When Wildfires Hit Home

As wildfires spread across Colorado and the country, we wanted to provide information on having coverage in the event a wildfire damages your property.

If you’ve discussed insurance with me you know that my goal as an insurance agent is to provide customized guidance on how much insurance each family needs.  For your homeowner’s insurance, the amount of dwelling coverage you have is important because that is the maximum covered amount insurance will pay if your home is completely destroyed.

Are you appropriately insured?

United Policyholders is a non-profit organization that helps people better understand insurance coverage.  They have several employees and volunteers that were directly impacted by a natural disaster and have decided to use that experience to help others.  In a recent presentation with The City of Longmont Landlord Training Alliance, they referenced homeowners they’ve supported after a natural disaster being underinsured on their dwelling coverage up to 6 figures.

Have interior and exterior features been inventoried and included?

The dwelling amount on your policy will be calculated by your agent.  All major insurance companies have software they use to estimate what it would cost to rebuild your home (typically called ‘Replacement Cost Estimator’).  It is up to the agent, and you, to make sure that the inputs into the software are accurate.  The size and foundation of the home are obviously factored into the cost to rebuild your home.  In addition to that, the quality of finish for the kitchen and bathrooms and the details you have in your home also impact how much it costs to rebuild your home.

Kitchen and bathrooms can have a wide variety of features and quality of finish.  If you have a kitchen with custom cabinets and counter tops, make sure your agent factors that into the replacement cost estimator.  If they just selected a standard finish in your home, then you will likely not get enough money from your insurance policy to rebuild your kitchen as is without paying out of pocket.

Upgrades to your home can also add up in the cost to rebuild your home as it is today.  While there are a lot of upgrades and features in a custom home, there are several common interior and exterior features in homes that need to be added to the replacement cost estimator like – molding, curved staircases, recessed lighting, cathedral or vaulted ceilings, chandeliers, pillars or columns, picture windows, and sliding glass doors.

Remember, the purpose of insurance on your property is to make you whole again.  Make sure you have the right coverage and enough coverage to do that.

Are additional endorsements a wise investment?

When needed, there are some common endorsements that add additional coverage to the dwelling amount that are inexpensive enough to have on all policies:

  • Extended dwelling coverage, typically adds 25% or 50% of additional coverage.  The coverage will help in the event the replacement cost estimator was too low.  It’s important to be careful here, extended dwelling coverage won’t provide additional coverage for a custom kitchen when the agent enters a standard kitchen.  So, it is important that this type of coverage is set up correctly to begin with.  I’m happy to explain this in greater detail. 
  • Ordinance and law coverage will pay for additional costs to rebuild the dwelling to current code.

Personal items

You should also be aware of the amount of personal property coverage you have and limitations for specific items.  For example, jewelry, rugs, art, and tools often hold limited coverage.  I review valuables with my clients to determine if a floater or endorsement policy is warranted in order to have enough coverage.

Documenting Possessions

Be sure to periodically take photos or video of your home, walking through each room, documenting finishes and special touches in your home.  Remember to open drawers and closets to record valuables. For more expensive items show the make and model. 

Additional Living Expenses

The last insurance coverage that will be helpful to you is additional living expense coverage.  This coverage will pay for expenses you have if you are not able to live in your home.  While the Red Cross and local shelters have options for short term arrangements, rebuilding can sometimes take years so it’s important to have some peace of mind that these costs can be recouped from your insurance.

Mitigation and prevention

There are several resources available on what you can do to create a higher level of safety for your home. Common recommendations include clearing debris from your yard, maintaining a distance between trees and your home, having a hose long enough to reach around your house and your roof.  Your municipality will likely have resources to help with mitigation, be sure to check in with them.  Some insurance companies partner with companies that work to provide additional protection for your home.  One way they will help is if your property is at risk of a fire, they will come and implement fire prevention measures around your home including potentially laying flame-resistant material.

I know it is difficult to think that a natural disaster will impact you, yet I like to encourage people to take precautionary steps when they can.  Even if you have minimal wildfire risk it is still good to review your coverage for homeowners, condo owners, rental owners, and renters.  Take the time to look over your policy or review a loved one’s policy that may be at greater risk.

Thank you to everyone helping fight the fires and helping those in need.

To your financial success,

Brad Christian

My Experience as an Insurance Agent

I have been a licensed Property and Casualty insurance agent for 6 months now and have partnered with Welch Financial Planning for over 5 months.  It has been a great experience and I am grateful that I pursued this new career path.  It excites me to talk about personal finances, providing a service that gets people closer to their financial goals, and helping people utilize insurance as a part of their financial toolkit.

In my time as an agent I have learned two things about the insurance industry that I feel are important to share.  First, what I’ve seen when running quotes for clients is that every insurance companies algorithm is different.  If the algorithm thinks you’re an ideal client for a specific insurance provider they will offer you a lower price as an incentive to switch to them.  Second, most of the large insurance companies have similar customer reviews and satisfaction ratings, so you should shop around every 3 to 5 years and change providers when there is an opportunity to do so. 

