Questions to ask your insurance agent

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Questions to ask your insurance agent

– Good afternoon, we’re here with Nic Eskew. I’ll let you introduce yourself.

– Hello, everybody. Nic Eskew here with American National Insurance, and I’m glad to be on today.

– Awesome. So, you are still quoting insurance right now, correct?

– We are, yeah. We are quoting and we’re actually really busy. I think your homeowners market is still hot around here, so we’re working a lot with lenders and realtors and buyers, and things are still hoppin’ around here. How are you guys doin’?

– We’re good, yep, I’m still busy. You know me.

– Always, right?

– Yep. So I wanted to have Nic on here today to talk about what questions you should ask your insurance agent when you’re looking for home insurance, and make sure that you’re comparing apples to apples and not apples to oranges.

– Right, that’s a good question. And you know we get that a lot, and it’s important for each homeowners to really go over their quotes that they’re receiving for their individual needs. Because it can be different house by house, there’s different coverages that we can add on. We do a quick quote for a lot of lenders that will provide the most common coverages that we see folks need. And we’re happy to get those out quickly so that you can get some generic numbers and kinda get things rolling with your lender. But we always sit down with our clients and really dive into some of the different things that homeowners insurance covers and what their needs might be, because it could be different from case to case.

– And so I thought we would talk, I’m just gonna ask you this question. Most of us know the general term, but what is homeowners insurance?

– That’s a good one. We do a lotta insurance 101 with our clients because they don’t always know what they’re getting. They know their lender told ’em they needed coverage. So homeowners insurance is really just a property and casualty product policy, and it primarily covers your home and the stuff inside of the home, and then anything on your property, such as fencing, landscaping, shed, if you have one, those types of things are all included under the homeowners plan. So, that’s your basic, if you will, definition of homeowners. And a lot of people get that confused with the insurance that the lender required, so they think, oh, well, we have mortgage insurance. Well, that’s different than the actual homeowners insurance. So we go through that with a lot of our clients and kind of explain that this actually covers your interest in the home, rebuilding the home, replacing your stuff, all of that good stuff that people need coverage for, so.

– And it’s not covering every disaster that could happen, correct?

– Right. Some disasters such as earthquakes, floods, different things require different coverages. And it’s important that you kinda visit about that with your agent and make sure that you have the coverages you think you do, you know? If you’re in an area that’s prone to flooding, you might wanna have that conversation with your agent. We do look up most homes that we quote to see if they’re in a flood plain. The lender checks that. We check out some of that stuff ahead of time. But it’s important to have those conversations. And we usually outline all of that with the new client and talk about earthquakes aren’t covered by your standard homeowners insurance policy. You need to add extra coverage for that or get a separate policy. Same with flooding, which is the rising of groundwater caused by weather-related flooding isn’t covered on a standard policy. So some of those things come up every now and then, and we just talk through ’em. We do have different options, depending on what the clients’ needs are, to add that coverage when they have a need. So it worked out good.

– And since we’re talkin’ about flood–

– Feds, our favorite.

– What?

– Our favorite, right?

– I know, our favorite. So if it’s needed for a FHA loan, then it’s more money. Because it has to follow the national guidelines, governmental guidelines?

– Right, yeah, it can be. So they require, I think the FHA, WCDA, some of those lenders require the federally-backed FEMA product, which does cost a little bit more because it comes with the backing of the federal government. So, it’s really good to know the difference between the two. We’ve had cases where clients have gone clear through the process just to find out the flood insurance they got isn’t the right one, and those rates can really vary. So it’s important to do your homework ahead of time and make sure that you’ve got the right type for the home that you’re buying. ‘Cause it can change, just depending on what area you’re in.

– And if it’s not required, then it’s less money, correct?

