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Insurance, explained clearly by a family with three generations of expertise.
Aaron (00:00.442)
Hello, everybody, and welcome to the Bollinger Podcast. My name is Aaron Bollinger.
Brian Bollinger (00:04.524)
And I'm Brian Bollinger.
Aaron (00:05.946)
Today we're gonna talking about everyone's favorite. The number one thing that's on the news is the wildfires, right, Dad? We've seen those last few months. I mean, last year it's been really hard on the insurance companies, and it's harder on our insureds now, people who are getting those notices in the mail saying, Hey, you know, your house is too close to wildfire, you know, we're not able to write the home anymore. What what should these people be doing? What what should these people be looking out for? What what are some things they should know?
Brian Bollinger (00:30.222)
They should start looking for solutions, right? I think the biggest thing with anything in when it comes to insurance is you don't wait until it's too late, right? You gotta be proactive, you gotta be engaged, you get a non-real notice or you get some kind of a something from your insurance company, even a bill, you gotta pay it first off. but the second thing is you don't wait for the cancellation. you be you need to be proactive, talk to an independent agent or broker, in my opinion. If you want to talk to captive agents, you can do that too. but definitely don't wait until it's too late.
Aaron (00:59.278)
I'd say gauge the market. I'd say honestly, play play all sides is what is what I would recommend. I mean, you you get forty-five days, right? They send you the notice in the mail, they say, Hey, your insurance is gonna be non renewing. They should they should legally give you forty-five days to go find that replacement. I would start on that forty fifth day. I I would start talking to some of your local experts, some people maybe who who have some cred. You could, you know, ask Chat GPT even just say, Hey, you know, who's a broker that I should go to for this and and get a gauge of the market and idea of the companies you could go with 'cause
Obviously it really depends on where you're at. I mean, there are people like you said before when we were talking before this podcast in that gray zone, that area between the brush and between the, you know, the the regular neighborhoods, not near brush. And those people, I mean, they they could be, you know, having their prices go down. I mean, honestly, like there are new companies who will write those areas. and it's it's really just a matter of, I'd say gauging the market, understanding your current risk, because the worst case thing, and I'll say it.
Is lender insurance is when that mortgage company yours goes in and they say, Hey, you could have shopped it, but your insurance is lapsing in a week. We're gonna buy this fifty thousand dollar. Obviously it's not gonna be fifty thousand, but they they're gonna charge you. They're gonna up that's that's how it works.
Brian Bollinger (02:12.386)
And it's not for your protection, it's for theirs, right? So I think the biggest thing is when you're proactive and you're owning your insurance needs and you're talking to an insurance professional to get real actionable advice for yourself. I think that's the key. I'd say the second hardest and probably worst insurance is the California Fair Plan, right? you know, we're actively trying to, the state's actually actively pushing them to reduce how many people are being insured with them. And some of the insurance companies are responding. We're seeing a number of carriers, you know, Mercury being one of them.
SafeGo, you know, Liberty Mutual being another. There's some other companies like Stillwater out there, Bamboo. A bunch of these companies are beginning to kind of creep back into the market with capacity and decent prices and giving you better coverage than having that fair plan plus the DIC. So the one thing is the non-renewal. The second thing is you have the fair plan, you should be really looking at that from time to time to make sure that that's still the best option for you.
Aaron (03:04.93)
And I I think that Safe Co might be a trigger word for some of these people who are listening, the ones who are getting the non renewal notices. Cause I mean, gosh, it was just six months ago they were saying, Hey, we're getting out and they they're non renewing, dropping people, you know, left, right, and center. And all of a sudden they they want more capacity and they, you know, they they want more writing in California. we
Brian Bollinger (03:23.282)
In in their defense though, let's be clear, right? for a long time the Department of Insurance has maintained with that, you know, some of the propositions we've had, the level of profitability these insurance companies can have. And so they had to go through a very rigorous process if they wanted more than a seven percent rate increase. So a lot of these insurance companies were losing tons of money on property insurance. And just recently, I would say the last year or so, we've seen that the California Department of Insurance begin to kind of open up and understand that these insurance companies can't take losses every year.
And want to keep writing business in the state. They a number of companies called the state of Department of Insurance a bluff and totally left the state of California, not only stopped writing insurance, but just said we're out. And I think that that level of brinksmanship, well, it's sad that it happened. I think that that's beginning to change. obviously there'll be a change in administration in California's Department of Insurance fairly soon. and the hope is that this momentum we have right now of trying to increase capacity and options for homeowners, that that'll continue.