My objective as an insurance agent is to make sure you have the right amount of insurance for your financial situation and not just offer low ball quotes to make a sale.  By looking at the values of your properties and talking through your financial situation I can provide guidance on how much coverage you should have to allow you to make the best decision for your risk tolerance.

In my 5 months as an insurance agent I have already helped clients reduce their insurance costs, increase their insurance coverage, or some clients were able to do both at the same time.  Here are examples of client engagements that highlight how I approach insurance-

  • I have already had several conversations with clients that had inadequate liability coverage.  People generally start out with $300k in coverage, which is fine when you are younger, but as your assets grow, so should your liability coverage to help protect those assets from being taken in a lawsuit.
  • Working with a potential client I highlighted several areas where I was concerned their coverage was not adequate.  They called me a few months later saying thank you for the advice and that they had contacted their current insurance provider to update their coverage with the suggestions I made.  For a few hundred dollars more a year they are now much better protected for their risk exposure.  Even though this prospect did not become a client due to not being able to offer a competitive price, I was able to recognize these lapses and make recommendations only a few months into my new career when the clients current agency hadn’t reached out in years.
  • A new client took the time to send me feedback on why they made the decision to move their insurance to me.  The main reason was due to the fact that I was able to simplify the quoting process.  I do my best to get as much information as I can on my own and then verify that information with the client.  That way we can focus the conversation on the coverage the client needs and is comfortable with and not spending time going through all the details needed for an accurate quote.
  • Most recently I had sent a quote to a potential client that was similar coverage with a lower price.  The client called their current insurance provider to see if they could lower their costs to get closer to the price I was able to offer.  The insurance agent suggested lowering their liability limits from $500k to $300k.  With the client having assets worth more than $500k my advice to the client was to not risk having your assets be exposed over a few hundred dollars a year in cost.

Your coverage amount should not be based on defaults or state minimums.  While going through my property and casualty insurance training I purchased a new vehicle.  When I called my insurance company to add the new vehicle to my policy they stated, ‘the default coverage is $250k/$500k/$250k, is that okay with you?’.  I vowed at that point to never say that to a client and to make sure there is justification for the coverage amount.

The way I approach insurance is to use it as a tool to help protect your family’s assets and financial future.  If you have questions on whether your coverage is the right fit for you, I am happy to review your policies and provide guidance.  The best thing to do is to reach out now as no one can predict when an accident may occur.

To your financial success,

Brad Christian

The Benefits of Umbrella Coverage

I signed up for an umbrella insurance policy when I was in my early 20’s because the financial advisor my wife and I were working with required all of his clients to have one.  At the time, I did not know much about it and luckily I have not had to use it.  However, now that I am a property and casualty insurance agent, I understand the benefits of having an umbrella policy, and I’m thankful that I’ve had it all these years.

An umbrella insurance policy starts at $1M of coverage and provides liability coverage in two ways.  First, if you have the proper home and auto coverage the umbrella policy will act as additional liability coverage on top of those policies.  Second, it will provide coverage in situations where your home or auto coverage may not be available (see scenarios listed below).

There are several reasons why I like umbrella policies.  Here are the main ones-

  • They are inexpensive.  Cost varies, but an average family with a house and 2 cars can get $1M coverage for $300 or less a year.  If the policy is used even once it will likely pay for a lifetime of coverage.
  • Lots of accidents happen to friends, family, or people you know.  An umbrella policy will be there to provide financial support if that is the results of a lawsuit.
  • It’s a way to build a moat around your assets.  At Welch Financial Planning, we obviously talk about personal finances and retirement a lot.  I like to joke that no one has ever drawn up a financial plan that in year 21 you get sued for $1M, most of your assets disappear, and you have to start over financially.  An umbrella policy is a tool to use to help prevent that from happening.

The need for an umbrella policy can be somewhat correlated to the amount of assets you have and your lifestyle.  The more assets you have creates a greater chance of litigation.  Although, just because you don’t have assets doesn’t mean you won’t be asked to pay a lawsuit later in life.  With statutes of limitations and using the legal process to collect you may have to pay for a lawsuit 10-20 years later.

Another factor to be aware of is the costs of ‘pain and suffering’ in a lawsuit.  Nuclear verdicts are becoming more common.  While most nuclear verdicts are against businesses and not individuals, there are still plenty of law firms advertising big settlements against individuals.  Large Colorado law firms advertise winning big and list several lawsuits where the settlement was +$300k on their websites.  The $300k does not include lawyer fees and lost wages that the umbrella policy could cover.  Hopefully the individuals paying these large sums had an umbrella policy to protect them.

Here are common scenarios where umbrella coverage can help if an accident occurs or a lawsuit is brought against you:

  • Hosting parties at your home, e.g. with alcohol
  • Coverage extends to your children in case they were involved in an incident
  • Situations where you assume responsibility for other peoples’ children
  • Your family’s use of social media
  • Travel abroad
  • If you volunteer with a charity or serve as a board of director, participate in a HOA

I want to acknowledge that I don’t think you are a bad person.  I hope you and I will never have to use an umbrella policy.  But there are accidents and unfortunate circumstances that happen every day when this coverage is needed.

