Well if the industry learned one thing in Florida last year it is that Mobile Homes are called that for a reason, they become VERY mobile in strong wind. Try explaining insurable value to the owner of a mobile home that was purchased for $300,000.
Yes that number is correct, no added zero’s. No companies will insure a mobile for more than $125,000 to $150,000, so they are left holding the bag on half of their investment. Most mobile homes in our area sold for $20,000-$40,000 over the last 5 years, now they are $100,000 for a 20 year old unit. Insureds never want to insure for proper value and they all want a new home if they have a loss. The sad fact is that one of the largest carriers for mobilehomes paid most partial losses as total’s in last years storms, and now they are non renewing the book.(MobileUSA) Who really win’s in that situation? Apparently the stockholders did, the shares are at an all time high and they get off of what they perceive as high risk business. It is really hard to get insureds to understand that a mobile home’s insurable value will never be higher than the day it was made, unless something is ADDED to it. Resale value is a different thing, and people are willing to pay a whole lot more than they are worth. I Don’t put much faith in MSB either, they advised agents NOT to use their quick rater last year, but have not done anything to make a viable replacement with accurate cost trend indexing. One thing is for sure, It is not easy to over-insure anything these days.
Neither the agent nor the company are in the business of appraising property. We have tools, such as Marshall & Swift, to assist with developing a replacement cost, however I strongly believe that the burdon should be on the homeowner to obtain a replacement cost appraisal of the home. Some may disagree with me, but quite frankly you cannot fit most homeowner’s into a box, which is what M&S does. Construction costs vary by state, city, building age, architecture type, etc. And then those costs inflate even more after a CAT loss. Florida after the hurricanes, the Southwest after wildfires, CA after wildfires and earthquakes. I would stop writing homeowners insurance before I would take the responsibility of being a replacement cost appriaser.
Another problem is the client. More often than not I come in contact with clients who want to underinsure property to keep their costs down. These are the same clients who, of course, will sue me for not providing adequate limits when their building burns to the ground.
It is very frustrating for an agency to be told that they will no longer be getting contingency payments for writing good business, and also being told that we are going to be held even more responsible for things that should be the responsibility of the insured. Companies should be handing out pacifiers instead of pens and notepads.
I hope some time in my lifetime I will see a reversal of all of this “it is not my fault” crap. Whatever happened to personal responsibility. If I were buying a home in this area and spent $750,000, I might be a little concerned if my homeowner’s insurance policy had a dwelling limit of $250,000. Didn’t the homeowner’s see their appraisals? I always see the homeowner’s trying to get something for nothing. They always complain about the price of the insurance when you do try and insure to value and then if you don’t lower the dwewlling value, they go to some insurance ***** captive agent who will write it for whatever amount they want just to get the sale. Sorry, but I don’t have much sympathy for these people.
Yeah right trying selling a $200 per square RC. The insured will complain about it being to much and doesn’t want to pay the premium, and the companies wouldn’t let you over insure. We had the same situation here in the White Mountains a few years. I could tell! How about and endorsement would increase coverage for CAT Losses only. What is normal cost increases when there is CAT. I think FL is going thru the same thing with the storm claims.
I’m an agent in Arizona and I concur with the above statements. My guess is that one in one hundred insureds understands the replacement cost concept, and we continually explain the process, but the bottom line is cost, and there is always going to be an agent or company that will insure the dwelling for what the insured wants. So, educate the insured, continue to insure to 100% of value, and feel good about it. If you are reading this and you are one of the agents that undercuts prices, I hope that yours is the company getting sued.
I agree with your comments, the homeowners will fight you when you suggest raising the limit as their premium will increase but when tragedy happens they blame everyone else but themselves, you would think you would take more time reviewing what coverage you have on your largest asset. But it is easier to point fingers at the insurance industry….another example in this country of people not taking personal responsibility for their own actions. I hope they lose in court big and it costs them a ton of money….
Insurance write policies that no one understands and you all do it on purpose.
People spend money to insure and then find out insurance companies do everything in their power not to pay. Ask the people in Md. who are still homeless going on 2 years now after Hurricane Isabel.