Aaron (04:21.678)
I mean, as brokers, it's easy to sympathize with the insurance companies. We see the loss reports, you know, we we have that level of clarity on on that side because we work with them and it's our job to kind of satisfy them and our you know our customers' needs. But honestly, I feel like the people who really get the the short end of the stick are the customers or the people who who are paying these, you know, egregious, outrageous prices for their insurance. Like honestly, it's it's unfathomable when when you're shopping a fair plan policy because there's no specialty market, which we should get into next.
the specialty markets and the fair plan policy comes back at you know 13k for something. I mean that mind you if that's a home in you know middle of nowhere around only trees and and greenery I mean it's it's likely that that that five figure mark could be pushed. But I mean it like you say they they want it to be the last resort. They they don't want to write the insurance. The state isn't wanting to insure your home. And so for those people who have just been placed with a fair plan and they
You know, if you if you're looking at your house on a map, and let's say that you're, I don't know, quarter of a mile from brush, like serious brush mountains, that there could be a world where there's an insurance company out there that would bundle your home and auto. Now it depends on the value of that home too. If you're if your home would not cost a lot to replace, there are gonna be some insurance companies maybe who will who will be willing to ride it, but it'll be less plausible, I would say. I would say less probable. If if your home's worth in the millions of dollars, then
Honestly, we we've seen companies that have that specialty access open up and be able to to kind of, you know, I don't know, take on that added risk because you're writing more insurance with them. And that's that's another thing is just bundling, making sure that that your insurance company isn't just like a, I've got one here, one there, kind of like one everywhere. Like if your goal is to really concentrate, you know, your risk, your time, just just your coverage, and honestly your price, thinking about.
Hey, I'm with the fair plan right now. Can I get a chubb? Can I get a pure? Can I get a company like this that's a better alternative to come in and write me? Or if it's a lower value home.
Brian Bollinger (06:25.91)
Yeah, or travelers, Mercury, Safeco. Again, they're e you know, farmers, whatever. I don't know if they're writing right now, but yeah, as they open up, you it's really important that you that you stay proactive on your insurance. Again, we're talking about cancellations right now. If you're getting a cancellation notice, don't wait until it's already too late, right? We want you to be proactive, start that dialogue. And and just because the insurance company you're with doesn't want to insure you, or if you're buying a new home, your current carrier, you know, there are choices out there besides the California Fair Plan.
Aaron (06:29.248)
New new companies open up.
Brian Bollinger (06:55.148)
And we want to try to express that to people that honestly the the insurer of last resort is the California Fair Plan. and and also the way they're handling claims and and just the difficulty of working with them. Clients honestly don't tend to have a great experience with them. I would encourage you to look at the reviews. that that's I guess another thought process.
Aaron (07:13.944)
And it's it's better than nothing, right? But it it just means that if your home is getting non-renewed, right? And let's say that it's it's a triple A, let's just say just out of nowhere, triple A non-renewes your home. You have 45 days, the timer's ticking. If you go to that broker or that, you know, that broker's buddy and he says, I've got a great solution. It's a fair plan policy. There are 10 different things that could be wrong with that, but here are just a few notes of things that you just have to make sure of.
Make sure that you get a difference in conditions policy. Now it's usually around the same cost, maybe half the cost of the fair plan policy. The fair plan is pretty much just covering you for that fire risk. So because you're near that fire area, it's it's that's the biggest thing that the insurance companies are saying no to. It's not the liability of the home in terms of just that liability side, it's the property that they don't really want to insure.
And so making sure that you get a difference in conditions policy to fill that gap because a fair plan policy is not a homeowner's policy. So if you get non-renewed and you're on a homeowner's policy, again, fair plan and DIC come together and make one. The second biggest thing that I would say is making sure that those limits coordinate. Now, if you're just getting a fair plan quote from your broker, I would question them and their credibility.
If they're sending you, hey, these are the DIC markets that we approach, we want to make sure that you have a comprehensive coverage package and you opt to go for just the fair plan. That's on you. But again, we just want to make sure that your broker is properly advising you that fair plan insurance is no joke. It's a very costly price. It's better than nothing.
