COLUMBUS, OH -- Home Value Protection, a groundbreaking insurance policy that protects homeowners from a loss in home value due to local housing market declines, debuts in Ohio this week, in the initial stage of a national rollout. Ohio is the first state in the country where this insurance for owner-occupied primary residences (single-family homes and condominiums) is being offered.
“This is the first insurance policy developed to help homeowners protect the value of their home from local housing market declines,” said Scott Ryles, CEO of Home Value Insurance Company, a licensed insurance carrier regulated by the Ohio Department of Insurance.
“For most people, their home represents the majority of their net worth,” Ryles explained. “While homeowners have long been able to buy insurance to protect against events like fires and floods, they have never been able to insure the value of their home against future real estate market declines, until now.”
Here is how Home Value Protection insurance works:
Homeowners buy a policy that protects their home’s current value from future declines in their local housing market. If home prices in their area decline and they sell their home for less than the insured home value, the policy will help cover the loss. Homeowners can lock in today’s insured value for 10 years, providing them ongoing protection from an uncertain housing market. If home values appreciate, a homeowner can purchase a new policy with a higher insured home value. For a typical Ohio home, monthly premiums are from $35 to $45 a month. To track housing values, Home Value Protection insurance uses the Case-Shiller® Home Price Index, a leading industry measure that tracks local housing market performance.
“Home Value Protection gives homeowners greater control over their lives and their financial future. They have the flexibility to sell when they want to, or need to, without being hurt by poor real estate market conditions,” Ryles explains. The product has been in development since 2009, when the founders of the company recognized the destructive financial impact that housing market declines have on homeowners and their families.
“While we hope the worst of the decline in home values is over, the uncertainty in the housing market is likely to continue,” he said, noting that home values in Ohio have declined nearly 18 percent from the peak in 2006.
Home Value Protection insurance protects homeowners at all stages of life.
Homebuyers – A key concern of homebuyers is whether home values will continue to decline. Home Value Protection insurance safeguards against that risk. It allows homebuyers, who have typically saved for years for the down payment, to protect their down payment should housing values decline.
Existing homeowners–Most homeowners have significant savings invested in their home. When the housing market is down, those savings are at risk, or substantially diminished, reducing a homeowner’s financial flexibility to move, whether for a new job or to accommodate a growing family. Home Value Protection insurance also safeguards home value when an unexpected event forces the sale of a home, such as job loss, divorce or death of a family member.
Near retirees - Those nearing retirement can protect the portion of their net worth invested in their home, which can be an integral part of their retirement and estate plans.
“The sale of a home is often unanticipated, and people may not foresee the need to move,” said Ryles. “With Home Value Protection, homeowners are not locked in. They have the flexibility to sell their home, even in a down market.”
Home Value Insurance Company, which is incorporated in Ohio, has opened an office in Columbus that is run by Regional Manager David Sanders, an Ohio native. The company is building a network of more than 300 independent agents across the state who will be appointed to sell Home Value Protection insurance.
Ohio was selected as the first state in the country to offer Home Value Protection for several reasons, according to Ryles.
“Ohio has large population centers that are representative of the broader US market, and its homeownership rate of 70 percent is high,” said Ryles.
“The need for insurance to protect the value of your home has never been more acute,” said Eric Hutchinson, co-founder of Home Value Insurance Company. “Prior to the current economic and housing downturn, the vast majority of homeowners had not experienced a prolonged period of housing price declines. Now homeowners and prospective homebuyers understand that home prices can be volatile, and they want to protect against that risk.”
Here is an example of how a Home Value Protection policy works, based on a mid-market Ohio home:
Protected Home Value™:
$ 200,000 (This is the insured value for the home)
Monthly Premium: $ 45
Local Housing Market:
10% decline during coverage period as measured by the Case-Shiller® Home
Home Sale Transaction:
Sales Price: $ 180,000 (sale took place after two-year deductible period)
Loss on Sale: $ 20,000 ($ 200,000 less $180,000)
A Home Value Protection insurance policy covers a loss of up to 25 percent of the Protected Home Value. There is a deductible for the first two years of coverage.
Home Value Protection insurance is available from independent insurance agents in Ohio, through the company’s website, www.HomeValueProtection.com or by calling 1-877-817-9265.
About Home Value Insurance Company
Home Value Protection insurance is a property and casualty insurance policy underwritten and offered by the Home Value Insurance Company. The Home Value Insurance Company is a licensed, admitted carrier in Ohio, regulated by the Ohio Department of Insurance, and is a wholly owned subsidiary of Home Value Protection, Inc. Home Value Protection insurance is not sponsored, endorsed, sold or promoted by Standard & Poor’s, Fiserv, or any of their affiliates, and they make no representation regarding the advisability of purchasing Home Value Protection insurance. Standard & Poor’s®, S&P®, Fiserv®, Case-Shiller®, and related trademarks used with permission.