Yes, we had more than enough insurance.
Instead of blaming the victims, take a look at how you do business. If you don’t want to insure risks, don’t write the policies. It really is that simple.
Companies like Mutual of Omaha have robbed people in Maryland and dare us to sue them.
I hope it never happens to you.
What goes around comes around.
We, as agents, are not qualified to determine the replacement cost of a client’s home. Fortunately, we have several markets that actually do replacement cost appraisals of homes – Chubb, Fireman’s Fund, Encompass – and they are extremely accurate. It is also important to get a policy with Guaranteed Replacement Cost with no cap limit. We lose clients to the direct writers because they underinsure the homes. The old addage is true: you get what you pay for. If you want to go cheap, don’t expect to be fully covered because it’s not going to happen. That’s where a good agent and agency comes in.
Insurance policies are not difficult to understand at all, particularly if you choose an intelligent and honest agent to help you.
The point of this particular thread is that your agent is NOT the person who should be deciding how much insurance you need on your building. Your typical insurance agent does not have the expertise it would take in order to tell you, the building owner, what it would cost to rebuild after a claim. I should not be held responsible for you underinsuring your building, period. I would not purposefully underinsure you. It does me no good to underinsure you. I make more money the more coverage I sell you, so I actually LOSE money by underinsuring you. But I should not be held accountable when a claim comes and you find that the there was not enough to rebuild. Either you tell me how much insurance you need, or you hire an appraiser to tell me. While there are some insurance companies who will send an appraiser out (eventually), the fact is that most insurance companies do not, and almost none will do it for a commercial building. And none of these companies are required to do so. Chubb and FF do so because they are a great “niche” market for certain types of higher valued homes. Encompass (CNA) is not even in the same league as Chubb and FF, so I find it quite hard to believe that they are doing any sort of appraisals. CNA does however use M&S costimators, which are about as good as playing “pin the price on the property”. Yes, many hurricane victims are being jerked around by their insurance companies. But I know of some, first hand, who CHOSE – knowingly – to underinsure their property and are now trying to sue their agents and insurance companies. Those are the people that are causing your policies to become unreadable without an attorney at your side. Those are the people who cost the industry so much money that good guys like you and I are going to see our 15% rate increase at renewal. Frivilous lawsuits and insurance fraud cost you and I, as consumers, more than you could ever imagine.
The bottom line is, for building valuation, the burden should be on the property owner, not the agent or the insurance company.
It all makes since now, If we lived in a society where people were responsible for their actions, or inactions, then we would have no need for attorneys to lay the blame on others. I say we start a movement to encourage personal responsiblity for all people so we can force lawyers into poverty, That would make it all worth while. It is so sad to see people act as if they are vindicated when they win a court case, when in fact it is just another case of “lets find a loophole in the law” or “someone has to be blamed for my ignorance”. I would no more rely on an insurance agent to be an appraiser, than I would decide to buy insurance from my banker or appraiser. I dont expect an agent to be proficient at building cost valuation, I expect him to be good at insurance, not construction. Is there any provision in home owners policies that require a customer to notify his agent if he adds on or modifies his home? It only makes since. but I just assume that responsibility on myself. I don’t trust others to do things they are not trained to do. My friend is a limo driver and has millions of miles of experience behind the wheel and is a very good driver and familiar with vehicles, This does not make him qualified to work on my cars engine. If an attorney practices medical malpractice law, he would surely have some knowledge of medical terms and procedures, but I would not suggest he could perform surgery. Dont expect your insurance agent knows how to rebuild a house he has probably never seen and be able to calculate values to rebuild it, especially if he only has a 1 or 2 page calculation sheet to do it. cost estimator’s are a joke and can not possibly determine values for all the different types of houses and geographic locations, at least not accurately. Does any one have a cost estimator that factors in a swimming pool or cage? does your company cover pools as “building” or “detached building”? Cov “A” or “B” Why is it that if you do 3 different cost estimators you get 3 different values. MSB does not factor garages properly, pools or multi story buildings. Go get an appraiser or a building contractor to give you an estimate and make sure the appraiser knows it is not to justify loan values or it will be for exactly wht you say the loan value is.