But that the coordination of it with all of your other coverages and the DIC is super important as well. And I mean, pe people really have to know that because we've seen non renewals come out of nowhere. We've seen people people are contacting us with a week left. You know what I mean? Like, and that's
Brian Bollinger (09:11.682)
No, no, I we've had people contact us that actually have active forced coverage, right, for like a week. And then we try to jump through hoops to get them an option. And realistically, they usually back up to a mountain, right? That we don't have any preferred market that would be willing to write them. The excess.
Aaron (09:26.904)
Well let's explain what let's explain what a preferred market is.
Brian Bollinger (09:30.434)
So a preferred market is typically a company you've heard of. the first thing is they're admitted in California. What that means for the admitted market in California, it means the California Department of Insurance has a level of oversight of their rates. So you're kind of being priced fairly. The second part of it is if you're not doing, you know, that admitted market, is that
They tend to be names you've heard of. So farmers, State Farm, you know, AAA, obviously travelers, SafeGo, Liberty Mutual, Mercury, even companies like Bamboo. And what's interesting is if they won't do it, Chubb, if they won't do it on a preferred basis, their admitted market because you have, say, bad electrical panel or some other thing that's your updates aren't quite right on your house or the location is too close to brush, sometimes they will offer you a not admitted company.
Aaron (10:09.206)
Mercury.
Brian Bollinger (10:28.514)
That's one of their kind of sister companies. And what that means is the Department of Insurance doesn't control those rates, but because of the underwriting characteristics of your particular property, they are willing to insure you, just not at those lower prices. So they tend to have a little bit higher priced option, but still with that quality of claims handling that you've come to expect from those bigger companies. And so that can be a very cost effective option for you.
Aaron (10:54.509)
Hundred percent. And and one other note on the admitted aspect of things and the preferred company is that California pretty much just offers a promise. The state of California, mind you, they say, hey, if this company were to go under, go bankrupt, and weren't to be able to pay your claims that you need to file, we would cover up to five hundred thousand dollars of each coverage, is pretty much what they're saying. And so it's it's capped. And so that might not be as much if you've got a six million dollar replacement cost house.
Then maybe looking at the ENS markets is or the XS surplus lines, the different companies, the specialty companies that are not admitted or are preferred companies, could be an option, could be a good option. And again, it really just depends on the company. It depends on the company, it depends on the situation. And really just getting a gauge of the market because you've got 45 days. If it's, you know, a couple of weeks, because honestly, I feel like people who'd be searching this up.
They've probably got a couple weeks left and they're probably stressing, or maybe in a few days. Reach out to somebody, make sure that you get coverage, because the next thing that we want to talk about is the mortgage insurance. And that's that's the worst.
Brian Bollinger (12:04.898)
Yeah, again, we just had a person recently, you know, call us up and they were paying, you know, even twice what the fare plan was, I think. And it only inclovered the insurance for the mortgage company not losing money. Their content wasn't included. their loss of use wasn't included. It was only for the bank's benefit, not for liability wasn't included. It was just it was ugly, right? All it was was to protect the bank from from loss of that particular loan value. and so essentially.
Aaron (12:20.502)
Liability. There was no liability.
Brian Bollinger (12:33.346)
You know, didn't help you rebuild your house, didn't do anything for you personally.
Aaron (12:37.12)
And it'll probably end up being the same price that you actually have to pay because the mortgage company doesn't care what company you're with. Like honestly, when they go place that coverage, it's just like like you just said, it's about protecting their assets. I mean, you can't blame them because you do have the time. If you have a 45-day window, you have the time to go look, engage the market. Now we've we're getting people who are, you know, contacting us about.
These two three-day turnarounds, and we're able to get them pretty snappy. But for the ones that are with the fair plan, there's another thing to consider is the turnaround time on the fair plan, because it's the state and we like to joke about it, is usually a lot longer than it is with a specialty company or an admitted company. Cause usually you just log in on one of those admitted companies portals as a broker or you know, get the quote some other type of way, send in some forms, you know, two-day turnaround time tops. The fair plan, you gotta upload photos. So
The broker who's writing that fair plan policy would just need pictures presently dated of all sides, including the roof. And so this this gets into the nuances of that rewriting. And again, it's just a lot easier if you send that email a little bit earlier to that broker, reach out to that broker a little bit earlier and get the market gauge and understanding of triple A nom renewed me. I maybe maybe you went to State Farm, maybe they said no, maybe they said yes, but the price is outrageous. You get to choose.
You have a decision to make. Do you go out? Do you go search the market? Do you just go with whatever people say? Honestly, I feel like the tools and resources are there for people with the ChatGBTs and with the podcasts and with the public information that they can utilize, learn from, and act on. It doesn't take listening to this whole how long is this going to be? Probably 25 minute podcast to understand what to do. We can narrow it down here in three seconds. Send an email.
