Course of Construction Insurance

Course of Construction Insurance:

What You Need To Know Before You Build Your Home.

Submitted by Eric Kossian of Leavenworth Insurance

We’ll assume you’ve purchased your dream lot and have hired a contractor. Prior to this point, you should have liability coverage either extending from another home policy or have a vacant lot liability policy. Once you start building you still need liability insurance (your vacant land liability policy is now void once construction starts) and you will need dwelling coverage while the dwelling is being built. Your contractors should have a Contractor’s Liability policies covering their work on the dwelling. For additional tips regarding your contractor see the bottom of the page.

Contractor liability policies do NOT cover your liability as a land owner and they do NOT cover the building while being built. Both of these needs can be easily and inexpensively covered by you with a Course of Construction homeowner’s policy. These cover the building(s) during the time of construction and typical personal property coverage too, as well as your liability. As with any homeowner’s policy there are usually limitations of $1500 - 5000 for theft of your personal tools so make sure, if you are helping out, your tools are well marked with permanent markers and well secured when not in use as tools are a high theft item. (While many companies have a construction surcharge on course of construction policies, I have found a preferred company that has no surcharge throughout Washington State and they have great rates. And, when the home is done, in most cases they don’t require the hassle of doing a new policy… it rolls right into your homeowner’s policy.

It can be cost effective to buy construction materials now in situations where there are strong indications that prices may increase in the near future. Sometimes you can buy now but have delivery later; whereas some materials may need to be delivered now. I offer, on the same course of construction policy, an endorsement that covers theft of building materials up to $10,000. The cost of this endorsement is just $150.

Statistically, 20% of homeowners are underinsured after a total loss paying the extra out of pocket; often many tens of thousands of dollars because the homeowner, insurance company and the insurance agent all estimated the home replacement cost incorrectly. So once your home is completed, be sure to contact your insurance agent to update your replacement cost. (Homes usually cost 12-15% more than budgeted!) I am one of the few Washington agencies offering a company providing unlimited dwelling replacement cost for your qualifying homes, so in the event your home replacement costs more than estimated, you are still covered!

Other Benefits: Identity Theft restoration service is included free with the all homeowners policies! Best policy also provides $25,000 reimbursement. Literally up to 50% discounts on both home and auto insurance for good to excellent credit rating. (I have saved people up to $1000 a year on just one home.) Affluent clients can get expanded theft coverage for jewelry & tools, worldwide liability, all policies in 1 package policy with just 1 bill.

Additional Tips Regarding Your Contractor:

I recommend you verify in writing that your General Contractor has a Contractor’s Liability policy of at least 1 million dollars – to cover at least the home replacement cost. I also recommend that you get your contractor to agree, in writing, that all subcontractor’s will provide evidence of contractor’s liability to the General, with a copy to you, prior to them starting any work on the property. Contractor’s buy these policies to protect their liability for property damage and injury resulting from their work. You can easily check to make sure your contractor and subs are licensed in Washington State at this site: http://www.dol.wa.gov/business/checkstatus.html

It can also be helpful to stipulate in writing with the General Contractor, for the home to be completed by a certain date or the contractor has to start paying you a daily amount, but allow enough time for reasonable construction delays – which are common. This will help ensure that if your contractor is overcommitted to too many people that your home stays at the top of his priority list. Do not agree to pay much beyond actual work performed. If money for materials is needed, you can make the check out to both the materials company (specifying your project) and the contractor if needed. This ensures that money provided to your contractor for “materials” actually gets spent on materials for your home.

Eric Kossian

Leavenworth Insurance

11756 Hwy. 2, Ste. 1, Leavenworth WA 98826

Ph. (877) 548 – 5488

Click Here to Read a Previous Interview with Eric and his company Leavenworth Insurance

Insurance for Vacant Land?

The Importance of Insuring Vacant Land

By Eric Kossian of Leavenworth Insurance

While vacant land doesn’t have any structures that could burn down, the landowner is still subject to liability lawsuits, so it is advisable to have liability insurance coverage.

To obtain vacant land liability coverage inexpensively the first choice is simply having your agent extend liability from an existing homeowners policy and/or excess liability (umbrella) policy. This costs almost nothing.

But what if you don’t currently own a home? There’s a policy you can get that will cover up to 500 acres of vacant land including up to 25 acres of lakes or ponds. There must be no structures or commercial use and no plans for development or construction during the term. (Once you are ready to build your dream home, you would cancel this and get a Course of Construction Policy which would also cover liability.)

Liability coverage on a Vacant Land Policy has no deductible and uses the expanded definition of Bodily Injury to include Mental Anguish and Emotional Distress. Premiums are low.