I just read this article and felt compelled to respond as an Insurance Agent writing insurance in Arizona. I laughed when I read the part about the individual that stated that he was offered insurance at $89.00 a square foot when the cost of construction is normally $200.00 to $250.00 a square foot. The reason I laugh is because I cannot tell you how many conversations I have had with my clients or ‘prospective’ clients about the replacement cost of their home should there be a total loss. And every single time it is a battle trying to get people to think about the ever climbing cost’s of construction especially in the area’s such as Mt. Lemmon or anywhere out of the direct metropolitan city limits. I cannot tell you how many times I have had clients gasp at how “high” the premium is at even $100 a square foot replacement cost. So it’s not always the insurance agent not giving the appropriate coverage but the client requesting certain things to keep the premium down. As it usually is in life most people do not want to pay high premiums for something they do not see an immediate payback from. Insurance is very important even though you can go years without ever needing to use it when the time comes you want to be sure it’s enough. Time and time again clients don’t realize the value of being 100% insured to value until they “need” it. So paying “high” premiums may seem like a waste of money but when the castostrophic loss occurs you will be thanking your lucky stars!
Everyone received tax statements that tell them what the value of their house is. With the way we are taxed to death, I would be very surprised if anyone was so “grossly” undervalued on their taxes. That would be another FLAG to the idiots who did not carry enough insurance to cover replacment of their home to say hwy, my insurance policy is XX thousands less than this, why? I agree with the agent about getting people to pay for the insurance they NEED. I had to enlighten a friend in this very regard who was going to insure her home for half value to save $100!!! Responsibility is the key word missing from our society today and it is 99.9% thanks to the attorneys who encourage that type of thinking so they can continue to rob the business owners, physicians, hospitals, etc. who give services. I do not know why the word “Accident” is in the dictionary anymore since it obviously is not used or needed anymore with the way things are going.
Well if the industry learned one thing in Florida last year it is that Mobile Homes are called that for a reason, they become VERY mobile in strong wind. Try explaining insurable value to the owner of a mobile home that was purchased for $300,000.
Yes that number is correct, no added zero’s. No companies will insure a mobile for more than $125,000 to $150,000, so they are left holding the bag on half of their investment. Most mobile homes in our area sold for $20,000-$40,000 over the last 5 years, now they are $100,000 for a 20 year old unit. Insureds never want to insure for proper value and they all want a new home if they have a loss. The sad fact is that one of the largest carriers for mobilehomes paid most partial losses as total’s in last years storms, and now they are non renewing the book.(MobileUSA) Who really win’s in that situation? Apparently the stockholders did, the shares are at an all time high and they get off of what they perceive as high risk business. It is really hard to get insureds to understand that a mobile home’s insurable value will never be higher than the day it was made, unless something is ADDED to it. Resale value is a different thing, and people are willing to pay a whole lot more than they are worth. I Don’t put much faith in MSB either, they advised agents NOT to use their quick rater last year, but have not done anything to make a viable replacement with accurate cost trend indexing. One thing is for sure, It is not easy to over-insure anything these days.
Neither the agent nor the company are in the business of appraising property. We have tools, such as Marshall & Swift, to assist with developing a replacement cost, however I strongly believe that the burdon should be on the homeowner to obtain a replacement cost appraisal of the home. Some may disagree with me, but quite frankly you cannot fit most homeowner’s into a box, which is what M&S does. Construction costs vary by state, city, building age, architecture type, etc. And then those costs inflate even more after a CAT loss. Florida after the hurricanes, the Southwest after wildfires, CA after wildfires and earthquakes. I would stop writing homeowners insurance before I would take the responsibility of being a replacement cost appriaser.
Another problem is the client. More often than not I come in contact with clients who want to underinsure property to keep their costs down. These are the same clients who, of course, will sue me for not providing adequate limits when their building burns to the ground.
