How to Choose the Right Amount of Home Insurance
KAREN: Hi, we’re back with another episode of House Talk. This is Karen Malanga, Hasson Company Realtors and nestbend.com.
I’m so excited to have Allison Glasier, Representative of Country Financial, here as our guest today. She is our go-to representative for insurance, and I would love to have her speak to something that I ran into last night at Maverick’s. I was visiting with a gentleman and he was explaining what his home insurance replacement cost was on his home, and I got out my calculator and I figured, what’s the local price per square foot? I thought my gosh, he doesn’t have enough insurance – I didn’t think.
Anyway, Allison, welcome to the program, and I hope you can speak to that for our listeners.
ALLISON: Thanks so much, Karen. It’s a pleasure to be here again. I appreciate you having me back on the show.
I’d love to talk with you about this. It’s a common misconception that happens with home insurance where people really have a hard time understanding if this place burns to the ground, worst case scenario, what is it going to cost to replace everything that I have here? It’s a big question, and it’s something that, unfortunately, there’s a lot of mystery around that.
Here in central Oregon, the land is worth a lot, so people often will say “My house is worth $500,000, but we’re only insuring it for $300,000.” Why is that? You have to keep in mind that the land isn’t going anywhere.
KAREN: Also the foundation is already poured, and generally that survives.
ALLISON: Absolutely. Those pieces are still there, so we’re looking at replacing the structure itself, and then also the personal property and some of the other things that you’ve got there. As a general rule, I would say we’re looking at $150 a square foot at a bare minimum here in central Oregon to rebuild a home. We have homes that we insure up to $500 or $600 a foot, depending on the build and the structure.
KAREN: What I’m thinking we may have in central Oregon is a lot of our listeners might have purchased their home during the recession, so the price was very low on the home. Replacement cost to build at that time was a lot lower as well. Now that our building costs are going up, can they really replace that home for what they’re insured for?
ALLISON: I think that’s a great question. Ultimately, in my opinion, it comes down to having a relationship with the person who helps you with that policy. A lot of people do get shuffled into a home insurance policy via their mortgage broker or some kind of a closing thing when they’re finalizing those documents and they don’t ever think about it again until they need it.
I’ve been doing this since 2007. That’s long enough to know that really none of this stuff matters unless it’s right when you have a claim.
KAREN: That’s the problem.
ALLISON: Right. So unless you’re doing a review every year or two, looking at those documents, doing an assessment of the property, any improvements that you’ve made, and really analyzing what it would cost, it’s often a surprise of being uninsured or underinsured.
KAREN: Also, people tend to acquire more things in the home. Maybe when they got their policy they had a tiny television and now they’ve got the big widescreen TV or surround sound system or they’ve updated the interior. That all has value.
ALLISON: Absolutely. A typical home insurance policy is going to include coverage for the dwelling itself and any additional structures, and then also coverage for your personal property. All of those things – your TV, your furniture, clothing, electronics – those things should fall under that personal property coverage, but you want to make sure you’re talking about those. If you have jewelry or collectibles or things like that that would be difficult to replace, it’s important to be having that conversation.
KAREN: Do you recommend that people take photographs of what they have inside the home?
ALLISON: Absolutely. I would say once a year, take your phone, do a little walk through, flip through your closets, look in your gear closet, inventory your skis – here in central Oregon we’re all such gearheads, right?
KAREN: The paddleboards, the kayaks, those mountain bikes.
ALLISON: That is so true. You’ve got a lot of value there. If you leave your garage door open and someone comes in, it’s often difficult to remember even what you had. So to have some kind of a digital record that you can email to yourself on an annual basis, just to update, makes it much easier if you do have a claim.
KAREN: As we’re talking I’m thinking, oh my goodness – just changes that I have in my own personal residence.
ALLISON: Absolutely. Really, it’s one of those things you don’t want to just do once and not visit it again after you’ve closed on that mortgage. You want to be reviewing that policy every year.
KAREN: The other thing I’m thinking about – and this is just from a personal standpoint, going through ages and stages with my mother – now I have her wedding ring. You are my insurance agent, and I don’t think I’ve told you about this. What steps do I do to secure that as well?
