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Insurance, explained clearly by a family with three generations of expertise.
Aaron (00:00.628)
Hello everybody and welcome to the Bollinger Podcast. My name is Aaron Bollinger.
Brian Bollinger (00:04.279)
And I'm Brian Bollinger.
Aaron (00:05.8)
Today we have had three recordings go amiss because of Wi-Fi. Hip hip hooray. But today we are going to be talking about one of the most exciting things that I hope everybody gets to experience that I have not yet experienced, but am super, super waiting for and looking forward to moving into a new home and buying a new home and taking out a loan and realizing that your insurance is a little bit more than you thought.
Brian Bollinger (00:11.041)
Wi Fi.
Brian Bollinger (00:30.818)
Yeah, we want to try to educate people when they're looking for a home. Like just the things you need to start to look out for for insurance. It starts with the address, the location. Obviously you can't move the home you love, but you have to accept the fact if you're in brush, you might be paying more for insurance.
Aaron (00:47.644)
And honestly, these modern homes, these new, newer built homes, we've seen ridiculously low prices on. Honestly, I mean, these vintage homes, they do have that charm, but they do have some of the structural issues, some of the update issues as well, is another thing. If you have an older home built decades ago instead of years ago or century ago, it's very important that you have updates or at least records or an inspection report, something that says that the electrical has been updated, the plumbing has been updated, the roof.
has been updated. And usually the insurance companies will ask for when it was fully updated. And so when you go to these captive insurance companies and you say in that quote process, they give you, this property had the roof updated in 2000, but the roof is actually original and it was just a couple patches that were put on, that doesn't count as an update usually with these insurance companies. They're looking for full completed updates. And so these are some things that the inspection report
will actually undercover or un uncover for the people.
Brian Bollinger (01:48.441)
They should. One of the things we want to educate you is what you should ask your inspector before you hire them, right? There's some things here. You want them to document when the HVAC system, the heating energy system, was installed, right? There's gonna be a date code, a label on that device. We don't want you climbing up on the roof and falling off, but if you hire these people professionals to inspect your property, they should tell you that. They should tell you an idea of when they think the plumbing was replaced in the house, right? Especially getting in the attic looking around.
It's very easy if there's copper plumbing in the attic to pull back that sleeve and look at the date code on the plastic on that actual not plastic, hopefully, but on that that copper pipe. It'll have a date made on it. There'll be certain indications that they can start to kind of forensically give you information, take pictures, document, and help you. Your electrical panel, most of these guys are not gonna say that the electrical panel is defective. They're not gonna say that it's safe. They're gonna take a snapshot of it. But then you might need to have a secondary.
inspection or ask them if they have an electrician that they know that could weigh in on whether or not this electrical panel needs to be upgraded to comply with insurance demands. And so, you know, there's certain panels like Zinsco, Federated, even Challenger, although some of them are good and some of them are bad, that that need to be, you know, at least addressed. And so a lot of homeowners and even realtors, right, that are professionals in this space, they look at it and they say, look how gorgeous this home is.
Unfortunately, us insurance professionals, we look at it and go, Can we get you the best price for insurance? Which we would we can do, obviously, that's what we do as as a profession. But is it gonna be as good as it could be? What are the things that are gonna be problems for it? What are gonna be the cost drivers that we wish would have been addressed?
Aaron (03:33.812)
That's the biggest thing.
That I think you just touched on it right there. We we had a story of somebody who this was many years ago, so I think we can use it. He he was buying a new home and it was the home was in the eight figures. And so that this was a very big purchase. I think he got some some trust money or something. He was deploying it on a on a nice asset, you know, a very nice house. And he was asking, he was getting a market gauge beforehand, which is very important. And he was asking, how how much is the insurance on this thing gonna be? The insurance was 80K. It was 80.
Do 100K. Now that might literally be more than the loan payments. It's it can get ridiculous. And so I'm I'm very happy that he made the decision and that they made the decision to ask firstly, because you don't want to get tied into a home if you're looking to go buy something, if you're close to finalizing it, without any sort of understanding of, maybe the preferred companies won't insure me. Maybe some of the specialty companies won't even insure me.
Maybe I'm gonna be stuck with a fair plan on this uber expensive policy. Or I mean, god god forbid it's it's a fair plan policy, but I mean that that's how it is someone's time.
Brian Bollinger (04:42.466)
Well, not only that, but you know, it's like we've had clients that pay cash for homes, you know, anywhere from a couple hundred thousand to tens of millions of dollars. And and the challenge with paying cash is you don't have that contingency for financing, right? Because you're just paying the money. But a lot of times you need to make sure you have that insurance contingency. Do you have some kind of a budget known of what you're willing to spend and what kind of coverage you want to have on the property? A lot a lot of times people say, what insurance do you have on the house right now? And they have some kind of grandfathered in product or plan.
And for them, it might be two to five grand or even fifty grand, depending on the the cost of your home. And when we actually go to try to replace that coverage, that company won't offer you the same terms. And so it's really important that this become to begin what to be one of those things in your mind as you go down that process of buying.
Aaron (05:30.087)
Yeah, so I I would say don't go off of the current insurance on the property 90% of the time. Like 90 to 95% of the time, don't. Because honestly, I mean, you you need to go see what your record is like too. Maybe they had the cleanest record in property insurance history, maybe 100 years, no claims, whatever it is. You know what I mean? But if you have a small water claim on your prior property that you had insured, or if you have another small claim, or maybe you lost a house to a fire or something horrible happened, then
These insurance companies will look at that record and they're gonna price you accordingly. They look at the whole profile. They look at the property, like you said, the address. They look at the year build, they look at the updates, they look at the surrounding area, the clearance, the brush, the conditions of things. And they look at you. They take a look at your record, just like how an auto insurance company pulls your report and makes sure that you're an all right driver. They take a look at your record. They see, hey, will this person be a liability to insure?