It is very frustrating for an agency to be told that they will no longer be getting contingency payments for writing good business, and also being told that we are going to be held even more responsible for things that should be the responsibility of the insured. Companies should be handing out pacifiers instead of pens and notepads.
I hope some time in my lifetime I will see a reversal of all of this “it is not my fault” crap. Whatever happened to personal responsibility. If I were buying a home in this area and spent $750,000, I might be a little concerned if my homeowner’s insurance policy had a dwelling limit of $250,000. Didn’t the homeowner’s see their appraisals? I always see the homeowner’s trying to get something for nothing. They always complain about the price of the insurance when you do try and insure to value and then if you don’t lower the dwewlling value, they go to some insurance ***** captive agent who will write it for whatever amount they want just to get the sale. Sorry, but I don’t have much sympathy for these people.
Yeah right trying selling a $200 per square RC. The insured will complain about it being to much and doesn’t want to pay the premium, and the companies wouldn’t let you over insure. We had the same situation here in the White Mountains a few years. I could tell! How about and endorsement would increase coverage for CAT Losses only. What is normal cost increases when there is CAT. I think FL is going thru the same thing with the storm claims.
I’m an agent in Arizona and I concur with the above statements. My guess is that one in one hundred insureds understands the replacement cost concept, and we continually explain the process, but the bottom line is cost, and there is always going to be an agent or company that will insure the dwelling for what the insured wants. So, educate the insured, continue to insure to 100% of value, and feel good about it. If you are reading this and you are one of the agents that undercuts prices, I hope that yours is the company getting sued.
I agree with your comments, the homeowners will fight you when you suggest raising the limit as their premium will increase but when tragedy happens they blame everyone else but themselves, you would think you would take more time reviewing what coverage you have on your largest asset. But it is easier to point fingers at the insurance industry….another example in this country of people not taking personal responsibility for their own actions. I hope they lose in court big and it costs them a ton of money….
Insurance write policies that no one understands and you all do it on purpose.
People spend money to insure and then find out insurance companies do everything in their power not to pay. Ask the people in Md. who are still homeless going on 2 years now after Hurricane Isabel.
Yes, we had more than enough insurance.
Instead of blaming the victims, take a look at how you do business. If you don’t want to insure risks, don’t write the policies. It really is that simple.
Companies like Mutual of Omaha have robbed people in Maryland and dare us to sue them.
I hope it never happens to you.
What goes around comes around.
We, as agents, are not qualified to determine the replacement cost of a client’s home. Fortunately, we have several markets that actually do replacement cost appraisals of homes – Chubb, Fireman’s Fund, Encompass – and they are extremely accurate. It is also important to get a policy with Guaranteed Replacement Cost with no cap limit. We lose clients to the direct writers because they underinsure the homes. The old addage is true: you get what you pay for. If you want to go cheap, don’t expect to be fully covered because it’s not going to happen. That’s where a good agent and agency comes in.
Insurance policies are not difficult to understand at all, particularly if you choose an intelligent and honest agent to help you.
The point of this particular thread is that your agent is NOT the person who should be deciding how much insurance you need on your building. Your typical insurance agent does not have the expertise it would take in order to tell you, the building owner, what it would cost to rebuild after a claim. I should not be held responsible for you underinsuring your building, period. I would not purposefully underinsure you. It does me no good to underinsure you. I make more money the more coverage I sell you, so I actually LOSE money by underinsuring you. But I should not be held accountable when a claim comes and you find that the there was not enough to rebuild. Either you tell me how much insurance you need, or you hire an appraiser to tell me. While there are some insurance companies who will send an appraiser out (eventually), the fact is that most insurance companies do not, and almost none will do it for a commercial building. And none of these companies are required to do so. Chubb and FF do so because they are a great “niche” market for certain types of higher valued homes. Encompass (CNA) is not even in the same league as Chubb and FF, so I find it quite hard to believe that they are doing any sort of appraisals. CNA does however use M&S costimators, which are about as good as playing “pin the price on the property”. Yes, many hurricane victims are being jerked around by their insurance companies. But I know of some, first hand, who CHOSE – knowingly – to underinsure their property and are now trying to sue their agents and insurance companies. Those are the people that are causing your policies to become unreadable without an attorney at your side. Those are the people who cost the industry so much money that good guys like you and I are going to see our 15% rate increase at renewal. Frivilous lawsuits and insurance fraud cost you and I, as consumers, more than you could ever imagine.