– Exactly. And that’s because the risk of it flooding is probably less because it’s not in that flood plain. So they do have some discounted rates. If you’re not in a flood plain, it’s pretty affordable. And there’s cases where a window well might fill up with water from a storm. It comes through the window, comes in, you know that can be considered flooding. So there’s times when it’s good to have that and it’s worth the extra premium, just depending on your situation. So we do go through that scenario with every client that comes in, just to make sure they understand that. Because ya never know.

– Yep. Is homeowners insurance required by law?

– No, unlike car insurance and different things, it’s not required by law. If you own your property free and clear, there’s a good chance that you can decide whether you want to take on that risk yourself or you wanna have insurance involved. However, when you have a loan on the property, you do require homeowners insurance in that case so that the lender is covered. And most people don’t wanna lose their money on their investment, you know? They want to cover it, they wanna have their coverages in place, especially when we’re talkin’ about the whole structure in a total loss or in the case where your belongings are all gone with that, it can really add up. So, most people don’t self-insure on those things. We can take care of it whether you have a loan or not, but it’s not required by law.

– One of the things that gives me a small heart attack is when I’m sitting at the closing table with somebody paying cash and they haven’t set up their insurance yet.

– Right.

– I say okay, stop, everybody stop, call your insurance agent.

– Right, get that done.

– You don’t want it to happen.

– Yeah, we get those calls fairly often where they just hadn’t thought of it because they weren’t asked to get it as part of the loan process, so it kinda gets put on the back burner. So, we do quote those pretty quickly in that case and try and get the coverage in place for those clients so their investment is safe and protected. So, it happens.

– Are their different types of homeowners insurance that you can get, like the general policy without the riders? Or is there just one and then you add the riders on?

– Sure, there’s a different type of form, there’s an SH-3, an SH-4, different types of forms that cover different things. But the important part is, regardless of the form, you wanna make sure it’s endorsed properly to give you things like replacement cost on your building, replacement cost on your roof. Each form kinda has some different coverages. And these days, we don’t really talk a whole lot about forms with the clients and the different types of policies. We just make sure that we’re getting them the right coverage. And most of the time you can add those coverages to either form. So, there are a few different types of policies. Some of those are actual cash value, so they’re just going to pay out with depreciation, which doesn’t replace what you had. So it’s good to have those conversations and make sure that you’ve got a replacement type policy, both on the structure, your contents and on the roof. And we see that quite often where those coverages aren’t there, and folks are upset. So it’s a good idea to ask those questions when you sit down with your agent.

– Actual cash value on roofs has become a little more common lately, right? So, you get–

– Right.

– It’s important to make sure that you have that, that full coverage, correct?

– Right. Yep, and different companies do it a little differently. American National doesn’t write an ACV policy. All of our policies on homeowners lines are replacement cost, but there’s some out there that still will depreciate. The other thing to watch out for is the deductible on those types of things. There’s carriers that’ll do a flat deductible for fire, wind and hail, and then there’s some that’ll do the wind deductible at 2% or 3% or a co-pay. You know, lots of different things can go into that. So part of your discussion should be, in the event of this and this, what am I responsible for and how much money am I gonna have to come up with? Because we’ve seen a few come in where the deductible is $7,000, $8,000 for wind and hail, and they thought they had $1,000 deductible ’cause that’s what it is for fire and theft. So it just kinda confused the situation. So, it’s a great question to ask and make sure that you’ve got that replacement cost coverage and you’re comfortable with the deductible.

– When you are starting this process and you know you purchased your house for, let’s say, $300,000.

– Right.

– How do you decide what you want it covered for, for the replacement cost?

– Right, that’s a good question. There’s some confusion about that because folks think, oh, I need it covered for what I’m paying for it. Well, that doesn’t always work out that way because what you’re paying for doesn’t necessarily mean it’s the same that you’re going to have to pay to replace it. So most insurance companies have a system that they build your house in. So we go in and say what style it is, what the year it was built, what type of flooring, what type of siding. We build the whole house in a replacement cost system, and then that way we can be sure that we’re covering it for the right amount. And also in your loan amount you’ve got the land. And most insurance companies aren’t worrying about the land involved in that transaction because we’re gonna rebuild your house in that same area on the same land. So there’s lots of different things that go into it, but the replacement cost calculator is a great tool for us so that we can make sure they’re covering it for enough and it’s the right type of coverage. So, it works out good. And sometimes we ask 1,000 questions when people call, and they get a little–

– It’s so fun.

