The Jason Theory
Jason Stratton of KlopasStratton Team, a top 20 team in the nation with over 1.2 billion sold , sits down with weekly guests to talk about becoming successful, the real estate market, and crazy stories/people we run into. Visit www.klopasstratton.com to see more!
The Jason Theory
S3 E12 Renters Insurance to Homeowners Insurance - Understanding This Before Its To Late.
Unlock the secrets to safeguarding your assets with insights from Kelly Weiss of BCU Risk Advisors. This episode promises to equip you with the knowledge to navigate the often-overlooked complexities of insurance, especially if you're a young adult stepping into your first rental home. Discover why renter's insurance is not just a necessity but a crucial shield against unexpected damages like fire or water damage, with expert advice on securing a minimum coverage of $50,000 to protect your personal belongings.
Explore the nuanced world of property insurance and liability issues, which are particularly pertinent for those living in multi-unit buildings or unique living spaces like duplex down units. Kelly Weiss helps us unravel the intricacies of insurance clauses, bylaw responsibilities, and the waiver of subrogation, offering critical insights into how these elements affect your coverage and financial peace of mind. Understand the challenges faced by Chicago residents and learn how to avoid costly surprises by being proactive and well-informed about your insurance policies.
Finally, we shed light on the often-misunderstood realm of condo insurance bylaws and coverage, emphasizing the importance of knowing your obligations in relation to common elements like windows. With Kelly's expertise, you'll also gain clarity on the significant distinctions between water backup and flooding, and why adequate insurance for below-grade spaces and water-related incidents is vital. This episode is your comprehensive guide to making informed insurance decisions, ensuring you and your assets are well-protected against the unpredictable nature of claims and coverage gaps in today's insurance landscape.
So let's talk about the issues that what the flat roofs in Chicago.
Speaker 2:Yes, okay. So they have identified through years of experience, right In actuarial data, that flat roofs in areas where you have cold weather climates don't perform well. A flat roof over the age of 10 is going to be, for the most part, unacceptable, and it's going to be. It's as it's not going to be a rider where you add it back. It's going to be more like, if they're going to offer it, they're just going to exclude roof claims. So it's going to be just reducing the coverage as opposed to giving you the opportunity to add it back.
Speaker 1:So they'll still insure the house, just like anything from the roof. You're shut out of luck. Yes, what's the five Ps? Do you remember it?
Speaker 2:proper preparation prevents poor performance there you go.
Speaker 1:it doesn't matter how much money we get, if we don't close, it's no money right. So no clothes is no money. I'm everything that I am because of my dad's death, and I wouldn't be as successful without his death. Hello and welcome to the jason Theory, season two, and we're almost at the end of it. I'm very interested in who we have today. This is Kelly Weiss from BCU Risk Investments. Was that all together? Advisors, advisors, and we're going to talk about insurance, primarily stuff that has to do with the house, home. We'll get into some car stuff, some things that are going on in the industry, and what I really want to get done here is for someone like myself when I buy or I rent, we'll get into renter's insurance too, because that's very important. You know, everyone comes into this ignorant in the true sense of the word, like no one really buys a house and says, oh, I need, I know everything I need to do. Um, I think that occurs once you have something catastrophic that happens and you're like oh, I should have done this, this, this, this.
Speaker 1:So, instead of being reactive, um, we're going to try to get people to be proactive, right Cause that's what you want to do. Well, at least that's what I tell my kids. So that's what we want to do here, and tell us a little about yourself, and we'll just dive right into what people literally need to be doing to make sure they're protected in their life.
Speaker 2:Yeah, so BC risk advisors, long story short, is a boutique insurance brokerage. So what that means is that we work with a bunch of different carriers. For us particularly, we work in the high-end space, so the carriers have minimums of what they'll insure, their threshold of $1.5 million or $2 million or whatever it happens to be, and we specialize in sort of custom solutions for our clients and education, as you touched on. I mean, we always joke that there's always this gap in life between things that you should, things you're taught in school, and the things you really need to know to be successful in life and insurance. Nobody teaches you that right, like there's no class in high school, there's no class in college. You have to seek it out If your parents don't tell you about it or your family nobody understands.
Speaker 2:Yeah, yeah, that really understanding what does liability mean, what are my exposures, those types of things. So. So a big part of what we do is when somebody comes through our door, as we like to educate them on. This is why you need this, this is what this is for, and then everything from there is kind of smooth sailing once you have an understanding for and then everything from there is kind of smooth sailing once you have an understanding.
Speaker 1:So, like, if we can start from the get-go. When somebody and I know this is not really your space right now because you're on the higher end stuff but when someone decides, hey, listen, I'm, you know, I'm moving out of mom and pop's house, I'm leaving college, whatever it is, and they turn around and they rent a place, a lot of people don't know what renter's insurance is and why you need renter's insurance. So can you just go into that space for a little bit? What I thought we'd do is we'd progress with a person in their life to get to the spot where you are. We're like, hey, you have a ton of valuables and are you protected properly on those valuables?
Speaker 2:Yes, yeah, ton of valuables. And are you protected properly on those valuables? Yes, yeah. So I mean really the first stage when you, like you said you know, getting out of school, leaving mom and dad's place, you need insurance to cover your stuff and certainly anywhere that you rent. Right, it's going to be a condition with with most apartment complex or leases that you sign and, and you know from the basics, it's contents coverage, right, you want-.
Speaker 1:So contents explain.
Speaker 2:Contents are anything that you would take with you if you moved.
Speaker 1:Okay, your computer, your clothes, dishes, clothing shoes, dishes.
Speaker 2:People don't think about all the kitchen gadgets, those types of things. And then, of course, furniture and decorations and all those sorts of things, and it is something that people tend to undervalue how much it would cost to replace those things. And it doesn't matter if you're a small renter or you know a multimillion dollar home, people tend to underestimate what it actually costs. So for any kid you know we do Gen Gen 2, gen 3 for our families For any kid coming out, minimum base minimum we want $50,000 of contents insurance and you know that just ensures that if there's water damage or a fire or anything like that, that you can replace what you have to live in your space.
Speaker 1:So when there's, when there's and what like, hold on, let me back that up, just so people have a context of of costs, $50,000 worth of content insurance. Obviously, there's other things that you know. Where you live, you know, are you in the swamp, Are you in the city?
Speaker 2:Are you in the play, yeah.
Speaker 1:So obviously that plays in, but on average, what are you talking about when you're talking about content insurance of $50,000 for a renter?
Speaker 2:So I mean, that is that's. That would be for like a kid starting out. Right, they've got a couch.
Speaker 1:What does that run?
Speaker 2:Yeah, so you know generally.
Speaker 1:On average like just a couple hundred bucks a year. So it's.
Speaker 2:Three to four hundred bucks a year.
Speaker 1:So it's nothing. It's basically nothing right, yeah, okay, it's a couple of coffees a month or something like that. Okay, that's what I want to tell people, in case stuff happens. One Starbucks a month is all you need.
Speaker 2:Yes, yes, and then, of course, to go along with that, the other. Anytime you see a declarations page, which is the page you get from the insurance company that says here's your coverage. Contents are first. Next, you're going to see loss of use, which is important. People don't think about this. If there is a loss at your location and you have to move out, right Water damage or a fire your insurance carrier, if you have that coverage, will pay for you to live somewhere else.
Speaker 1:comparable I mean that's huge, people don't think about that. People don't think about that. I would have never said that was part of that insurance. And right now, because I know as my owner's insurance, I have that right. I need to move somewhere else. You know, and the good insurance carriers like where do you leave go?
Speaker 2:Yep, and depending on where you live, I mean that could be a huge expense. You know folks out in California, right, these fires come through, there are minimal places even available to rent when these, after these homes burned down. I mean we have seen monthly expenses, monthly rental expenses to live elsewhere, of $50,000 a month.
Speaker 1:I mean it can be massive, it can be millions of dollars at the end of the day, depending on what your lifestyle is and stuff like that.
Speaker 2:Exactly, exactly. So that's another coverage that comes with it. You don't think about it until you have a loss and all of a sudden you have to move out, and what the heck are you going to do? Right? And then the other piece is liability.
