Wednesday, October 31, 2012

Do You Really Need That Flood Insurance?

FEMA Elevation Certificates are used to determine if your house or structure is in a Flood Hazard Area. A lot of Mortgage companies are automatically putting Flood Insurance on houses that may or may not be in a Flood Hazard Area. We can file LOMA (Letter of Map Amendment) to the Federal Emergency Management Agency (or FEMA) on a case by case basis. FEMA will review each LOMA and determine if the structure is indeed out of the FHA and then send a letter stating so. This letter can be used to send to your mortgage company to eliminate FI which can be very costly. In most cases the Mortgage Company will only eliminate the Flood Insurance with an FEMA Certified Elevation Certificate and/or a LOMA.

Why has this become such an issue recently? Over the past few years, homes even outside of the Flood Hazard Area have been damaged or completely destroyed due to unprecedented flooding in some areas. If the home is destroyed by flood and the home owner doesn't have flood insurance, often times the mortgage company is left with the outstanding loan and no way to recover it.

Because of this, Mortgage companies are trying to require flood insurance. Having a FEMA elevation certificate can be the only way to get out of having to pay for expensive flood insurance when you really don't need it. Some areas carry more risk than others and having an elevation certificate can show reduced risk, and trigger the mortgage company to remove the requirement of flood insurance.

Flood insurance can cost from $750.00 per year up to $5000.00 per year and up from there depending on your property, your home value and your risk of flood. The only real way to determine how much risk you have is to get the FEMA elevation certificate and file the Letter of Map Amendment. In almost every case where insurance is require by the lender, the cost of a FEMA Elevation Certificate and LOMA filing is far less than the ongoing cost of paying for flood insurance that you may not actually need. Even if it is determined that you do need insurance, you end up with an accurate assessment of your risk, and that can in many cases save hundreds of dollars each year.

Being informed about these types of things when buying a home can save you a lot of money over the life of the loan. Don't just take what you are given and accept it. In most cases, lenders and insurance companies are motivated to first protect their investments and assets before they consider yours. Take the time to investigate, and make a good informed decision. Apathy costs consumers a lot each year, and knowing what steps to take to protect yourself is the first step to saving money.

Sunday, October 14, 2012

Protecting Your Assets Against Losses in Times of Calamities and Disasters

People are slowly recovering from the recent disasters that pummeled the island of Luzon and affected the populace. As I remember back then it have been raining very hard and almost all day and everything happening on those days were grounded to a halt with floods affecting the flow of traffic, schools and business establishments temporarily closed and people worried on their lives and properties on what to do next and how to get on their previous life on track again.

Floods, Typhoons and other disasters

Many of the known areas where flooded and a great majority of people got stuck in their second floor of their homes or at their rooftops for those living in bungalows. Local government units have mostly declared their municipalities, cities and provinces under state of calamity. These provinces and major cities are located in flood map areas of the country. It was good that the population and the government are prepared from these disasters in which Typhoon Ondoy served as a lesson for most of us and a basis on what things may come in the future with the rapid climate change and destruction, depletion of our natural resources and improper waste segregation and management in which we the ordinary people should be aware of.

Major government and non-government agencies come prepared and gone along way on their risk reduction and disaster management operation in the recent calamities after 2009 with faster response time. There have been some problems encountered during rescue and evacuation but still people living in the flood hazards zone are resilient and instead stay behind on their homes because they have sentimental value of the things they are going to leave behind and were just asking for relief goods other opted to temporarily evacuate on higher grounds or shelters provided by the local government units.

Typhoon Ondoy, the damage to property was estimated to be P6 billion, including P4.1 billion in damage to infrastructure, P1.9 billion in damage to schools, and P882.525 million in damage to agriculture. Meanwhile, Typhoon Helen and the southwest monsoon had incurred damage of more than P3.0 billion pesos worth of infrastructure and agricultural loss according to the National Disaster Risk Reduction and Management Council (NDRRMC) in September 2009 and August 2012 reports.

Our country, The Philippines, is no exception to natural and manmade disasters because it sits on the center path of major tropical storms coming in from the Western Pacific Ocean and more than 20 or so typhoons can come across our archipelago in a year and so the need for Non-life and life insurance is greatly needed in such times of needs.

What are Non-life insurance and Life Insurance?

To give you a brief background on Life and Non-life insurance, Non-life insurance is defined as insurance for property and casualty and is specialized on different categories in order to customize the needs of the policyholder.

Many non-life insurance companies can give different package from fortuitous events such Fire insurance to other allied peril insurance such as Flood / Typhoon, Earthquake in which these are specialized insurance products. They can also have extended coverage from Burglary, Valuable Items Protection, Riot, Smoke, and others that are offered from these non-life insurance. Sometimes these non-life insurance providers can also include life insurances package such as hospitalization, personal accident, and personal liability for those who avail this.

Life insurance on the other hand provides a monetary benefit to a decedent's family or other designated beneficiary, and may specifically provide for income to an insured person's family, burial, funeral and other final expenses

People think that insurance is just a waste of money but in can work a lot of ways of helping the policyholders in which insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss.

Other types of insurances are crop and livestock insurance (agricultural / aquaculture), motor vehicle insurance, mortgage redemption insurances (Real Estate) and many others.

Life and Non-life Insurance can both work hand in hand and could be a useful tool in protecting yourself against unfortunate events such as what happened a few weeks ago.

In choosing the right Insurances for your needs, the providing company must be registered and abide by the rules and regulation set forth by the Insurance Commission of the Philippines. The Insurance Commission's mandate is to regulate and supervise the insurance industry in accordance with the provisions of the Insurance Code in order to ensure that adequate insurance protection is available to the public at a fair and reasonable cost and to assure the financial stability of the insurance industry so that all legitimate claims of the insuring public are met promptly and equitably.

For those interested to avail of insurance, you can check out the website of the Insurance Commission if the insurance companies offering you are legitimate and also to better shop around and research first for the ideal insurance products that fits your need before selecting and deciding the right one for you.

Amidst the hardships and anxiety the resiliency and Bayanihan spirit still exists

It proves that "The Filipino Spirit is Waterproof" as what was circulated in the social media networks like Twitter and Facebook two weeks ago. The resiliency and spirit of helping others have been seen among ordinary citizens who are willing to risk their lives for others. The fortunate souls who were not affected were able to give the affected and those in need the help and relief with their unwavering support and gracious hearts.

It was also a time even in these disasters that people of various walks of life affected from this tragedy have high hopes and still learn to smile and be happy in order to cope up with the extreme weather conditions we are experiencing and eventually triumph from it.

CRB Benedict Baluyut, is a certified real estate professional with PRC Real Estate Broker's License No 8538. He is based in the City of San Fernando, Pampanga, Philippines and as an associate broker of C. F. Baluyut Realty and has been a lecturer on topics regarding real estate selling and marketing using the internet, other multimedia platforms or social networking.