– Yeah. They get a little annoyed but we wanna make sure from the start that we’re getting all the information that we can in giving an accurate proposal. And we wanna make sure there’s enough coverage there because nobody wants to write a check for the difference if there’s not. So, it’s an important thing to go over.

– And I just thought of something. When people are building a shop or something on their land, they wanna make sure they call and tell you, correct? Because–

– Absolutely.

– If you don’t have that and, I mean, for heaven sakes, it all burns down or something, you’re not covered on that other structure unless you added it.

– That’s correct. There’s some extensions that would apply for a little bit of coverage, but it’s a really good idea to have that conversation before you’re building it. Let your insurance company know the size and what you’re gonna be doing with it so that we can get that covered beforehand. It happens sometimes even with upgrades to your home, it’s important throughout the year. If you went from vinyl flooring to hardwood and you really increased the value of that, we need to know about those changes so we can make sure that replacement cost is accurate. That could be laminate countertops to granite. Any improvements like that we really wanna make sure that they’re letting us know about that and we can make the necessary changes throughout the year. Also, it’s important to do a review with your agent. So you set everything up five years ago with your agent and you haven’t talked to him since, you probably should give him a call. They should be reaching out to you occasionally, just reviewing those things and making sure nothing has changed. We see that happen with scheduled personal property sometimes too, where you might get a new diamond wedding band on an anniversary, it’s high value, it’s a good idea to call your agent, let him know, and make the changes to the policy so that’s covered. So, lots of good info and a review can really bring out a lot of those things.

– How do you make sure that a diamond ring or a piece of jewelry is covered?

– You bet. Every policy is a little bit different, so you’d have to kinda read your policy language. It usually will cover for a percentage for the theft of that type of a jewelry, watches, furs, art, that kinda thing. So we can actually schedule those items on your policy for you, and we just do a Quick Change form, we get a copy of the appraisal on the item or a receipt if you recently bought it. And we can schedule that right on the policy so we know exactly what the value was, exactly what the ring was or whatever the case, and you can be assured that it’s covered that way.

– Good. So one of the things on the homeowners policy is liability. So let’s talk a little bit about liability.

– Absolutely. Liability will extend in a case where you’re involved in a lawsuit maybe regarding the house, somebody gets hurt. And it protects your assets in the event of a lawsuit pertaining to that property. It can follow you as well. So, say you’ve done something on a vacation or somewhere, pushed somebody down the stairs and you’re being sued, don’t do that, it’s not good, but it can follow you. So it’s dependent on your assets how much coverage you have. And we’re usually gonna have the conversation when clients come in, so we can be sure there’s enough coverage there. A lot of limits start at $100,000 and we can go clear up into the millions, just depending on each person’s situation. But it’s really when you’re in a position where there’s neglect. So we tell the story of you leave a lawnmower outside, somebody comes along and trips on it, you’re negligent because you left that out, it’s hazardous, it’s a nuisance, you could be sued for that. So, it’s good to make sure you have enough liability limits there when you’re at fault for the accident.

– Are there, Tom just said don’t push people down the stairs.

– Don’t do it, don’t do it.

– Are there liability limits?

– There are, yep, there’s different limits and it just depends on the individual client’s assets. And we can talk about that with a client. Usually they start around $100,000 and we can go up from there case by case. But it’s important to have that. And most policies will come with some. No matter what, you’ll have some coverage. But make sure that it’s enough.

– I’d like to go back to the home part of this now.

– Okay.

– Let’s talk about the riders that you can add. I believe it’s called backup sewer and drain?

– That’s one, yep.

– One, that’s one.

– And that’s one that does, yeah, yeah.