Speaker 1:I was going to ask you if liability was wrapped in that.
Speaker 2:Yes, so liability will always be wrapped in your primary, what we call homeowners, and that includes renters condo actual freestanding homes. So liability is what protects you against a lawsuit brought against you.
Speaker 1:Yeah, against an idiot.
Speaker 2:Yep against an idiot and it could be a slip and fall at your house. Or you throw a party and someone leaves drunk and causes an accident.
Speaker 1:So if someone's, if someone's of age and they leave your house after drinking and they go in a car, they can they, can they sue you?
Speaker 2:They can. So we always say a good lawyer is going to throw the book at everybody.
Speaker 1:Yeah, I mean anybody they can, especially if they know you have insurance.
Speaker 2:Exactly, especially if you have insurance and even if even if it wasn't really your fault you're going to incur defense costs.
Speaker 1:Oh, yeah, trust me.
Speaker 2:Just yeah, right yeah, just to defend yourself and get yourself out of the suit, so you know. So liability insurance is and especially in America it's extremely litigious, right. Everybody's suing everybody for anything.
Speaker 1:Well, your liability insurance, like cause Chicago is so litigious. Is that will that? Will there'll be a premium on being in Chicago versus like a like a litigious place versus a non litigious place? Do those?
Speaker 2:you know that that's a great question. I do know in in Chicago it's it's honestly, the liability piece on a policy is not the biggest part of the premium.
Speaker 1:Yeah, I know, it's really small.
Speaker 2:Right, yeah, so I think the only places where I can really think the state of Nevada is like massively, like they have the highest rate of lawsuits. I know, isn't it? It's odd Someone said everywhere you drive it's just attorney billboards everywhere. That's a state where, like, the liability might be jacked up a little bit, okay, but for the most part the liability portion is going to be standard on your primary homeowner's policy. Now, if we talk about excess or umbrella, liability.
Speaker 1:That's kind of a different conversation.
Speaker 2:Yeah, that's where the rating becomes a little more customized. Liability that's kind of a different conversation. Yeah, that's where the rating becomes a little more customized, but yeah, but that piece is just in terms of protecting yourself from any, any sort of worst case scenario where you hurt somebody, or even if you don't, they're just pissed off and they want to, you know, drag you into something.
Speaker 1:The question. I will tell you the question I always get and we'll we'll go to it as I mean. I just don't want to forget it because literally this is the question I get, maybe eight or nine times a year. I will tell you when something occurs in a homeowner's or a renter's. The first call they make I don't know why is always to me. Thank you very much. I appreciate that. I'm on top of mine and I do want you to be crippled, so you have to call me for everything.
Speaker 2:That's what my financial advisor I'm like. I'm always like.
Speaker 1:I'm like Andy, what's this mean? He goes. You don't need to know. He goes, cause the more you know, the less you. Your place Is the insurance on the person above you, that's the person that's liable. Does your renter's insurance like? How does that like because you don't want your premium to go up right and you have a deductible? Like how does that happen when you have insurance on your items and someone else ruins your items in your apartment?
Speaker 2:So that's a great question and that ends up kind of in this goes for renters or if you own, a condo.
Speaker 1:Same thing. I don't want to forget it. I'm bringing it up now but I know it's for both.
Speaker 2:Yeah. So the first question we ask when something like that happens when water is coming from another unit is what do your bylaws say Right? So is coming from another unit is what do your bylaws say right? So what does your condo association have in writing? Or what does your lease agreement say? Most condo associations will have a sort of a subrogation clause where they say unit owners are responsible for their unit. Specifically, you cannot subrogate against another unit regardless of fault, and it's really put in a place for those exact scenarios.
Speaker 1:So if that's the norm.
Speaker 2:Yep, so it's very common in Chicago there are. There are units or buildings where they don't have that in place and you can absolutely say listen, this was your toilet that overflowed and it damaged my unit. Your insurance is needs to pay, right? So then you place the claim through their insurance and you kind of go through the whole rigmarole and and it get it paid that way. We've seen it both ways. So that's the first question is understanding, or the first thing to know is understanding how your bylaws are written, if you own a condo or if you're in a rental where there's multiple units, wonder if I've never rented in a multi-unit.
Speaker 1:that's a high rise. I wonder, like, when you sign your documents, if there is a rule list. Hey, if there's damage, like I wonder if they go through that. I know you have to have renter's insurance, so maybe they're like, hey, you know it's, you're on your own and you better have insurance that covers it.
Speaker 2:Yeah, so I and any lease agreement that you sign will have the insurance clause in there and they'll state exactly the minimum that you need to have.
Speaker 1:You're talking one of these bigger like a lease? Yeah, because the car, the lease agreement from Chicago, does not have that.
Speaker 2:That's just it doesn't talk, it's just, it's just the lease agreement.
Speaker 1:It's like what's, what is the like? What is this understanding heat electric? This stuff they don't go into? Like what is this understanding heat electric this?
Speaker 2:stuff they don't go in for the renter.
Speaker 1:Yeah, they don't go into if something happens.
Speaker 2:Yeah. So then, in that case, I mean it's the owner's fault. Yeah, yeah, in that case it might just defer back to the, the, the owner of the unit, the bylaws that they have an agreement with the association. Ok, OK so if you know, if that that subrogation clause is in place and everybody's responsible for their own part of, you know, of the building their own units, then the renter would be responsible for their own.
Speaker 1:Does the insurance company take a look when they insure something? Do they say, hey, let me see your bylaws so we can tell what our liability is?
Speaker 2:or Nope, they don't. They don't. There's generally a question on the agent side or on the broker side that says you know, have you reviewed the bylaws?
Speaker 1:Yes or no?
Speaker 2:But no, it comes down to and it's because every building can be different, I can just tell you. You know, typically in Chicago we see it, where most often you're responsible for your own unit had a claim in New York City, though, and he was able to go against his neighbor and get you know full, fully reimbursed for all of his damages from his neighbor. So it's just going to depend on the building. So it's just something important to be aware of when you're signing for a unit.
Speaker 1:Interesting. I would think that they would want to maybe be able to get a little bit more in depth than who the liability is, so the insurance prices could change. Like a person that doesn't get into a car wreck, they may get a lower rate than someone that's had issues.
Speaker 2:Yeah, yeah. So really the only place where this might be getting a little too detailed, but the only place where waiver of subrogation affects the pricing. I mean, ultimately the carriers probably they're going to price, assuming that they're going to be on the hook for anything that happens.
Speaker 1:So they're doing worst price, assuming that they're going to be on the hook for anything that happens.
Speaker 2:And that's just a worst case scenario. Okay, waiver of subrogation also comes into play. If you're doing renovations on a home or something like that and you have that between you and your contractor, that can affect pricing. Okay, meaning you can't go against the contractor if there's an issue during a build or during renovation, that kind of thing, and that does affect the pricing.
Speaker 1:All right. So the next thing is you've you've got your rent insurance. You're doing well. You want to buy your own place.
Speaker 1:I want to focus in on duplex downs because those seem to be the biggest right. Let's say duplex downs. Those people take the biggest brunt of everything. When the roof leaks, it's a duplex down. When the foundation leaks, it's a duplex down. When the foundation leaks, it's a duplex down. When the city turns off the sewers or there's an issue with the battery backup or the sub or the ejector, the duplex down. So that's kind of when you start getting into, all right, the roof is an issue, it drives all the way down, it goes through, but it settles on the duplex down people.
Speaker 1:Let's talk about the insurance that people should be having if they have a below grade portion to their house. Because I remember when I the first time I bought a duplex down, I went from a top floor. I needed more space and I got insurance. I think it was through maybe state farm. This is years ago and no one brought to my attention the backup for the, for sewer and for this and for that. And when I asked the person, I'm like you know, I, you know I'm in a below grade, and the first thing he said to me is like you know, they ask us not to bring it up. That's literally what he said to me yes, and it, and it was like only a $20,000 worth of coverage.
Speaker 1:I'm like, bro, this is half of my house, that's that's exactly right, yeah, so so that is yeah, that's kind of what I cause people. That's what, like every phone call I get from a two bucks down person, oh, you know, the roof leak, this happened, this happened, and you know whose fault is it Jason Yep, and I'm like man and I'm like man, I'm like it's from the roof. I'm like it's a common element yep, yeah, so, um, those are.
