
• Identify exactly what was lost (most people can't recall items accumulated gradually).
• Settle your insurance claim quickly and efficiently.
• Verify losses for income tax deductions.

Remember, should you ever need to report a burglary or file an insurance claim a household inventory could be a valuable document.

If you want information about homeowner's insurance, call AIG Hawaii at 544-3970.

Hurricane Insurance is Mandatory to Purchase a Home
By Michael Onofrietti

As of June 1, we began another hurricane season. Since Hurricane Iniki in 1992, we have been fortunate that no storms made landfall, although we had a couple of close calls. Hurricane Daniel passed within 150 miles of Maui last July (and 225 miles of Oahu), and Hurricane Fernanda passed within 300 miles of Hawaii in August 1993. Because of the devastation hurricanes bring, it is important that we are all prepared with water, supplies, medicines and other items to help us survive without electricity, clean water, or even your roof, for several days.

But there is another aspect to hurricane season that we all need to keep in mind, and that is the way that hurricanes impact your ability to obtain financing on your home. Since the Federal Reserve's recent interest rate reductions, the number of homeowners refinancing their properties has soared.

If you think the time is right for you to refinance, or if you are ready to buy a home for the first time, your lender will require that you purchase hurricane insurance. Prior to Hurricane Iniki, lenders generally required that homeowners purchase fire insurance, but were silent on the issue of hurricane. The reason is that prior to Iniki, virtually all single-family homeowners insurance policies included protection against damage caused by hurricanes as part of the basic coverage package.

For condo owners, the scenario is different. Condo owners are not obligated by the lender to buy hurricane coverage because the condo association usually provides this coverage. There can be exceptions depending upon the complex, so a prospective unit-owner should check with his or her realtor on the coverage's provided by the condo association.

After Iniki, homeowners' coverage for hurricane damage changed. When you buy homeowners insurance today, there are two ways hurricane coverage is provided: a separate hurricane policy or all coverage's included in one policy.

Two Policies

• Most insurers and agents are offering two different policies. One policy protects against financial loss due to damage caused by fire, theft, vandalism, non-hurricane wind damage and liability, among other covered causes of loss. There will be a deductible, usually $250, $500 or $1,000. In the event of a covered loss, you pay the deductible and your insurer pays the amount above the deductible.
• The second policy protects against financial loss due to hurricanes. This coverage is usually triggered by the issuance of a hurricane watch or warning by the Central Pacific Hurricane Center, and includes damage occurring within 72 hours following cancellation of the watch or warning. Typically, the hurricane policy will have a separate deductible, usually 1 to 5 percent of the value of your home.

Until recently, insurers offering two policies obtained hurricane coverage through the Hawaii Hurricane Relief Fund (HHRF). The HHRF enabled real estate transactions to close because insurers were unwilling to protect against hurricanes. The HHRF stopped writing policies in December 2000, as there are now several private sources of coverage available.

If you currently purchase homeowners insurance and have a policy through the HHRF, your insurer or agent should alert you to your available options when your HHRF coverage is ready to expire.

One Policy
In other cases, you will receive one policy that covers all damage, including hurricane. In this case, there will still be two different deductibles, one for hurricane and one for all other causes of loss. In fact, when taken as a whole, the coverages may not be much different than when coverage is offered under-two separate policies. However, the same insurer will help settle all of your claims.

If you already have homeowners and hurricane insurance, now may be the best time for an insurance review, before a hurricane, or other loss, occurs. As part of your preparation to refinance or to buy your home, a discussion with your insurer or agent is an important and necessary step. In most cases, your home is your most significant asset, and you, and your mortgage lender, want to be sure it is protected.

Michael Onofrietti, ACAS, MAAA, CPCU is vice president and actuary of AIG Hawaii Insurance Company and its family of companies. For more information, please call 543-9789.