– The important one.

– That’s one important one. Yeah, yeah, nobody likes to get those calls about a backup in the home. It’s never fun for the client to have to deal with. A standard homeowners insurance policy doesn’t come with water and sewer backup. So it has coverage for a sudden loss, like a pipe broke suddenly and it flooded. The water and sewer backup many times, not always, but generally it comes back to a maintenance problem. So they didn’t get the line cleaned, they had roots they didn’t know about. So it’s not automatically covered. So we do visit with clients about that when they’re starting their policy. Are they in a big tree area? Did they have the inspection done on the line? Did they run the camera through where are we at? And it’s important to make sure that it’s a covered peril that you talk about because nobody wants to deal with that mess. There’s other endorsements. I know we’ve talked quite a bit about like the service line coverage that actually covers the line, the sewer line, the water line, the power line. All those lines to the house can be covered with an endorsement. So, if you’re concerned about that, those sewers can be, that line can be $8,000 to $10,000 real quick. So, we can add endorsements for that. We have the mechanical breakdown coverage that’ll actually cover your furnance, your AC, any of the units in the house that make the house run. That can be covered. Guns, jewelry, watches, furs are all endorsements that we speak to a lot of clients about, and we can add extra coverage for that. So, a lot of good things that you can go through and visit about. Our company’s proposal’s very thorough and it lists that out right on the proposal, so that you can see the additional things that we need to visit about. And my staff’s really good about sitting down with clients and discussing those things, because we wanna make sure that they’re covered right, so.

– Tom said that, he’s asking a question, many times you can purchase a third party insurance policy from the utility company. Do you think those have enough coverage? Or is this something that, or you do both or?

– Yeah, I haven’t specifically gone through the third party policy. We do have a lotta clients that will go ahead and add that on. I think the utility company does that for you, and it’ll cover the lines. So it’s good to have that. I’m not sure what the amount of coverage is. Ours maxes out at $10,000, so it does give you quite a bit of coverage. And with American National, it’s included on every homeowners policy. So it’s not something that you have to add. It’s just part of our package policy, along with that mechanical breakdown coverage for the furnace. So, a lotta folks will elect to go with that instead of adding that extra coverage at an additional cost, but it probably isn’t worth, it’s worth looking at and just seeing what they would cover and what the costs are. It’s a good idea.

– Lots of people wanna know how do I get a discount? How do I get a discount on my home insurance?

– Right, well, I would say bundling. That’s kind of a hot word these days. Bundling gives you the most discounts. So if you can bundle with your auto, with your life insurance, with your four-wheelers, usually the more lines that you have, the more discounts the company will give you because they want all of your business. So, it works really well to do that. Other discounts would be how old some of your utilities are. How old’s the furnace, how old’s the AC, how old is the roof, which is a huge one. Insurance companies spend a lot of their time with claims on roofs. So if you have a newer, nice roof put on, companies can provide a great discount for having that. Otherwise, it just really depends on each client’s specifics, where they’re at with their claims history, insurance risk score, all that good stuff is put into it. But those are, the most common discounts are for bundling and the utilities discount for having a newer roof or furnace or air conditioning system. So those work out really good. The other one now is the surveillance equipment. So the alarms and things in the house. The Ring camera now qualifies with our company for a nice discount for the protective device. And a lot of people are putting those on. Just the doorbell camera can give you discount on your homeowners insurance. So it’s a good idea to talk to your agent and see what they offer you.

– Definitely.

– Yep.

– There’s been a lot more talk lately, especially with a couple of my clients, about umbrella policies. So will you kind of explain what that is and how that works?