Speaker 2:So. So the the roof down scenario and then sort of like water backup are yeah.
Speaker 1:So let's do. Yeah, let's do different. Let's do ice damming or roof issue or stuff like that so.
Speaker 2:So, like in a so and you're just talking like in a multi-use.
Speaker 1:Yeah, multi-family building. Yeah, three flat condo building, which is 60% of the inventory here.
Speaker 2:Yeah, so again, in that sort of scenario, we're going to defer to the bylaws first, Right? So if it's found that the association was negligent in repairing the roof or something of that nature, right, there's recourse. There may be recourse where you can go against the association's insurance to have your unit repaired and then that's your common insurance and that is yes. So that's going to be like the, the association's common element insurance. So they're insuring the whole shell of the building so you got.
Speaker 1:I mean just to hit on again because you have to read the decks and bylaws and where would have to read the decks and bylaws and where would that be in the decks and bylaws? Would that be under, because it doesn't say insurance, but probably under like common elements?
Speaker 2:Yes.
Speaker 1:Okay.
Speaker 2:Yeah, so sometimes under insurance they will state what the unit owner or the lesser is responsible for, and then they will also state what the association is for or what the association is responsible for yeah, most associations is studs in, so like behind the drywall.
Speaker 1:Or sometimes I've seen it where the association does a drywall but not the paint.
Speaker 2:Yes, so, yeah, so paint is considered a finish. Yeah, yeah, yes, yes so dry.
Speaker 1:so studs in is your common insurance, studs out, paint out is your own.
Speaker 2:Yes.
Speaker 1:Yes, okay.
Speaker 2:Yeah, so we always tell people to think of it like if the whole kind of building burned down, they would give you a white box.
Speaker 1:Cool, then you finish it out.
Speaker 2:And you're responsible for everything else inside of it.
Speaker 1:Okay, so the water's coming from the downstairs. It hits there. You want to look at the decks and bylaws.
Speaker 2:Yeah, so that's going to be the first place to start, and if it's clearly written that you can't go against the association for X, y and Z, then your insurance is responsible for it. If there is-.
Speaker 1:Negligence of how about if it's negligence of the second floor or the third floor? Or someone on the rooftop deck that does something that's not to code or it's not done right, and all of a sudden that individual has made the damages, then do you go after that person's insurance.
Speaker 2:So if the bylaws clearly state that you can't subrogate against another unit owner, you're probably going to hit a wall. You're not going to be able to do it.
Speaker 1:Yep, you're probably going to hit a wall. You're not going to be able to do it, Yep, and if it does say that you can, what is the process in terms of like getting when time is of the essence? What is the process? Is it? Does the insurance company say, hey, we're going to take care of this, and then, you know, I still haven't gotten paid on that car. So I'm thinking about that, right? Yeah, yes, so I paid all that and they're still fighting to give me the money.
Speaker 2:Yep, so there there's two routes.
Speaker 1:Who is that person?
Speaker 2:There's, I know, I know. So there's. What the fuck is this fucking?
Speaker 1:woman. I met her you had a tough case.
Speaker 2:You're like I know what you look like. You had a tough case and and and We'll go to that later.
Speaker 2:Yeah, so that that that is again subrogation, but that deals we're talking about between two carriers at that point. So anytime you have a claim, you have two options A claim where you're not at fault or something happens to you right from someone else's issue, or negligence, or what have you. You have the option to go against their insurance carrier and that could be home or auto right, somebody rear ends you same thing and to go through their insurance and then their insurance. You're dealing with their adjuster and their service and they are either reimbursing you or paying out for your damages. Right, that avenue is favorable because it keeps a claim off of your record.
Speaker 1:So it's so you want to push for that. You don't want to say, let me do it, my insurance will do it, and then I'll get rebated. You don't want to go that route.
Speaker 2:Yeah, for stuff where it's really cut and dry, it's like you were at fault or this was obvious negligence, right, and the other carriers like we, accept liability. Yes, we want you to do that ideally right, because we want to keep claims off your record.
Speaker 1:If you are part of the same. A lot of people in the condo world have state farm like have a little bit more of a low, not lower, end, but more common insurance. I remember when I had state farm and I had an issue from the person upstairs they're like oh, you're both state farm, it'll be handled in house.
Speaker 2:Yeah.
Speaker 1:Now, is that docking me, or are they docking them, since it's in-house?
Speaker 2:So I mean in-house. They probably put it on the other unit. Okay yeah. You might have gotten lucky there. That was probably lucky that you both had safe arm yeah it like, you're like. Oh, we're both safe arm yep, yeah, safe arms, like we're paying regardless.
Speaker 1:So yeah, you know so we want so, like the, the number one thing here is what this is good is try to keep it on the person that affected you on their insurance. Don't try to take it on if the other insurance or the other person says, hey, why don't you pay it, and then you can, and then we'll, and then they'll like, because I remember sometimes it would be like, hey, you pay, and then they'll, they'll pay they'll reimburse you.
Speaker 2:Yes, and then I've had the association reimburse me on my deductible yes, so I've had it like so yeah, so so there's a, there are, and again, and so that was in your bylaws, there was there was something in the bylaws that said you were eligible for reimbursement. I may have jumped around a little too much, no, but you were eligible for reimbursement from the association if it was an association common element that caused.
Speaker 1:That's what it was.
Speaker 2:Yes, that caused so again. Bylaws right, super important. I know it's a drag to read for anybody signing and it's overwhelming, certainly if you're buying your first place.
Speaker 1:I always look at, I always read what common, what are common, what is common, what is common, what is.
Speaker 2:Yeah, what are they responsible for?
Speaker 1:that's exactly right is the doors common? That's like.
Speaker 2:I'm like just if you just read one thing, read what the common elements are and don't assume right, don't assume that you're not responsible for that window, because we have seen cases where it's a massive condo building and you are responsible for the windows yeah, the window cracked and he had to replace it.
Speaker 2:I mean. So, don't assume anything and read it. What are the common elements when it comes to insurance? Who's responsible for what, and is there a subrogation clause between you know, the association or another unit? How does that look Right? Those are kind of the three main elements to be aware of, because that it will affect how your insurance is going to respond.
Speaker 1:So the water comes down to feedback, to that. The water comes down. It's HOA. They are responsible. What we want to do is make sure that the person on the second floor is the one making the payments, not you. And then you want to deal because it always seems like. It always seems like this. But when I'm talking to people like, oh yeah, you know, my insurance said they'll send their person out and they'll go after that person, but you don't want to do that.
Speaker 2:You so, because I've had friends.
Speaker 1:I've had friends that have been dropped and it's not their fault.
Speaker 2:Yes, so that is exactly it, and I would say, in the market today, insurance companies are the carriers are desperate to stay profitable right now. Right, I mean, everyone can see what's going on, just with fires and hurricanes and flooding and all that kind of stuff.
Speaker 2:Right. So every natural event, natural disaster event affects the insurance industry in some way, so they're desperate to stay profitable. So our recommendation is typically, if you are not at fault and it's pretty cut and dry who is at fault we want you to pursue the other party's insurance. First, because having claims on your account is just it's not good. It's not good for you short term and it's not good for you long term. You're going to get surcharged and they're going to look at it for the next five to seven years every carrier and they could determine that you're not eligible for coverage and it's just really impactful, especially now, having claims. So first step if you're not at fault, try to pursue the other party's insurance.
Speaker 1:Now how do you get, how do you get insured properly on that basement, like when you like a duplex down? You know your bedrooms are down there. It's half of your house and the insurance carriers look at it as a basement but it's not.
Speaker 2:Yeah, so so really I mean the term basement.
Speaker 1:Really what it means is just Below grade, below grade Yep, just either partially or entirely below grade. So how do people get insured properly for below grade space?