Note that umbrella policies are not a failsafe to financial ruin.  There are some general exclusions for umbrella policies and every insurance provider has their own fine print on requirements and coverages.  Like all insurance policies, a personal umbrella policy does not cover intentional injury.  But, of the tools available to achieve financial success, this is a top rated and valuable one to implement.

I suggest having liability coverage 1-2 times your assets.  If you do have assets over $300k then an umbrella policy is something to consider.  We are here to review your financial situation and assess the appropriate amount of coverage for your family.  By the end of May I encourage you to list out your assets and an estimate of what they are worth.  From there we can review your insurance coverage, suggest changes, and even complete multiple insurance quotes to make sure you are not overpaying for coverage.

To your financial success,

Brad Christian

Spring Cleaning in Full Force

It seems to me that spring cleaning has taken on a whole new meaning this year. I have a relative that has a goal of cleaning something in their condo every day. And a close friend of mine, who hasn’t done yard work the 6 years I’ve known him, just did 5 hours of yard work yesterday.

I made the commitment that I would clean all of the blinds in the house, although it is not going as fast a I would like. It is also time to get the garden organized as Mothers Day is this weekend.

What are you cleaning or organizing around the house that hasn’t been done for a while?

Keep Doing the Little Things

We are living in an unprecedented and emotional time.  Given the number of challenges we are all facing during this time, I’m inspired to see the many ways that people are pitching in and helping others adjust – whether that’s parents who are now partially homeschooling their kids, medical staff, first responders, or grocery store staff, it builds hope to see how people are banding together.

Property and casualty insurance companies are also finding ways to help their clients financially.   Each company has their own approach, here are some examples of what most major P&C companies are doing:

  • In March, many insurance carriers announced they would not cancel policies for non-payment and waive late fees.  Some insurance companies are literally not sending invoices for renewals.  Just telling their clients they are covered and we’ll worry about payment at a later date.
  • Endorsements and coverage extensions are being added temporarily for free to business insurance policies.  For example, if you are a restaurant that never provided delivery service before, your insurance most likely did not have commercial auto coverage.  Insurance companies are automatically adding commercial auto coverage to restaurants in case one of their employees has an accident.
  • The announcement this week from most major insurance companies has been by providing refunds/credits for your auto coverage.  Most people are driving less (I drove ~15 miles in the past 28 days) resulting in the insurance companies taking on less risk.  They are passing on that benefit to their clients.  Each company has their own program, but in general, the program will benefit all clients and there is no need to apply.

Go on your insurance company website or call your insurance agent if you have specific questions on how you may benefit from any of these new announcements.

Here is my call to action, please provide an example of a company or small business you would like to recognize for supporting their community and their customers.  If you don’t have an example to share, I encourage you to take action yourself and share it here.

Colorado Independent Insurance Agent, Brad Christian

While you’re home…here are a few insurance steps to check off your list

My wife had an interesting observation this week. She said, “most of the time life is hectic with lots going on and all I want is for things to slow down. Well, I got what I asked for. Our calendar is wide open for the foreseeable future.” If you are someone that has been staying home and have been passing the time on Facebook or attempting to teach your children, here is one thing you can do at home to be productive and improve your family’s protection-

Take a video of everything in your home. Go through all the rooms, open all the drawers and cupboards, go in the basement, and around the outside of the house. Make sure you capture everything. For more expensive items such as jewelry, musical instruments, sports equipment, electronics, be sure to capture the brand, make and model in the video. Save the video to the cloud, put it on a USB drive and give it to a loved one, or put it in your safety deposit box.

If anything ever does happen to your home, you will thank yourself. You can send the video to your insurance company and they will use it to help determine how much money you should receive. This should save you a substantial amount of time when filing a claim and you can spend more time focused on recovering.

In addition, if you’ve made any of the below changes to your home you should reach out to your insurance agent-

These may qualify for a discount and lower your insurance costs:

  • If you have a new home or have had your roof replaced in the past 5-10 years and the contractor used grade 4, hail resistant shingles. Make a copy of the document stating they are grade 4 and send it to your insurance agent to see if you qualify.
  • Installed a water monitoring system. Flo and StreamLabs are 2 popular brands right now.
  • Installed or upgraded your smoke alarms, fire alarms, or security system.
  • Replaced your furnace.
  • If you have completed a home renovation that involved upgrading plumbing, heating or electrical.

Your coverage may need to be updated if you:

  • Did a home renovation like a kitchen or bathroom update.
  • Installed solar panels.
  • Purchased an item worth more than $1,500.
  • Inherited money – not because we want a piece… As your assets increase, so should your insurance coverage. That way if an accident does result in a lawsuit your nest egg is better protected.

Colorado Independent Insurance Agent, Brad Christian