Eric Kossian was an Underwriting Specialist with State Farm. He owns Leavenworth Insurance, LLC. an agency providing affluent homeowners throughout Washington State with all their insurance needs. Eric can be reached at (877) 548-5488 or

leavenworthinsurance@gmail.com

Leavenworth Insurance - An Interview with Eric Kossian

10 questions for Eric Kossian of Leavenworth Insurance

Here is my second installment of my "10 Questions" series. Eric Kossian of Leavenworth Insurance is a insurance broker in Leavenworth, WA. He is located on Highway 2 in Leavenworth next to Jerry's Saw Shop. His motto is "We love to save you money!"

1. What does an insurance broker do?

Geordie, an insurance broker locates and shops insurance products to protect clients from the financial risk of loss due to such things as fires (property), accidents (liability), death and unsecured retirement investments and income. While most agents think in terms of selling product that is incorrect; we are in the business of asset protection. Some examples of personal assets could be an owned home, cars, income- your ability to produce it, your life (yes, it is a financial asset), and investments. We then use a wide variety of insurance and annuity products to safe guard assets. A good insurance agent asks you lots of questions about everything in your life. This exposes risks which are currently being self insured. A good agent then shows the client options to reduce risk by reducing or moving all or part of the self insured financial risk to others. Having been an Underwriting Specialist for a huge insurance company, I have a keen eye for risk.

2. What special insurance products do you offer for the Leavenworth market that other agents or companies might not offer?

While I office and live in Leavenworth, my clients and my advantages are statewide. I can insure most log homes at the same rate as frame construction ( a big savings). But specifically, the most frequent & obvious area I can help people is eliminating the risk (1 in 5 chance, nationwide after a claim) of not having enough insurance to cover the replacement cost of your home. Almost all “replacement cost” policies are capped and the rest is your out of pocket expense. However, I have found a company that removes the cap and will simply replace your home in the event of total loss (and they almost always cost less!) But generally, I provide better risk analysis. Last week, among the clients I insured were 2 multimillionaires and a young fireman who owns 4 homes. They all had significant gaps that could have cost them hundreds of thousands in the event of a claim and I was able to show each of them things on their existing policies where they could save money. It was very satisfying to help them and I actually get paid to do help! They also have simple investment and retirement income risks that are easy to avoid which I am helping with. Why take unnecessary risk if you don’t have to? Make sure you have the “big things” covered.

3.What kinds of clients can you help the most?

The more one owns the more I can help.

4. What things in a home or things about a home make it difficult to insure?

Homes generally qualify for preferred insurance if they have had updates to the electrical (Romex wiring and 100 amp panel min.), plumbing (no pressurized galvanized pipe), the roof is in good shape, there are no major foundation issues (large cracks, major settling, post & pier or rock & mortar foundation). They also cannot have any type of home business (unless approved 1^st)- including renting out their home for a nightly or vacation rental. Finally, they cannot be more than 5 miles from a fire station or on a road that is inaccessible in winter.

5. Where do you see people being the most underinsured? What liabilities are we not insuring?

There is a long list but the two that effect the most people are: 20% of homes are underinsured, Auto liability is often too low (and is cheap) and many people should have a $200 a year, 1,000,000 excess liability policy. In addition, people often have their assets (their home and retirement assets and their life asset) structured in manner that is risky and not the most conducive to wealth building.

6.Will the massive claims from hurricane Katrina have an effect on insurance in Leavenworth, WA?

Indirectly, yes. With billions being paid out, that is lost investment income for insurance companies. That can affect rates nationwide. That why some many preferred companies will no longer write policies within 40 miles of the gulf and Florida coastline.

More likely to impact Leavenworth home insurance rates is the satellite photo & computer aided modeling insurance companies are doing in California. It will eventually spread to Leavenworth. It has been highly accurate in predicting future losses based on fuels & topography.

7. If I have to snowmobile to my property in the winter how does this affect the insurance?

You will pay an extra $1000-$1500 per year for non preferred homeowners insurance.

8. How is insuring a condo different than a house?

Condo insurance insures only the contents and liability ( the structure is insured by the association). There are several things I recommend for condos and board members.

9. Do you offer insurance for people building a home?

Yes, people who own property and have a contractor who is going to build their dream home need to get Course of Construction insurance. It covers the dwelling and their liability.

10. If you could ask 10 questions of anyone alive today, who would it be and why?

Being a historical buff and the fact that I am writing this at 10:30pm all the people that are coming to mind are all dead! Ha! There is so much more I want to learn about so many things, I would ask the 1^st person permission to ask 1000 people a hundred questions. I love to read on a variety of subjects so at any one moment the person selected could be an astrophysicist or a kindergarten teacher.