Speaker 2:Yes. So a big part of that is the agent needs to be aware of that, right, and I can tell you behind the scenes, anytime we get a home, we're going to go online and we're going to look at it and certainly, for you know condos in Chicago, I can see if it's, you know, first floor unit, and then you've got the below grade, very common Right, and then you have the little well, yeah, the little well, or you have the, you know, the sitting area or whatever it is outside the porch. But it's just that is the agent's job to make sure that they understand the risk and that they're presenting it correctly to the carrier, right, that they understand the risk and that they're presenting it correctly to the carrier, right. So, um, when they do that, then the carrier is going to rate, knowing that a portion of the risk is below grade, and they ask all the time is the basement finished or is it unfinished, right?
Speaker 1:because sometimes that will affect the money they get for a finished basement is like it's like pennies it.
Speaker 2:Well, it's, I mean. Yeah, so just in terms of cost of like you're talking about, just like if they replaced it, or yeah, I mean it's like not not the insurance that I have right.
Speaker 1:So like it just seems to me that when you get into that duplex down space and you have a basement, maybe state farm and progressive and all these other carriers aren't the best fit.
Speaker 2:Yeah, and the reason for that is what you noted earlier. They have really low limits for what we call water backup sewer, sump pump backup, things of that nature. In a city, especially when you have below grade and you're on a street, the chances of having water backing up through drains or through the sewer system is pretty high. Yeah, and then even on top of that, flooding, which is something different, but just anytime you have anything below grade, the chance of water coming into that space is higher.
Speaker 1:And the flooding has got to be through the drain right. There's different ways that you can flood.
Speaker 2:There are. So water backup just real quick. Water backup is water coming into the interior of the house through either a pipe, a drain or a sump pump. Flood is outside surface water coming into the house generally, either like through a foundation, a window or a door.
Speaker 1:Okay.
Speaker 2:Kind of how we distinguish. So water backup state farm doesn't want to mention it because they know they have really crappy low. It's terrible limits. Twenty thousand dollars will barely get you a new floor, yeah right, let alone replacing drywall and they don't tell you how much money it is.
Speaker 1:What they do is like oh, do you want water backup for your basement? Like well, well, yeah, it's my finished basement and then, like months later, you look at it or if you have a claim and you're like I'm paying $500 for 15 grand.
Speaker 2:Yeah.
Speaker 1:It was like a and this is I'm dating myself. This was like mid, early 2000s. It was 546 or 550 for the backup. Essentially nothing, nothing 5.46 or 5.50 for the backup.
Speaker 2:Essentially nothing, nothing, yep.
Speaker 1:Yep, and I call them up like that's all we offer. I'm like how can you only offer that?
Speaker 2:Yep, and it is. They max out and that's all they're going to do. They're not going to change it, and it's because it's a very it's a high risk loss scenario.
Speaker 1:Yeah. So like people are like, oh, I'm only paying $1,800 for insurance, I'm like, yeah, but you don't have insurance.
Speaker 2:That's exactly right. You don't have insurance for, uh, ultimately the most likely causes of loss.
Speaker 1:Yeah, your highest, your highest, your highest. Beta is like the highest thing that could happen to you is you don't have it.
Speaker 2:Yes, like the. What are the odds of your cabinets falling down and breaking? No, not not to where you're in. So I can, I can tell you, um, in working with, with our carriers, the, you are nine times more likely to have a water related loss in your home than you are a fire.
Speaker 1:Oh, I can believe that.
Speaker 2:Yep. So everybody's got like fire alarms and that sort of stuff Nobody thinks about. Nobody thinks about having backup batteries for the sump pump or uh, automatic water shutoff devices.
Speaker 1:That's the thing they made me put in my house.
Speaker 2:Yes, yep.
Speaker 1:Like it has like a computer, so it's called a flow logic.
Speaker 2:Flow logic, so that's an automatic water shutoff device, so that controls all the pressure.
Speaker 1:So they made me put that in to continue my insurance.
Speaker 2:Yes, because that is the most frequent cause of loss. Yeah, yep.
Speaker 1:So, like I have a computer, I'll explain to people. I have a computer on my main that comes in and it knows. You know, ai wise knows how much water I use every hour. This this whenever it senses that there's an amount of water that's above and beyond of what I normally use.
Speaker 2:Or even a low grade consistent.
Speaker 1:Yeah, consistent drip, yep. So it captures appliance leaks and things like that and it shuts off and it shuts down my water to the house. What I do really like about it is when I go on vacation, I just go down and I hit vacation button and it literally drains all the water in my house. Yep, that's the best part. And I come home and they are.
Speaker 2:I mean we. We have stories of those systems saving people's homes. It cause it. Honestly, it never fails to. If you're going to have like a burst pipe, it's going to be while you're away.
Speaker 1:Yeah, it's going to be at work. I'm not saying it's cheap, but it was like 3,500 bucks, yep, but when you're talking about maybe a hundred thousand dollars to fix a basement, it's, that's exactly right it could take it could take a burst pipe and something that could have been a hundred thousand dollar claim and it'll make it five grand.
Speaker 2:Yeah, now you, just you just have some water, like you know, in the drywall and a little bit on the floor and it's going to shut it off pucks in my furnace the water sensors. Yeah, my furnace things, because that's that's where I see.
Speaker 1:I will tell you I see most water damage and that's how my house was. That's actually what it ended up being. Most water damage I see is the is the condenser, is the furnace 90 that drips the water?
Speaker 2:yeah, the ac unit plugs up and then it's the slow drip that in and refrigerator, like the hoses behind refrigerators and dishwashers Dishwashers those hoses are usually rubber and they get brittle and they drip. And then it drips slowly and then all of a sudden one day you look down and all your hardwood floor is buckled.
Speaker 1:Yeah, whenever you walk into a house and there's buckled floors, and then right.
Speaker 2:And then you know and it seems like something so little, but then you have to replace an entire hardwood floor, you have to bust up all the cabinets and take the countertops off, and then you go downstairs and you realize that you've got mold in your you know, in the walls because it's been dripping. I mean, it's water is so destructive.
Speaker 1:Yeah, whether it's slow or fast, it's destructive.
Speaker 2:The duplex down and then we start getting into the high-end homes, who are some of the carriers that you guys work with, where you're like okay, this is, if you're serious about your, your contents, this is where you should be, yeah, so so in the high-end space there are at one point there used to be six or seven big players and we've really seen a kind of a drastic shrinking of the market over the past five years.
Speaker 2:So the big players right now are Chubb, which everyone knows, everyone knows They've been around for, I don't know, 70, 80 years and they've always sort of been the benchmark in the high-end space for just in terms of broad coverage and level of service and those types of things.
Speaker 2:So there's Chubb, there's Pure, there's Cincinnati, which they've also been around for 50 years, but they've always played in the mid-market space, competing with a state farmer and all state. They moved into the high-end space probably about 10 years ago and they've done a nice job. And then there's Berkeley One, who is the newest to the market. They've been around, oh gosh, seven or eight years now and their contracts are almost literally modeled directly after Chubb. So those are sort of the four big players. Aig used to be a big one. They have drastically downsized and reduced sort of their market share and any new business in the past several years, and that is due to they took a massive hit in California. They were one of the first carriers to just pull out of the state altogether, so they're sort of licking their wounds currently.
Speaker 1:Who's out of that state? State Farm is too right State.
Speaker 2:Farm Yep State Farm pulled out.
Speaker 1:Farmers is not writing.
Speaker 2:Any new business anymore.
Speaker 1:So Farmers State Farm AIG.
Speaker 2:AIG. There's a handful of other smaller carriers. I mean those are pretty significant. How about?
Speaker 1:Florida too. Are those carriers out of Florida also?
Speaker 2:So in Florida everyone is just basically drastically reduced their new business appetite. So State Farm is still open in Florida. I believe I'll have to fact check that. But um, they are. I mean, nobody's writing anything new unless it hits these like for our carriers it's like minimum 3 million to $5 million homes and that's it. That's all they want. They're not going to take the $2 million location.
Speaker 1:Why do they want three to $5 million homes? Are they built sturdier? Is it the concrete?
Speaker 2:So a couple of factors. One they can get more rate for them at that level and there are limitations. So generally anything built before 2002 is going to be extremely difficult to place. So they want them to meet those Miami-Dade building codes of 02 or later.