ALLISON: That’s a great question. Thanks for bringing that up. What we’ll want to do is get an appraisal on that one and have that on file. That way if it does go missing or it falls down a drain or if anything happens, it’s replaced with no deductible.
That’s called scheduling personal property. Anything like that that’s of really sentimental value or a lot of monetary value, I recommend getting that scheduled. That way, if it does go missing, it’s not a problem.
KAREN: We’re speaking with Allison Glasier, our local representative from Country Financial. I’m Karen Malanga with Hasson Company Realtors and House Talk. We’ll be right back, and we’re going to be discussing some of those things you purchase for your backyard that may add additional risk. The first thing that comes to mind is a trampoline. We’ll talk to you soon.
Hi, this is Karen Malanga, Hasson Company Realtors and NestBend, back with House Talk. We’re so lucky today to have Allison Glasier, our local representative from Country Financial. In the previous segment we discussed some of the basics on homeowner’s insurance.
Now we’re going to touch on a subject that’s important to my daughter. She has three little ones. She mentioned yesterday that she’s thinking about purchasing a trampoline. I thought, Allison, could you speak to us about some of the additional things people can purchase for their homes that may add additional liability?
ALLISON: Sure, absolutely. Those are busy little boys, so I’m sure that’ll be a well-used trampoline.
KAREN: Yes.
ALLISON: There are definitely some factors that could increase that liability risk. Just as a general rule, I always say I want to make sure you have more liability insurance in place than you could possibly lose in a lawsuit. If you’ve got a million dollar portfolio and you’re carrying low liability limits, that’s a huge risk. For a couple hundred bucks a year, to have an umbrella or a big fat liability policy that would protect you, in my opinion, that’s invaluable.
There are things like trampolines, like swimming pools, things like that where, let’s be honest, accidents do happen. So rather than try to put yourself in a position where you’re having people sign waivers, etc., just to have enough coverage that if anything does go wrong, you don’t carry that burden, would be valuable.
KAREN: Sure. What other items – not just the trampoline, I’m sure there’s a lot of other items people can have on their property that create another layer of liability.
ALLISON: Yeah. It’s really interesting; one-fifth of all home insurance claims are related to dog bites.
KAREN: I was thinking about dogs, because we’re Dog City, USA.
ALLISON: It’s so true. Everybody here in Bend has a dog. Some companies won’t insure certain breeds, and that’s how they try to mitigate that risk. Other companies will only work with people with a certain credit score or a certain background, to help them from an actuarial standpoint of trying to figure out how much to charge people for these policies and for that risk.
But ultimately, dogs are a huge risk. If someone comes onto your property and your dog’s having a bad day, even if they’ve never had a predisposed temperament, you need to be prepared to know that you want to have more liability than you could be sued for.
Again, just to make sure that that baseline is covered is so important.
KAREN: When you sit down with people, do you go over some of these things, like “Do you have a dog? Do you have a trampoline or a swimming pool?”
ALLISON: Yeah. I also want to know, what do you have at risk? What’s your net worth? Do we have enough of an umbrella in place that it’s not going to cause you to lose sleep?
We had a client in Portland a few years ago who lived here in Bend and had a couple of rental properties up in Portland, and he got a phone call from an attorney – he was not aware that one of his tenants had had a trampoline on the premise and had had a party 11 months before, and some adult guest had fallen off of the trampoline and injured her neck. He was being sued for $2.5 million. He did have a $3 million umbrella, so he was okay.
But the fact is that as a landlord, you really don’t have control as much as you’d like to think over what exactly is happening at that property. So rather than stress about what your tenants are doing or some of those details, just to make sure that you’ve got that base level is so important.
KAREN: I didn’t even think about the whole rental property aspect of this and someone having a dog they didn’t even tell you they had. That opens up a whole other layer.
ALLISON: It sure does. Careful screening – I think real estate investing is such an important part of a portfolio that you want to be able to do that, but you have to do it strategically and with the right kind of screening in place and property management in place, and liability.
KAREN: Allison, thank you so much for touching on the potential for liability and some of the items that can cause that.
I have another question for you. We have buyers all the time from out-of-state, and they call and they want property along the river. You’ve been so helpful in the past when I call and say, “Is this in a floodplain, is this not?” Can you go into flood insurance here and river properties in central Oregon?