To a licensed broker.
Brian Bollinger (14:36.686)
Call a licensed broker, talk to somebody. and that what they're gonna do is they're gonna ask you a few questions, right? Your address. It's important information. So they can take a look at the map and the brush, like that's simple easy. There they might ask you the year built of your house, just to kind of gauge how old your home is. They can look it up, like we can look it up too. The bigger thing is if your home is over about 30 years old, 30 to 50 years old, they're gonna start asking like when the roof was replaced, possibly when the
Aaron (14:38.148)
Cool.
Brian Bollinger (15:03.288)
Plumbing was replaced or electrical panel upgraded, you're gonna have to know some very specific details about your property. And when you have like an old home that's like 100 years old and you say, I have no idea, it's impossible. It is impossible for your agent or broker to give you any kind of real meaningful service other than the fair plan. And you're gonna get really crummy policy with them at a really high cost. And it's just, you gotta know your property. So the big the biggest thing I would say is.
You get that non-renewal notice, you need to start like looking through when you bought the paper when you bought your home, start looking through that, trying to figure out when you last updated, you know, the house. Hopefully it's not, you know, nineteen thirties or nineteen fifties and nothing has been done to it, right? Because you're gonna be back at that fair plan. It might be the only option for you, especially if you're near Brush in any meaningful way.
Aaron (15:53.92)
I I a hundred percent agree with that. And it's it's the sad truth, honestly, is that it's coming to this level of sort of last resort in terms of the California property insurance because Triple A is sending out the non renewals. We've had Safeco, we've had, you know, state farm farmers, travelers. I mean, you even and it it doesn't even necessarily have to be from a wildfire, right? Non renewals can come in all different types of forms. It come from losses. That's a whole other thing that we need to get into as well in other podcasts is what to do if your property has losses. Like you can't clean that.
Brian Bollinger (16:22.348)
And how to prevent your property from having losses, right? I mean, more importantly, right? I mean, a lot of people wanna say, I bought my insurance, the insurance company should cover it. And they might, but like even a single water claim or a single incident can sometimes result in a non renewal of your property. and that's problematic. You're gonna pay more for insurance for five years. yeah, it's crazy.
Aaron (16:42.328)
your your record, you know, it it tracks. You know, it it if you file a claim at one property, it it'll go on to the next. It's a reputation sort of thing. Really though, I I wanted to talk about a specific example of ours. So we're we're very fortunate. So we we have a cabin and that cabin is quite literally, as you can imagine, a cabin in the middle of the forest in the mountains. it's up the grapevine, if you're
Cali Local, it's just before Bakersfield around Fashion Park area. And now this property is it's nice, right? I mean, it's it's you've done the clearance on on the brush and made sure that it it complies and all of that. But because we have a bundle, and maybe it's grandfathered or whatever it is, because we have a bundle that I don't think that they had write new business on this. Because because it's bundled, we were able to write that with a preferred company. And so again.
Brian Bollinger (17:27.456)
It's grandfathered for sure. No, they haven't. They won't.
Aaron (17:38.5)
There is a world where if your home is valuable or if it's got this huge risk on it, there are insurance companies that will write your property. I can guarantee it. I can almost guarantee for 98% of people, 99% of people, there is a specialty insurance company that'll write your property. If you're listening to this podcast, it's probably lower because you're listening about the wildfire non-renewals. But in general, I would say that most properties in California have a specialty market. And so if, again,
If that's a fair plan and a great DIC company, I would count that as a good solution. And there is an option out there for you. We just need to make sure that people know fair plan is better than no insurance. Like.
Brian Bollinger (18:18.114)
Yeah, the other thing to keep in mind is, you know, one of the things the State Department of Insurance did with the admitted companies when there was a wildfire that went through an area, they had a moratorium on cancellations for like a year or two. And basically, so some people are being grandfathered in the renewal on their property, maybe as they're possibly rebuilding or something like that. But that grandfathering in may not continue indefinitely. So you might be one of these people that, you know.
Maybe you're with one of these companies, right? Maybe you got a renewal this year. Doesn't mean next year you're gonna be okay.
Aaron (18:52.516)
Truly. And obviously, I'd say if if you're with a captive insurance company, we've seen so much opening up on the independent side. Whether that house is, you know, currently covered excellently with AAA, but it's super expensive, or that house is covered with State Farm and God knows State Farm's reputation nowadays, what rating are they?