The bottom line is, for building valuation, the burden should be on the property owner, not the agent or the insurance company.
It all makes since now, If we lived in a society where people were responsible for their actions, or inactions, then we would have no need for attorneys to lay the blame on others. I say we start a movement to encourage personal responsiblity for all people so we can force lawyers into poverty, That would make it all worth while. It is so sad to see people act as if they are vindicated when they win a court case, when in fact it is just another case of “lets find a loophole in the law” or “someone has to be blamed for my ignorance”. I would no more rely on an insurance agent to be an appraiser, than I would decide to buy insurance from my banker or appraiser. I dont expect an agent to be proficient at building cost valuation, I expect him to be good at insurance, not construction. Is there any provision in home owners policies that require a customer to notify his agent if he adds on or modifies his home? It only makes since. but I just assume that responsibility on myself. I don’t trust others to do things they are not trained to do. My friend is a limo driver and has millions of miles of experience behind the wheel and is a very good driver and familiar with vehicles, This does not make him qualified to work on my cars engine. If an attorney practices medical malpractice law, he would surely have some knowledge of medical terms and procedures, but I would not suggest he could perform surgery. Dont expect your insurance agent knows how to rebuild a house he has probably never seen and be able to calculate values to rebuild it, especially if he only has a 1 or 2 page calculation sheet to do it. cost estimator’s are a joke and can not possibly determine values for all the different types of houses and geographic locations, at least not accurately. Does any one have a cost estimator that factors in a swimming pool or cage? does your company cover pools as “building” or “detached building”? Cov “A” or “B” Why is it that if you do 3 different cost estimators you get 3 different values. MSB does not factor garages properly, pools or multi story buildings. Go get an appraiser or a building contractor to give you an estimate and make sure the appraiser knows it is not to justify loan values or it will be for exactly wht you say the loan value is.
I just read this article and felt compelled to respond as an Insurance Agent writing insurance in Arizona. I laughed when I read the part about the individual that stated that he was offered insurance at $89.00 a square foot when the cost of construction is normally $200.00 to $250.00 a square foot. The reason I laugh is because I cannot tell you how many conversations I have had with my clients or ‘prospective’ clients about the replacement cost of their home should there be a total loss. And every single time it is a battle trying to get people to think about the ever climbing cost’s of construction especially in the area’s such as Mt. Lemmon or anywhere out of the direct metropolitan city limits. I cannot tell you how many times I have had clients gasp at how “high” the premium is at even $100 a square foot replacement cost. So it’s not always the insurance agent not giving the appropriate coverage but the client requesting certain things to keep the premium down. As it usually is in life most people do not want to pay high premiums for something they do not see an immediate payback from. Insurance is very important even though you can go years without ever needing to use it when the time comes you want to be sure it’s enough. Time and time again clients don’t realize the value of being 100% insured to value until they “need” it. So paying “high” premiums may seem like a waste of money but when the castostrophic loss occurs you will be thanking your lucky stars!
Everyone received tax statements that tell them what the value of their house is. With the way we are taxed to death, I would be very surprised if anyone was so “grossly” undervalued on their taxes. That would be another FLAG to the idiots who did not carry enough insurance to cover replacment of their home to say hwy, my insurance policy is XX thousands less than this, why? I agree with the agent about getting people to pay for the insurance they NEED. I had to enlighten a friend in this very regard who was going to insure her home for half value to save $100!!! Responsibility is the key word missing from our society today and it is 99.9% thanks to the attorneys who encourage that type of thinking so they can continue to rob the business owners, physicians, hospitals, etc. who give services. I do not know why the word “Accident” is in the dictionary anymore since it obviously is not used or needed anymore with the way things are going.