Brian Bollinger (06:27.982)
And it's not just like the insurance record. Some of them pull credit reports in some states. And then like on the auto side, it's the motor vehicle reports. There's a bunch of reports these insurance companies have on people. they're even now pulling mileage, right? I think you were talking about that earlier, Aaron, for the auto insurance.
Aaron (06:43.953)
Yeah, they they use like a real drive estimate. And so they they partner up, I think, with the service providers on the oil changes and and cars and they pull those and they calculate the the change in odometer. So when they write that policy, they'll they'll either estimate the odometer or ask for the exact odometer. But pretty much then when you go get that oil change in a few months, they're gonna say, in those couple months you drove two thousand miles. That means all year you're gonna be driving, you know, six times two thousand, twelve thousand miles and they'll
They'll hike that up. And I think that that's that's something that companies are doing. I I think we've seen like Cover Whale or something is a is a trucking company, insurance company that that's a nice big startup. And they're they're using like fully like statistical breakdowns of the driving profiles with cameras to to ensure people cheaper, I assume, and and more effectively and safer. But obviously we haven't got
Brian Bollinger (07:36.758)
And you wonder, is that true? You know, I mean, obviously we all we all question insurance companies, even even us insurance professionals. We're like, if it sounds too good to be true, it probably is, right? They're probably not a hundred percent for your benefit.
Aaron (07:50.142)
Well, yeah, of course it's it's for the insurance company's benefit one hundred percent. obviously, like if if that doesn't help them be more profitable, they're not gonna implement that. And then that that's another thing is is the the gauge of the market. And so you buy a home and you think it's beautiful, you go in and it's modern, it's sleek. If you think that it's modern and it's sleek, odds are there might be something wrong with it. I mean, honestly, we we see things get painted over, we see things
where maybe everything has been updated but one specific part of the home, like the heating or like the roofing or like the plumbing. And then that that can tear down the entire insurance plan. And so again, that inspection report is crucial. If if I were to give you a checklist of five things to do if you're buying a home, I would say reach out to a broker and give them the address and a couple basic details. I would say let them take a look, hopefully they have experience with property placement and aren't just going to give you a fair plan coverage policy.
And then if it is in a moderate area where there might be, you know, slight wildfire risk, I would reach out to some captive companies. I mean, I know that Geico is good at writing, I know AAA might be riding some of those moderate risk areas. Obviously, there's state farm and farmers. I would honestly, even as an independent insurance broker, tell you to go to some of those captive companies if it fits best for you. But the second that that home's value goes up, the second that that you know the the risk goes up and you're closer to wildfire.
that that's when you really should be looking at other options and in complete transparency because the higher value that you get, the less these standard insurance companies are going to want to insure you and will insure you for. Some of these companies have caps on how much they'll insure on your home. And so that these are things that you have to think about because you let's say you you're moving from a, you know, a nice cottage somewhere, you know, not not super close to brush or maybe just a nice apartment or or condo.
And you think that you're just gonna go from that condo in San Francisco to let's call it Fraser Park, where we have a cabin. that'd be a weird move, but let's say let's say that you go into Fraser Park. Mammoth, big bear. Yeah.
Brian Bollinger (09:48.942)
Well say a mammoth or say you know, say Tahoe, say Big Bear. I mean there's lots of places. I mean, yeah.
Aaron (09:56.03)
Yeah, just any any place like that. Then I mean odds are that that insurance company you're currently with, who's covering that apartment or condo, they probably won't write you there. And so it it's it gets tricky and and you're gonna probably have to change insurance companies. And that's that is a tedious process. But hopefully you find a broker that makes that fairly easy.
Brian Bollinger (10:13.292)
Yeah. Well sounds good. Hopefully that helps you think about as you go down that journey of buying your dream home, making sure that the insurance has become the nightmare.
Aaron (10:22.577)
Yep. And I would say again, like just just last little note. So if you do have to go with the fair plan and all the specialty markets say no, and maybe you're thinking, maybe you have the inkling, hey, this is really close to brush. I I would also look at things like how close are we to a fire station? Are we in a, you know, fire approved resistance district? How close is the brush clearance to the house? And how close are we to a fire hydrant? These are a few details that the fair plan does look at and price based off of.
And another thing is also to make sure that the roof has been replaced in the last twenty years because that is a requirement to get replacement cost coverage with the fair plan on the dwelling. That's one of the the few requirements. So making sure.
Brian Bollinger (11:00.662)
And lots of other carriers too, even if you're not in a brush zone, if your home is above like twenty years old, the one of the main things, even up to fifty years old, is has that roof been replaced in the last 20? Really important. And if think about it, you're buying a home. You you're buying a, you know, liability in a way, right? If that roof needs to be replaced in a couple of years and you're not budgeting the 10, 20, 50 grand to replace that roof and 20 grand for electrical and 20 grand for the AC or whatever that is, you could be out.
tens to hundreds of thousands of dollars that you're not anticipating in addition to the cost of this insane insurance premium.
Aaron (11:36.551)
One hundred percent. Well, I I feel like this was hopefully informative for people. If you if you have any questions on on the market specifics or, you know, any type of specialty companies or, you know, wildfire areas or if you're looking to go buy a new home, just you know, you can drop a comment maybe on this podcast or reach out to us. We'd we'd love to see you know, people interacting with our videos and maybe if you have a question for next podcast as well, that that would be greatly appreciated. We just wanna, you know, keep sharing time sensitive appropriate information.
Brian Bollinger (12:04.162)
Sounds good. Thank you so much. Have a great day.
Aaron (12:06.599)
Thank you, you too.