– Yeah, sure. That’s great that they’re visiting about that. And it’s something that a lot of clients miss and might not know about. We try to have that conversation when they’re in. But basically, an umbrella policy will offer extra liability coverage over and above what’s already covered by your standard policies with the carrier. So, for example, your homeowners policy, we talked about liability. If you have $100,000 there, that got exhausted for some reason, the umbrella could go over and above that, and provide more liability coverage to protect your assets. Most companies will require a minimum now. You have to have minimum liability coverages of some type on your auto and your home before you qualify for an umbrella, ’cause they wanna make sure that you’re covered there with enough liability coverage first. But really think of it just as an umbrella over and above all of your liability risks that are with that carrier. And it’s really a good idea if you have assets to protect that. They’re very reasonable to add on. And it just goes over and above the rest of those policies, helps avoid those lawsuits. If you have teen drivers in the house, own quite a few different properties, have equity in your properties, it’s a good idea to protect that further. And we do those on the commercial level as well. So we can do an umbrella over and above for your business policies and whatnot. So it’s a good idea to have that conversation no matter what product you’re looking at, and make sure that the liability’s there. And the umbrella is just nice peace of mind to know that you’re protecting your assets. It just takes one missed stop sign to hurt somebody and you don’t know what’s gonna happen. So if they’re hurt badly, your auto policy gets exhausted, the umbrella could be there to kick in and assist you. Does that make sense?

– Yes.

– Okay.

– How do people go about, when they’re first-time home buyers, and really don’t know where to start to get a homeowner policy, so what, when they call you, what do they?

– It’s best to gather up their personal information. Most carriers are gonna need the full name that’s gonna be on the loan, their current address, their personal information. That’s the easy part. And then with technology today, we can usually get online and figure out most of the details about the house. So we make it pretty easy. It’s just usually a quick phone call, give us some personal information, and then we go to work building that in their replacement cost system, and working with your lender to see what any requirements they might have. But you can do it as easy as a phone call. We do like to meet in the office once that’s ready, so we can go over those coverages. Right now we’re doing that by Skype and phone and e-mail, and doing some different things. But we love to sit down face-to-face. And it’s important that you do that. You don’t wanna just take the cheapest quote that you got and run with it because you’re not sure if it’s really fitting what you need specifically. So, that’s prettu much it these days. If you wanna include auto and some different things, it’s good to get together those current policies and have those coverages available, VIN numbers, just the details about the vehicles. We have access to some of that now in a database, so it’s just gotten easier and easier to do a quote and get a comparison put together for you.

– Awesome. Is there anything else you wanna add, Nic?

– I don’t think so. I think that is a good insurance 101. I think we talked about the need for clients to make sure they understand their deductible. I think that’s somethin’ we’ve ran across a few times with different clients we’ve worked on together, that they had no idea they had the higher wind and hail deductible. So, I would make sure that folks know to talk about those deductibles ahead of time, talk about the endorsements and make sure everything’s set up how they want it to be. Most insurance policies are fairly customizable, so we can add things and take care of those coverages, so. What about you, any other questions?

– No, I think it’s totally important to always read what you’re signing. I talk to my clients about that a lot. I recently had a gal who just, she’s, “No, I trust you.” Well, I love that you trust me but you’ve only known me two weeks. And you have to, I love that but I wanna show you where, I mean anybody can make a mistake.

– Right.

– You’ve got to understand what you’re signing before you sign it, every time.

– Yeah, I agree. And the other thing with that is, when you get the policy in the mail after you’ve done everything and signed it up, look through it. Look through and read it. It’s dry, it’s not the most entertaining stuff, but we get a lot of people that never read the policy and they have no idea that this is covered or that wasn’t covered. So, it’s a good insured responsibility thing to read your policies when they come in and make sure that you’re on the same page with your agent and your company. And that can save you some claims questions and headache down the road.

– Well, Nic, thank you very much. You did a amazing job and you can tell you really know the insurance business. And thank you for, also, hopefully, we’re entertaining all of you while some of you are stuck at home.

– Right.

– We’re gonna do this every day at 4:00. It will be someone else, someone new with me every time. And we have a pretty good lineup comin’ up in the next week. So, thank you, Nic.

– Yes, thanks for havin’ me. We appreciate all you do. Take care.

– Bye.