Speaker 1:What happens when you can't get a carrier? If you're in California, my friends are like dude. It's so impossible to get insurance.
Speaker 2:Yep, it is. So in that instance there are a couple different scenarios. So in California, for instance, insurance has the admitted markets, right, so they all come into these states. They file with the insurance departments what their coverage is, what their rates are, those types of things. It's regulated by the states. Insurance is regulated by the state, right, so it's not federally regulated. Every state has their own department of Insurance and their own guidelines on what they want for their consumer. California is a very strict state. They protect their consumers but on the other end, it makes it very difficult for carriers to do business there when you have these major catastrophic events going on. They limit how much premium they can take. Their rate increases each year. So that's why you have carriers just pulling out. They just say we can't get what we want, we can't make it profitable, we're going to leave the state.
Speaker 2:So in those instances there's another market insurance, which we call non-admitted or excess and surplus. Lloyd's of London is a great example.
Speaker 1:If you heard of that, yeah, Yep, that is literally.
Speaker 2:They insure athletes right. So these are the markets. Lloyd's of London is literally, I think it's been around. It's been around for a very, very, very long time, Literally out of London, England.
Speaker 1:Yeah, they insure people's legs.
Speaker 2:They insure Mariah Carey's vocal cords.
Speaker 1:Yeah, yeah, great stuff, yeah.
Speaker 2:So when it turns into the property casualty side, they can take on higher risk locations, they can take on homes maybe that have had a lot of water losses and it's just deemed not acceptable by any other markets. But they're not filed with the state so they can charge whatever they want.
Speaker 1:Why don't other people just not file with the state?
Speaker 2:Why wouldn't?
Speaker 1:Why wouldn't other people not file with the state? Why wouldn't Chubb or AIG say you know what Screw it? London's doing it. We're going to do it this way.
Speaker 2:Yes, so that's a very detailed question with the insurance department and I honestly don't know the full answer to that, other than the fact that it it's in order. So these other carriers, by the way, chubb and aig, they also have not admitted oh, they have branches.
Speaker 2:They have arms which they have developed. Chubb especially, has rapidly been growing their ens market, um so anyway. So so that's like anything that doesn't fit into the admitted side, that fits into kind of the standard regulations, that business is then moved to the ENS markets. But even in some cases, especially in California, even the ENS markets don't want certain locations. Right, you're in the middle of like a brush area where it's high wildfire and those types of things.
Speaker 1:You're living on a fault. Maybe you should just move.
Speaker 2:Yeah, well, honestly.
Speaker 1:If you can't get insured, you should move. Well, that could be a good indicator. So I mean that there's something catastrophic about the fucking happened to you.
Speaker 2:That's exactly right. I mean, I always say, like if people weren't living there like 500 years ago, there's a reason for it, right, like if it's if their places were going to be ripped down by hurricanes and fires.
Speaker 1:These insurance companies have enough data that if you're living there and they don't insure you, it's because at some point you're going to be wiped out.
Speaker 2:That's exactly right. It is extremely probable.
Speaker 1:Yeah that you will be wiped out. They're in the business to make money.
Speaker 2:Yeah, so in California specifically, right, so you can't get admitted, so you go to the ENS market. They have a third option and it is actually a government run program and it's called the California fair plan. Yeah, and it's just as great as you would imagine. It covers like six causes of loss. It's like lightning, fire, aliens, yeah.
Speaker 1:It's like terror.
Speaker 2:I mean it's it's extremely limited coverage, but at least it's some coverage Right. And those are for the cases where they can't they just cannot get any other private companies to insure them, so the government has created this plan. The only problem there, as you can imagine over the past five years, is that there's got to be no money. Kenya. It is so close to insolvency it is really bad and they also have maximums you get. You get a maximum of three million of coverage and that's it and that's for everything.
Speaker 2:That includes your content for people in chicago like that's a lot of money. California, it's like no, I mean so it, and that's called total insurance value. So that's literally everything all in your house, your contents, your other structure, whatever it is all of it. But it's something, it's something, yeah, so it's a mess. I mean, it's obviously a kind of a state of crises in California and Florida as well in terms of, but that's affecting Illinois.
Speaker 2:That is affecting everyone, and the reason for that is that because these states are so restrictive about what these carriers can take on an admitted side right, what kind of rate they can take, even the kind of lead time they have to give to non-renewal policy In California, I think it's a year you can't just like. You have to give a year's notice so that they can try to find coverage.
Speaker 1:Yeah, that's right yeah.
Speaker 2:So it's very restrictive and it's just weighing these carriers down.
Speaker 1:I can see in California when no one wants to. They've created that issue. The government has created that issue, so now they have to give people a year because they've made it so restrictive for people to do business there.
Speaker 2:Yeah, so what these carriers do, and it's not just California and Florida. Texas is a new state that is becoming increasingly difficult to write insurance in, and that's because the state as a whole, it's one of the only states in the US where it is subject to every possible natural disaster that we have Freezing tornadoes, earthquake, hail, hurricane, wildfire, right.
Speaker 1:Electric grid breakdown.
Speaker 2:Yeah, anything else you can think of, it's becoming progressive.
Speaker 1:Cowboys.
Speaker 2:Progressive just announced that they are no longer writing new homeowners in the state of Texas. Progressive, that's a big one right.
Speaker 2:So we're starting to see it already. They're starting to peel back. Anyway, long story short, it's not just these states, but there's multiple states where you have these large catastrophic risks obviously billions of dollars going out the door. The carriers say fine, we can't take rate in California or Florida, we're going to take it in Illinois. Illinois happens to be a state that's pretty comfortable with allowing carriers to take it in illinois. Illinois happens to be a state that's pretty comfortable with allowing carriers to take a lot of freight on their homeowners and auto I mean, yeah, mine's more than doubled yeah.
Speaker 2:Yeah, it might have something to do with the fact that state farms headquartered here, here, yeah um and all state yep, there you go right. So the insurance department is pretty lenient. And there's other states. The same thing. If they're going to allow a carrier to take 20% rate increases, they're going to take it, and then that is the only way that they can offset.
Speaker 1:So Illinois is basically offsetting a lot of the costs.
Speaker 2:Illinois, and it's so funny because everyone that gets this kind of increase right that we work with they call and everyone is taking it.
Speaker 1:So, personally, you know it's like, and it's like I'm like a broken record.
Speaker 2:They're like what do you? I haven't had any losses, I don't. They don't want me, what's going on? And it's like it's not you, it's not you. We got to step back and look at the bigger picture here.
Speaker 1:I think the one thing that I can get offended not offended, but upsets me is like right, I have like a little rental house that wouldn't fit into your guys portfolio and the house is from like 1940 but it was completely gutted and everything's new and state no, it's not state farm, it's I don't know one of the smaller carriers, not smaller carriers, one of the more general carriers. They won't come out to see that the house is new and the roof is new and the electric's new. They're like no, no, I'm like well, how do you tell me my house is for 1930? You won't like does no one come out and inspect anymore?
Speaker 2:it's like no, we'll just give you the worst case scenario yeah, so um, with those kind of carriers, we I tend to call them mid-market. Yeah, mass, you know, mass market, what's the one?
Speaker 1:with the home.
Speaker 2:American Family.
Speaker 1:Yeah, american Family, and they won't come out. Yeah, but they're charging me as if I have a 1930 house.
Speaker 2:So you know that honestly should be something that the agent I mean when you are underwriting, when you're quoting homes, it is asking you if there's updates.
Speaker 1:Yeah, it is asking you if there's updates, yeah, two things. And if they're not, putting that in.
Speaker 2:Yeah.
Speaker 1:He's like, yeah, but they still see it, they still recognize it as an old home.
Speaker 2:They're just assuming that there might be some random wiring in there or something. Whatever it is, yeah.
Speaker 1:But they could come out. They could come out and inspect.
Speaker 2:They could. That costs them money.
Speaker 1:Yeah, but I'm giving them money that that's their job.
Speaker 2:Yes, but they're not going to offer that service and they're fine with it too, because their coverage is capped. So if it's insured for $300,000, they know max payout they're ever going to give you might be 120% of that. It's capped, that's it. So they're right in the exposure for that max 120% and they don't care.