ALLISON: Sure, absolutely. In 11 years, I’ve written more flood insurance policies over in Lincoln City and Newport than I have here in Bend.
KAREN: I can see that.
ALLISON: Honestly, there are not as many properties that are in a designated flood zone. If you’re in that flood zone, you’ll know. Your realtor, as you know, obviously, will make sure that you’re aware of that. It does require an additional policy. Flood insurance is not covered by Country Financial or by any other typical home insurance policy, so you do have to purchase a flood-specific policy.
The reason for that is obviously, if you look at what happened in New Orleans with Hurricane Katrina, some of those things are absolutely devastating. So it is a different type of risk that companies are taking on.
When you have a pipe that bursts in your home and floods your house, that is covered by a normal insurance policy. That’s a covered peril, if you will. But if you have water that comes in from outside of the home –
KAREN: Like from the Deschutes River.
ALLISON: Exactly. If the river rises and floods all those homes, unless those people have flood insurance, they are not covered. So again, it really comes down to having a relationship with the person who you’re working with so you can ask those questions.
Get things in writing. I’m a big fan of shooting someone an email and getting an email response so you’ve got that in writing that you asked this question and then they’ve done their due diligence as well.
KAREN: This is Karen Malanga with House Talk, Hasson Company Realtors, and Allison Glasier, Representative, Country Financial. We’ve been touching on floods and floodplains. When we come back, we’re going to continue on talking about water, but we’re going to go into ice dams and what can happen in the winter here in central Oregon.
Hi, we’re back with House Talk. This is Karen Malanga, Hasson Company Realtors and NestBend. We’ve got Allison Glasier, our local representative for Country Financial. We were discussing floodplain issues, and now I’d like to discuss ice dams just because of two winters ago.
Allison, I do not understand this one thing that happened to me last year. I thought I was doing the good thing – rake the roof, get the snow off the roof. I believe you told me if the ice dam or the water damage had happened because snow was on the roof, then I was covered. But because I did what I thought was a good thing and I put the snow on the ground, all of a sudden I wasn’t covered. Did that create a flood?
ALLISON: Yeah.
KAREN: See, that’s a gray area for me.
ALLISON: It was very confusing. You’re not alone, and I actually was on the phone with our claim supervisors trying to highlight exactly that question for a number of people. I stood in my driveway that winter of 2017 and called my state director and said, “Do you want a roof claim or a life insurance claim?” He said, “Get off your roof.”
But I was doing the same thing; I was up there with rakes and shovels, trying to mitigate the damage potential on my roof.
KAREN: And take the weight off too.
ALLISON: Yeah get this three feet of snow off the roof, right? But it is by definition – you’ve got to understand, insurance policies come down to the letter of the policy. The second that I pushed the water off of my roof onto the ground, I then created this potential for groundwater – which, when that melts, that is not covered. That is considered flood, and it’s not covered.
So you are not alone. It was a very common conversation that we were having last year. How do we navigate that?
KAREN: So you would’ve had to have had a flood policy, even if you lived up on top of Awbrey Butte or somewhere, to cover this.
ALLISON: Yep. Last winter, in my opinion it was kind of an anomaly. We don’t see that kind of snow here very often. But I did have people who purchased flood insurance policies looking forward, saying “If this happens again, I don’t want to have to have that stress.” Because they weren’t in flood zones, they were fairly inexpensive. It was a few hundred dollars a year to have that additional policy.
KAREN: Oh, okay. I didn’t realize that.
ALLISON: Yeah, it’s not so bad unless you’re in that flood zone. But it is really important to understand, where does that policy delineate? How does that work? I actually had my windows replaced in my house last year – thank you; you sold me that house about 10 years ago. But those windows were 30 years old, so it was time to replace them.
I had a handyman who I’ve worked with for years who did this for me, and in January I had water pouring into my 5-year-old daughter’s room. So I called him up and said, “Hey, this window’s leaking. Could you please come back out?” The poor man came out four times and re-caulked the window literally four times. I had to send him a huge gift certificate for wasting all this time.
But it wasn’t the windows. It was the roof, and I didn’t know that. What had happened is on my own roof, I had damaged it while I was removing the snow.
