Most people don't think about insurance until they have a loss in Hawaii, but by then it's too late.
Here is the perfect example since we all celebrating how our home values have risen from 2010 to 2022 in Hawaii. Regardless of which island we are pointing the finger at: Oahu, Maui, Kauai, or Hawaii ( Big Island ), simply all of them have risen.
Many of us purchased homes in 2012 or later ( for example ) for $500,000.00 and the same home is worth in 2022 ( for example ) $1,000,000.00.
What an Accomplishment the market has done in Hawaii $500,000.00 Equity Hurray !!!!
Here is the Issue for some individuals on the Islands, the Mortgage loan on the property is ( for example ) $400,000.00 with the remaining balance. So Now it happened: A Fire or Flood Damage right in time you have been on Vacation and when you return, your Property is completely ready for Demolishment in Hawaii.
At the time of purchase, when the insurance was provided you with the Insurance Binder, your home was covered at a replacement Value at ( for example +-) at $325,000.00. All this sounds pretty reasonable however since Covid 19 hit the World, the price of Lumber, Building costs have risen, along with the increasing Labor Cost. In order to rebuild this home, the Architect's Quotes have been between ( for example ) $625,000.00 to $650,000.00.
Now the Owner of the home is in shock, because his
Example Calculation :
- 2022 Value $1,000,000.00
- Current Mortgage ( Minus) $ 400,000.00 Owed
- Replacement Value ( Plus ) $ 350,000.00
- Rebuild House Today ( Minus) $ 650,000.00
Total +- / Rebuild ( Minus ) $ 700,000.00 New Balance Owed
As you can see, before the person owned a Mortgage at $400,000.00 and now they own $700,000,00 since the Insurance was set for Replacement Value and did not adjust in this example very much.
Here is my advice to all Homeowners and Condo Associations to check your coverage with your agent every year. Also, besure to ask your agent for an " Umbrella" policy, These can offer extra liability coverage for not a lot of extra cash.
Now should you be in this situation of a Total Tear Down because of Flood Damage, Fire, or other circumstances, there are Mortgage options available, however, may not be as nice Mortgage rates as they have been in the past.
What I am referring to is a Construction Loan that can take care of the rebuild, and possibly take care of a Needed Rebuild for the better. All of this obviously has to be evaluated from case to case situation.
In essence :
Do an Insurance Checkup with your Agent
or
Call me for a Construction Rebuild Mortgage Loan.
* Note: Our Company is not an insurance provider, consult your insurance agent for details.
Here are some great Agents:
Kit Okasaki Statefarm Insurance
Matthew Arine, CPCU (808) 389-2625 E-Mail: marine@atlasinsurance.com
Ivy Costa 808-853-7760 Direct Ivy@MutualUnderwriters.com
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