Speaker 1:That's infuriating to me, considering that's what you do. And I'm like he's like, yeah, we don't send people out. He's like you can send me a picture. I said I sent him a ton of pictures.
Speaker 2:And he won't.
Speaker 1:Yeah, it's like he's like, it's like it's like I don't know what to tell you.
Speaker 2:It's like everyone's everyone's things up sort of a top-down decision that that's how they're going to handle those and it is, and it's they're, they're going to try for an old yep, and for an older home they're going to try to get as much rate as possible, and that's just sort of the talking about california and florida, so let's talk about the issues that what the flat roofs in chicago yes, okay, because you told me this like a year ago.
Speaker 2:Yeah, roofs, in general in Illinois. So the big thing in Illinois right now is hail exposure. Right, wind and hail exposure. The carriers have been getting just hammered on those kinds of losses, especially in the Chicagoland area, and it's and you know there's a couple reasons. One is the the frequency of these hail events has increased over the past 20 years. Right, chubb came in and did this whole thing. There's a whole it's analysis and it's doubled since, you know, whatever, 2001, um, and not only has have those events increased global warming.
Speaker 2:That would be well, so they will tell you. It's all these convective storms. Because everything's warming, they become more intense, right so? And not only is there more hail events, the hail is larger when they do happen, so it's causing more damage to these roofing systems. And then, coupled with that, in Illinois, especially in the northern suburbs, they love a good wood shake roof and those roofs are beautiful and they have this really great aesthetic, but they get damaged very easily by hail, and then the cost to replace them is so, so high, so that, and flat roofs in the city of chicago proper is where we see most of those. You're a great example. The issue there is the weight of ice and snow and ice damming.
Speaker 1:Yeah.
Speaker 2:So everything sits on that flat roof. It's not going anywhere. Freeze thaw, freeze thaw, freeze thaw.
Speaker 1:Yeah, every day, every day for months Yep. Coming up against the grain.
Speaker 2:Yep, and then on top of that everybody's got masonry, for the most part, you know, and that kind of stuff, and that very quickly busts through that masonry and then you have tuck pointing issues and then you've got water coming into the interior of the home. So that is, they have identified through years of experience, right In actuarial data, that flat roofs in areas where you have cold weather climates don't perform well, and actually even in warm weather in Arizona, flat roofs are an issue, believe it or not, they love a great flat roof out there too, right, those sort of Adobe looking homes, um, but just the, the materials that they use and the sun baking them, they dry out, they crack, and then you sort of have similar issues with with weather elements coming into the home.
Speaker 1:So what is what's the what's the flick right? So like when we went to shop for insurance, it was hey, if you rip your roof off and put a new roof on, we'll do it. Everyone else was like no, go pound sand.
Speaker 2:Yep.
Speaker 1:So what is going to be? Is it going to be one of these off market brands, like you said, or are you going to be able to get? Are you going to have to spend? Are you have to buy a rider, like you do for a basement? Are you going to buy a rider for a flat roof, like, what is their, what's their, what's their thought process on? Ok, this is how we're going to handle this.
Speaker 2:So, so right now and this is speaking generally, for for the higher end hearers flat roof over the age of 10 is going to be, for the most part, unacceptable to anyone, and that is just for the reasons that I just stated. Right, the material generally the rubber, the rolled rubber or some sort of like composite mixture, and it, just as it ages, it just doesn't perform well in the cold and warm climates. So they're going to be unacceptable, and it's going to be. It's not going to be a rider where you add it back. It's going to be more like, if they're going to be unacceptable and it's going to be, it's not going to be a rider where you add it back. It's going to be more like if they're going to offer it, they're just going to exclude roof claims. So it's going to be just reducing the coverage as opposed to giving you the opportunity to add it back.
Speaker 1:So they'll still insure the house, just like anything from the roof. Your shadow log, yes.
Speaker 2:Yeah, if they offer. And the same goes for the wood shake. They're either saying if you're wood shake there are carriers, several carriers, cincinnati and Berkeley who have just said no new wood shake at all. They're not writing a house in the Chicagoland in Illinois at all if it has a wood shake roof.
Speaker 1:So you think there's going to be lawsuits against HOA? I mean, HOAs are are gonna have to be like hey we like yeah. So how are hoas gonna handle that? Because those are the ones that govern that rough. They're gonna have to bend and say okay, here are, here are composites that will work that's.
Speaker 2:That's exactly right. So so there are. The good news is there are alternatives out there that look very similar and give you that same aesthetic. I just finished up a two-year-long claim involving a large home with a woodshake roof where the carrier declined, or they declined a full replacement. They said there's only 200 shingles that are damaged. The HOA stepped in and said unacceptable, doesn't look right per our agreement with a homeowner. If it doesn't, you know if there's a certain amount that has to be replaced.
Speaker 1:you have to just replace the whole thing and that would govern.
Speaker 2:That's the bylaws. That's the bylaws with the HOA, and what ended up happening is the claim went to arbitration, which is where the insurance company and the client and their third-party adjuster hires a third-party adjuster, they get their own adjusters to review the claim and it takes a long time. There's a lot of back and forth and they ended up settling. It was not for what the client wanted, I can tell you that much, but it was a lot more than what the carrier wanted to pay. So they ended up settling somewhere in the middle and it was because the HOA got involved.
Speaker 1:I think Can you turn around and say to the HOA you owe me the rest because this is your rules. No, oh, I'm sure they've got to have language in there that the HOA is not going to be responsible for any of that Right is not going to be responsible for any of that, Right, but if this is the direction, if this is the direction that they're going, the HOAs are going. These suburban HOAs are going to have to start to like hey, at some point they're going to get sued.
Speaker 2:Yep, they're going to have to give a little um and and, whether that's saying, okay, you can use an alternative material, or yeah. Or they just loosen up what is acceptable in terms of how many shingles have to be replaced and if that still looks.
Speaker 1:It's going to look shitty Nice.
Speaker 2:I know Yep, it's problematic.
Speaker 1:Let's take a quick. I'm going to end on personal property, because I think that's where a lot of people have issues with, including me. Until you explained it well, what do people need to make sure they have on personal property in terms of contents, dresses, jewelry, watches, collectibles and do well, first and foremost, I would say, if you have an issue with those things, you probably need to be at a higher insurance period.
Speaker 2:Yes.
Speaker 1:So let's you know if you have.
Speaker 2:If you're buying designer things and then Jewelry.
Speaker 1:And you have, you got a dump state farm.
Speaker 2:Yes, yeah, exactly, you've outgrown it, more or less right, yeah, we talked about that.
Speaker 1:You outgrown it. So now you're at Cincinnati Ch um. How do you structure that? And you know, I know people have like a general, like a general thing, but like when you have certain items that are of certain worth, how do you, how do you navigate that?
Speaker 2:Yeah, great question, because there is a lot of confusion around this when there was with me too, and that's like, hey, this is what I have.
Speaker 1:Do I have what? Do I have? What's right?
Speaker 2:Yeah, exactly. And you say you tell somebody to think about what's in their house and they're like well, obviously I have my furniture and my clothes, but I have these paintings. You know, do I include the paintings? Or you know that sort?
Speaker 1:of thing. Sports collectibles. Sports collectibles are huge for people that I know. Yeah, comic books, baseball cards.
Speaker 2:Even like antique furniture.
Speaker 1:Yes.
Speaker 2:Those types of things. So where you sort of make the differentiation between general contents and what we call valuables or collectibles. Is something that is a collectible is something that would have a secondary market, okay Right, but something that is a collectible is something that would have a secondary market.
Speaker 1:Okay.
Speaker 2:Right. So you know if you buy. If you buy a couch and you use it for five years, nobody's going to buy that couch again. You know yeah.
Speaker 1:No Facebook.
Speaker 2:Yeah.
Speaker 1:Or Facebook marketplace Right.
Speaker 2:So um gypsies. But if you so it's like put this on Facebook.
Speaker 1:I'm like dude, do you want those people in your home? First off, who's? I don't know. I've seen people sell swimsuits on that. I'm like whoa, oh my gosh.