KAREN: I think a lot of people did that.
ALLISON: Yep. So all of a sudden there was just a little hole where the water was able to come in and seep into her walls. It ended up creating a pretty substantial issue. I had to take the water out of the walls, replace the drywall, the sheetrock, all of the paint, etc., and also the roof.
KAREN: Wow. But that was covered, even though you created the damage to the roof?
ALLISON: Yes. Fortunately, there is no “idiot exclusion” on your insurance. I was trying to do the right thing and get that off of the roof. So they did cover that, but it was quite a learning experience.
KAREN: I think a lot of people have been in the same boat since the winter of 2017. What’s covered, what’s not covered? The whole groundwater thing just floors me, with the snow.
ALLISON: It’s so true.
KAREN: I think I’m going to look into adding a flood insurance policy – well, it depends. This winter was so light.
ALLISON: I know.
KAREN: I would think if you live in Minnesota or somewhere, you probably have a flood insurance policy.
ALLISON: Yeah, and again, it really comes down to where that flood line is. If you’re in that zone, you’re going to spend a couple grand a year on that policy. It’s not cheap if you’re required to have it by your bank.
KAREN: Water damage is so invasive.
ALLISON: It is. And then you don’t realize, too, the mold factor. If you don’t address it, it can create pretty substantial issues. So you really have to deal with that.
It’s important to understand your home insurance policy is not a maintenance policy. It’s not there to buy you a new roof when your roof is 30 years old. It’s there to fix it when something that is covered has happened. Things that are covered are wind, fire, vehicles crashing into your house, vandalism – all of those normal things are covered. That’s what it’s for. It’s for when the tree falls and causes the roof to break open and causes the water to come in that way, or when some idiot homeowner is on a roof removing snow and causes a hole. Those things are covered. But if you just have an old roof…
KAREN: That’s your problem.
ALLISON: Yes. That’s just being a homeowner.
KAREN: What about strong winds? We get really fierce winds here in central Oregon.
ALLISON: Yeah, that’s covered. Hailstorms, all those types of things.
It’s interesting; when I started in this business, you could insure a basic home for $300 or $400 a year. It’s gone up a lot across the industry. It’s not company-specific, but the rate of insurance has gone up substantially. You have to look around at the fires last year in California, the windstorms, the snow last year, and just understand that that is what’s happening. The risk of those replacements is being spread, and unfortunately we’re all on the hook for that.
KAREN: Allison, I have one more question for you. What happens to some of our very rural areas with a wildfire?
ALLISON: That’s a great question. When I’m insuring a home, we run that ISO report, which is basically a report that tells us how far that address is from the responding fire station. That plays a huge factor in the price that you’re going to pay for insurance. Really, you are paying a lot more to live in a rural area where you have that higher risk. That’s just the bottom line. You’re going to pay literally double in some cases.
Know that fire is covered; it’s a covered peril. Any insurance policy will cover fire. You have to be able to look at that risk.
But it’s also really interesting – last year I had a close friend who was helping to fight the fires in California in the neighborhoods. He’s a city firefighter. He said that they literally were going around looking at the defensible space around these homes and making a split-second decision of whether or not this home was savable.
Fascinating, right? All of a sudden as a homeowner, you really have a responsibility to give these firefighters a chance. If you don’t defend the space around your home by keeping the brush low, keeping the woodpiles, etc., away from your home, they’re going to move on to the next house where they have a chance to save the house.
So be responsible as a homeowner. Take that initiative to make sure that you do give those firefighters a chance to help you when you need that help.
KAREN: Yeah, I can understand that. Allison, it has been terrific having you here on House Talk.
ALLISON: Thanks so much.
KAREN: Again, this is Allison Glasier, our local representative with Country Financial. I’m Karen Malanga with Hasson Company realtors.
Next week we’re going to be speaking with Tammy Baney, our County Commissioner. That’s going to be a real fun discussion. We’re going to touch on affordable housing, which is a pretty hot topic here in Bend.
For this week we have another trivia question. Our question today is: what is an insurance binder? For those of you that have that answer, I want you to go to nestbend.com and enter to win two tickets to the movies.
If you like our show and want to know more, please visit our website at nestbend.com, and you can listen to today’s show and all of our past shows as well.
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