Brian Bollinger (19:14.904)
Again, we don't we don't talk about that. I mean, one of the issues we see Well, I think again, we have to pull the current one for that particular thing. But my point being, like the issue is these wildfires that caused these claims have put substantial financial pressure on these insurance companies. The companies that used to be A plus companies have been ground down over the last decade. And some of them now are B plus companies. And it's not that they're bad companies. It just means that they've been under financial pressure.
Aaron (19:16.246)
No, we we can talk about the AM best rating.
Brian Bollinger (19:44.946)
And and that's why the rates have had to come up to kind of help them restabilize their business.
Aaron (19:50.722)
Obviously it's it's a great company. It just came from the whole scandal with the C A D O I California Department of Insurance is what I was referencing, where they were pretty much getting sued and almost forced out of California for the fraud that they committed in terms of not paying claims. it's it's literally there in the legislature.
Brian Bollinger (20:06.964)
Every insurance company, and again, this is the problem that I have with insurance companies. Let me be candid here. Every insurance company, when there's a massive claim or a massive loss event, you're not going to get their best service. You're not going to get their best claims handling. You're going to get the worst claims handling, right? They're going to have people flying in from Florida to help, you know, try to figure out these claims. And some of those people, you know, are not looking out for your best interest. and again, I personally believe that's where an independent agent or broker can help.
in terms of you know helping you navigate getting the claim resolved. some of the state farm farmers agents have been successful in helping people, you know, navigate that. but I know of one client in the Palisades, they had to get an independent adjuster to essentially fight AAA to help them get their property back to the condition it was prior to the loss, right? Which, if you kind of think about it, if that's why you buy the insurance, right? If your house burns down, you're buying to get it rebuilt.
If your house gets substantial smoke damage because the fire burnt the outside of your building and the inside has smoke sit everywhere and heavy metals and stuff like that. you have that insurance there to help you clean it back up and get it back to where it was before the loss happened.
Aaron (21:18.244)
That that's what you're paying for, right? You're you're you're paying. So hopefully you you want your property to be insured. So if you're like 99% of people and you do have the the property insurance and you are paying that yearly premium, you want to make sure that that's that's a good coverage, that's a good fit for your property. And again, we we do free.
reviews again this isn't this isn't like some sort of pitch but we do review a lot of people's insurance policies and plenty of times it's just, this is great. Maybe you increase this one coverage here. Maybe you optimize this little setup here. But honestly, for the people who are getting non-renewed, I would say maybe just go ask Chat GPT. If you're going and buying a property and it's a new purchase and you have no idea about the insurance, that's sort of a very similar situation to getting non-renewed because that's like a replacement sort of thing.
Understanding when a property has to get new insurance, the risk of the prior of the prior losses on your record and the property's record are going to be included on that. And so if a company non-renews you and you had you had maybe a small water claim three years ago, right? And you've got 1970s construction, you think that that small water claim, when that non-renewal hits, it won't be a bit, you don't even think about it. All you're thinking about is, I just lost my triple A coverage.
Or I just lost my safe farm coverage. What am I going to do? When you go talk to a broker, honestly, water claims are serious. Water claims on that property record, with again, you're gonna have to get a letter of experience to show proof that you fix the problem. But still, a lot of companies are gonna put a water supplement on it. That's the these are things that we're gonna get into in these next podcasts. But honestly, if you're getting non-renewed, your property record is important. The area your property is in is important.
the prior insurance that you had and how long you had that for is important.
Brian Bollinger (23:09.994)
And the updates, you gotta make sure you know when the stuff was updated. I mean again, you know, we've had some people say, I have never updated my electrical panel in a hundred years. That's a problem. It's a big problem.
Aaron (23:21.098)
And the permits on that to actually get that done is a whole nother thing. The the executing of that and then the insurance that comes with that sort of work is also a whole different thing. And honestly, if if you're having a hard time replacing that property and you're reaching out to people and people are saying, we can't write this, we can't write that, the fair plan again is a last ditch alternative, making sure that it's coordinated with a difference in conditions policy is crucial.
Brian Bollinger (23:45.954)
Yeah, other than that I think we'll get into more details later, but I appreciate your time.
Aaron (23:49.818)
Appreciate your time.
Brian Bollinger (23:51.726)
Take care.
Aaron (23:52.654)
Take care of you as well. Bye.