Speaker 2:No, thank you. I honestly I'm not even gonna go down that road, anyway. So when we say secondary market, we think outside of eBay or Facebook marketplace, meaning there's a higher concentration of value in this single item. You could sell it to a gallery, you could sell it to a dealer, you could sell it to a jewelry store, those types of things. So we are. We're looking at things like paintings or sculptures or mixed media, whatever you want to collect sports memorabilia, right, there's a secondary market for that kind of stuff. Comic books, even wine that was everything. The wine market has really exploded yeah recently um whiskey market as well.
Speaker 2:So so you know things where it's like once you have them, someone is still looking for that item, or that item is still of value, even though you have owned it, that's what we collect.
Speaker 1:Would you call it again the secondary market?
Speaker 2:yeah, there's a secondary market. Is that what you're?
Speaker 1:how did you? You said that's this or it's this.
Speaker 2:Yeah, so it's kind of your everyday. You know the couch yeah, the everyday couch and clothes or things where somebody might want it, even after it's been pre-owned.
Speaker 1:Okay, gotcha.
Speaker 2:Right, so, yeah, so, and generally in homeowners policies there's very, very low limits, like built in for fine arts, like twenty five hundred dollars.
Speaker 1:Yeah, it's garbage yeah.
Speaker 2:And it's always it's subject to the deductible anyway. So the great thing about valuables or collections policies is that you can kind of ensure all of these higher valued items watches, jewelry, paintings and it is a zero dollar deductible. So everything's covered from $1 for these items. And it also includes mysterious disappearance and breakage, which regular contents don't right. An insurance carrier isn't going to give you a new couch because your kids jumped on it and broke it yeah.
Speaker 1:Yeah, I understand.
Speaker 2:Yeah. But if you have a ring and the diamond chips or you lose a diamond or you have a watch and the face gets cracked right and it's high valued and you have to take it to a watchmaker or a craftsman to have it fixed, those types of things are covered. So that's what we want people to think about when we say what's in your house and do you have valuables. When we hear somebody say valuables or collectibles, you want to think about those types of things where it's like could I, if I had to sell them, would it be considered an asset? Maybe it's another way to think about it. Could I resell it if I liquidate it quickly?
Speaker 1:Now, within that because it's the discussion we had within that asset class, let's say it's 60 grand and there's certain items that are 40, 30, 20 in your higher end insurances. Do you need to individually insure those items? If they are hey like, can you just say, hey, it's, I have $300,000, $400,000 of the stuff, even though one one thing is worth 250. Do you need a separate Cause with you know I'll never forget with with um. Before I moved to you, you know I had a separate rider that was fairly expensive for my wife's ring, where in your insurance it was all covered. So I had to have a separate rider for it, cause it was one item that was over. So it's like hey, you know you had 60,000, but within that 60,000, nothing can be worth more than 10.
Speaker 1:Yes so because we talked about and we just did because of that. So let's talk about that.
Speaker 2:Yep, so so great question. So in the mid-market world, if you have valuables, they are going to make you list out every single thing you have, and it could be a $1,500 ring or it could be a $15,000 ring. They want to know exactly what they have and they're going to rate accordingly and the higher in insurance space. There are two ways to insure valuables. And one is to schedule the item, certainly, list it out, put the value. And the second is the blanket coverage, which is what you're referring to, and what that is is you can say you know, my total collection of watches is, you know, about $100,000. And under that limit, with each carrier, they'll have per item limits. And under that limit, with each carrier, they'll have per item limits. So if you have $100,000 coverage, the carrier is going to say but we won't pay more than $50,000 for any one particular item.
Speaker 1:Yes, so if you have lopsided assets, it could hurt you.
Speaker 2:Yes, so it's you know, and again, that's what we talked about.
Speaker 1:I'm like oh, I have one thing, that's exactly.
Speaker 2:And then you're like oh, then that doesn't work. Yeah, and this is why having a conversation with your broker and the people who understand the insurance that they're selling is so important, right? Because you may make an assumption about how something works and you think you have a hundred thousand dollars coverage and you have one painting worth a hundred thousand. Well, guess what?
Speaker 1:You're only getting 10. You're only getting, yeah, you're only getting 50.
Speaker 2:So so in that world. So how we do that is if you have yeah, you have a bunch of collectibles and you say nothing's worth more than 20 grand, but I have a hundred thousand dollars worth of stuff. A blanket is a great way to cover that. We don't have to list out 47 things that you have. But in a total loss a fire or a theft you'll get that check for a hundred thousand. If any one item is damaged, you get coverage up to 20,000 or up to 50,000 or whatever the minimum is.
Speaker 2:Yeah, so then when you have the items that are more than the 50,000 or whatever the minimum is, you want to schedule those and you want to list those out right and you cause, then we want to make sure that you are going to have the coverage that you need. A perk that comes with scheduling too is you also get up to I think it's like 150% of that listed value. So if there's been a lot of market appreciation whether it's a painting or a piece of jewelry, right, like you bought the ring for a hundred thousand but now to replace it, it's 150. You get, you get 150% of that.
Speaker 1:What's the best way going about making sure that you do get the value for your collectibles, your watches, your rings? Do you want to have an appraisal once a year? You know we talked about I have pictures of everything Like how do you know? Like, like. So if I have an appraisal, if I have a an appraisal of a ring from 10 years ago, at least we know that dynamiter, what's cut, cut the color, the clarity, whatever the four C's or five C's are all that. So then they'll just say, hey, at this time we can appraise this ring without looking at it because we have the appraisal, and then that's the value you get.
Speaker 2:Yes, so obviously, anytime you have any documentation from a high value purchase, keep it or send it to your broker and we'll keep it on file, right? So in general with our carriers for for jewelry I think it's they don't generally need appraisals for anything over 50,000 or under 50,000. I'm sorry. And then for fine arts it's like $150,000 or $250,000 in some cases, but any receipts you have any recent appraisals, even you just had it cleaned and they gave you a little something about it. I mean, whatever it is.
Speaker 1:Keep all that.
Speaker 2:Just keep all that Because, yeah, because if it's gone and we didn't have a specific description for it, we want to know. So, you guys database, like if I sent you guys stuff, you guys file that and that's there, yep, it's on file. Yeah, it's on file, yeah. And then in the event of a loss, um, what happens is if you say, okay, I had a hundred, you know, $150,000 ring scheduled and I had a hundred thousand dollars blanketed, miscellaneous items, what they're going to do with the rings gone, they're going to say, well, we're, you know, we have the description of the ring. They will take it, the carrier will take it to there. They kind of have like jewelry departments and gurus who do this all the time, right, and they'll look at that description and they'll go to their vendors and say, hey, if we had to replace this, what would you charge?
Speaker 2:And then they'll give you the replacement cost for that so if it's still a hundred, you know, 150,000 for the ring to replace it, great. If it's higher, great. They say, ah, this, it would only be like 90,000,. You know, that's kind of how they play with that.
Speaker 1:Okay.
Speaker 2:Um, for the blanketed items, it's really going to be a kind of a write down what you lost. You know we'll. We'll kind of take a look and you know, yeah, and we'll kind of. It's just it's different for every case, but you know they're going to do their due diligence behind the scene, but have you ever seen fights over that, or is it mostly?
Speaker 1:not, not really now with the big guys.
Speaker 2:Nope, Not with the big guys. Yeah, and certainly if anything's scheduled, I mean it's. It's pretty straightforward getting that done.
Speaker 1:At what point? I'll let you out on this one. At what point do you think people need to like maybe they don't need a job on a two-bedroom, one-bathroom, but at what point are you like hey, this is, you're at this asset class or you're at this level. You need to have the proper insurance. Yeah, need to have the proper insurance. Hey, you know, call me and call Kelly called and like let's, let's really figure out where you're at and is it time?
Speaker 2:Yeah, so so it's kind of twofold. So a lot of people ask like you know, what does you know what kind of net worth are the carriers looking for? And and from the carrier perspective, it's not about net worth. It's literally about what is your primary home value, what is your, the, your, you know, largest physical asset, more or less? How much is that worth and do you qualify for our standards? So in the state of Illinois, for instance, if your home is a million, five or higher, you qualify for all of these high-end carriers. That's what they're looking for and obviously we insure homes for that value up to you know, 30, 50, whatever 100 million. Yeah, and they're willing to take that From a just sort of a broker recommendation perspective. Really, I mean, if you have that home of 1.5 or a condo of 500,000. Those, those are kind of the minimums. And then you have some assets involved you know of, of any kind, whether it's like 401k or investments or those types of things. I mean the minimum access liability we recommend is usually 5 million.
Speaker 1:Okay.
Speaker 2:So, yeah, if you've got you know two, 3 million of assets and you intend on growing that, I mean you going with a high end carrier is probably going to be a great fit for you. What?
Speaker 1:happens if you're? What happens if you have a million two house, like cause, that's Chicago, right, the average, like you know, the average house in Bucktown, I think now, is like 870,000. So let's say you have a million dollar house and you just don't like the coverage you're getting from these mid-majors. How do they get to you? Yeah, is there still a possibility? How does that work?
Speaker 2:There is, so the 1.5 is a general rule. There are two carriers, chubb and Cincinnati, who will write homes under the 1.5 million limit.
Speaker 1:Okay.
Speaker 2:Yep, they will still offer. Chubb is going to be a little more expensive in the state of Illinois for, for obvious reasons, right, they've been around forever. They have a large market share not looking to grow necessarily. Um cincinnati is quite competitive. May have to drop the coverage um down to a kind of a lower form where maybe some of the limits aren't quite as broad. Is what our carriers offer. Full water backup, for instance, with all our carriers, is always covered. You don't have to worry about that. You're not getting 20 000.
Speaker 2:It's up to the policy limit yeah it's one of those things, um, but again, conversation with your broker, right, and they understand what they, what the market is offering and what is available to you and they can explain it yeah, I think people don't realize and we should have started off with this like the, the fact that you have what you do and you're a broker every.
Speaker 1:There's so many nuances, like every person's situation is different and you can take that and I, you know, I've been with Kelly for a while and she can take these situations and say, hey, listen, or hey, you know, these people aren't doing flat roofs anymore. This is this what's best here. What's best here, know, is it a mixture? Do we do progressive on the car? Do this here, this here? Like, if you're just calling up people and I say the same thing about real estate too if you're just calling up somebody trying to figure out how to insure yourself and you're not, and you're not being directed the right way, I mean, for every dollar you think you're saving, you're costing yourself thousands. Yep, absolutely, because you're saving, you're costing yourself thousands.
Speaker 2:You could be Yep Absolutely Because you're just not doing it right.
Speaker 1:I don't care who you are, yep. I don't care how much you Google, yep. No, there's no way you're doing it right, like when you call up somebody and it's progressive or it's whoever it is, and you're calling up and I go this, this, this, this. There's so much stuff you're missing, oh, oh yeah, and they're there to sell you those self-service ones make me so nervous and I think about it all the time. People do they just click?
Speaker 2:Yeah, those poor people who are like, yes, I'm getting a great rate, they are, I guarantee you. They're missing water backup. They're missing just water damage in general have like next to no limits. They're missing.
Speaker 1:People click. They don't give a shit what you're doing. It's not right.
Speaker 2:Like listen, if it's really low, it's probably not good.
Speaker 1:Yeah, I mean like but even if it's high, it's like well, are you paying for insurance that you shouldn't have?
Speaker 2:Yeah, yeah and honestly, and that's why brokers exist in this space Right, I mean it, and it changes so rapidly. I mean the past two years. I feel like our heads are spinning in this industry who wants what and what the limits are, and what they're adding and what they're taking away, and what states are right, I mean, it's been kind of chaotic, it's a lot. It's a lot. It's a lot, but fortunately, when you have a broker, our job is to understand this every day, right?
Speaker 1:Yeah, and to stay on top of it, I never understood that, like in any industry, it's like. It's like everybody wants. I always tell people everybody wants the, the, the best doctor Right.
Speaker 2:But then everything else, like I don't give a shit.
Speaker 1:Yeah, like, like. And you know it's always saying like, you know you wouldn't, you wouldn't go around shopping a doctor Like who's going to give me the lowest.
Speaker 1:Yeah, you're, you're great, you've been, you're a teacher and you're a fellow. You've written papers on heart surgery, but this guy's half the price. He went no offense to people who went to school in Jamaica, but he got his degree in Jamaica. I'm like, no, I mean, I just don't. I like life is so much easier when you have great people around you. I just, I don't know, that's just me, and then you can focus in. I don't have to focus in. I'm like, oh my God, do I? You know, if I get broken in, is this as good? No, no, I'm good, I can focus in on other stuff.
Speaker 2:Yeah, a good broker's main objective should be just to take this off your plate. Yeah, no, I agree help you sleep at night. You know you trust that person, that they're gonna get.
Speaker 1:They're providing you the best I know and then you just take it off the plate and move on I know, when we had that, that, that water thing in my family room, I mean, like dude, it was like whoever that company was, those people from hinsdale, yep, like everything was just like me and my wife sat back and we're like, dude, this is insane, it was so, so professional, it was so perfect. Yeah, I mean I can't everyone there. I felt like it was like the service industry, like everyone there was, like it was like the four seasons, everyone there was like you know, it was nice, like, do you, do you want to move somewhere else? Do you want to stay here? I'm like, yeah, dude, I'm not moving.
Speaker 2:Yeah.
Speaker 1:Do you want to move all your furniture? I'm like, listen, let's just, let's just, let's just.
Speaker 2:Yeah, it's, yeah, it's the option to do.
Speaker 1:I'm like I'm not moving.
Speaker 2:Yeah, no, yeah, yeah. The network that we've been able to build out, build out as well.
Speaker 1:Yeah, which is so great?
Speaker 2:Yeah, and which goes beyond just insurance but things that obviously tie into insurance. The people, Yep, we know what groups are really professional and really high end.
Speaker 1:That's your phone, that you bought insurance with who's going to come over and do your floors or mitigate things and it's like I don't know where to go.
Speaker 2:I'm going to go on the.
Speaker 1:You know well, you hire somebody, or we're going to, you know, or you know they're just going to send over, that's sending over a contract or just going to send over the person. I finally did. You did find it.
Speaker 2:Yeah, it was like three months for a color wallpaper at some point I'm like.
Speaker 1:I'm like, nikki, let's just tear it all down like, let's just start over, let's just tear it all down like it's just like no, and I'm like and then there it was like it wasn't off but like it had light. So it was kind of yeah, and the guy was like really particular. He's like you know it's a little off. I'm like, bro, I will never notice that, yeah, You're like.
Speaker 2:You shouldn't have even pointed it out To this day.
Speaker 1:I'll never notice it. I'm like man, knowing like there's different shades of black. But it was like so minute because the sun had bleached it?
Speaker 2:Yeah, absolutely, yep, all right. Well, can you tell us how people up it's BCU Risk Advisors and you can look us up at bcuriskcom online. Just had our website redesigned. It's very lovely. We have had a lot of new hires, so there's some new faces on there, which is great, and then I can be reached just via email.
Speaker 1:Whatever you want.
Speaker 2:Yeah, so my email is K.
Speaker 1:We're stalker free.
Speaker 2:Yes, my name is Kelly Weiss and my email is K Weiss, and that's K W E I S S as in Sam Sam at BCU riskcom. And then, if you want to reach me directly, I mean my office number I have no problem giving to you yeah. Is 3, 1, 2, 7, 9, 5, 0, 6 0 3.
Speaker 1:Awesome. Well, I appreciate your time. I have learned so much and the nice thing is is that when I learn things from you or for other people about my life and my situation, that makes me a better broker, because then I can say, hey, listen, this is my experience, this, this, this. So it's good to learn stuff because it's going to help you in whatever profession that you're in. So I appreciate it again. Thank you so much for tuning in to the Jason Theory and have a great. This will be oh my God, it's almost December. This will be a great. It'll be on December. This will actually be the last podcast of 2024.
Speaker 2:I'm honored. This will be it, so it'll be get your insurance shit together before 25. Get your shit together before 25.
Speaker 1:Yeah, all right, be good. Thank you so much.