Home insurance isn’t the sexiest topic, but in the world of financial independence, predictability is quite an attractive trait to have. That’s why money nerds across the world value insurance as a natural hedge against catastrophic wealth-ending disasters. Whether you’re a homeowner, a renter, or a landlord, home insurance could help you rebuild quicker after the unexpected happens.

Recently, a large fire broke out around the Denver, Colorado area, affecting families in Mindy’s home city of Longmont. Thankfully, Mindy and her family are safe, but many didn’t share the same fate. Hundreds of households were left without homes, while they watched their old neighborhoods turn to ashes and embers. This prompted Mindy to invite her good friend and insurance expert, Steve Longenecker, onto the show to discuss how you can financially protect your family when disaster strikes.

Are you underinsured thanks to rising home prices? How much will your insurance company pay you if your home is destroyed? How are renters protected during natural disasters? And who should you contact to make a claim? All these questions (and more) are answered in today’s bonus episode of the BiggerPockets Money Podcast.

Mindy:
The show notes for this episode can be found at biggerpockets.com/moneyshow265-5. Welcome to the Bigger Pockets Money podcast, homeowner’s insurance fire bonus episode where we talk to Steve Longnecker from Mountain Insurance: Longmont about your homeowner’s insurance policy. I promise it’s not as boring as it sounds.

Steve:
It’s a bit challenging for some of these folks because they’re trying to figure out, “Well, where am I going to live for this period of time? How much is it going to cost me, and how long will that loss of use coverage be able to retain me? If I need to spend a couple thousand bucks a month just to live in a VRBO or somewhere that I find and if I have a year’s worth of coverage, well what happens next?”

Mindy:
Hello, hello, hello. My name is Mindy Jensen and I am here to make financial independence less scary, less just for somebody else, to introduce you to every money story because I truly believe that financial freedom is attainable for everyone, no matter when or you are starting. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, or start your own business, I will help you reach your financial goals and get money out of the way so you can launch yourself towards your dreams.
Today’s guest is a longtime friend of mine, Steve Longnecker, an insurance broker from Mountain Insurance: Longmont. On December 30th, 2021, fires ripped through almost 1,000 homes in cities a few miles south of where Steve and I both live. An article in the local newspaper brought up the possibility that in addition to losing their homes, some of these homeowners may not have had adequate insurance coverage due to the recent double digit percentage value increases our local market has seen. Talk about a double whammy. So I brought Steve in today to answer a bunch of questions about homeowners insurance. Steve Longnecker, welcome to the Bigger Pockets Money podcast.

Steve:
Thanks, Mandy. It’s great to be here. Appreciate that.

Mindy:
I’m so excited that I know an insurance broker so I can ask all these questions because this is really timely for not only people who live locally where we are, but in markets all across the country, housing prices have gone up. I’m seeing 10% and 20% and much more than that percentage increases and you could be under insured. So what happens if I’ve had a homeowner’s policy for a couple of years and my house burns down in a fire like this? With the price appreciation we’ve seen, someone who insured their house for replacement value a few years ago, maybe even a year ago, might not have enough coverage.
So let’s use round numbers for the ease of math. Let’s say I bought a house for $500,000 and insured it for $500,000. But now, it’s worth $750,000. Ignoring land value for just a moment, what happens to that delta of $250,000? Will the insurance company only pay out $500,000 and now I’m scrambling for that extra $250,000? That makes sense, but that also really stinks for somebody who is in this situation. So what can people do to protect themselves from this situation in the future, because housing doesn’t look like it’s going to be easing up anytime soon. I just threw 17 questions at you right there.

Steve:
Yeah, no problem, Mandy. So very good questions, by the way. There’s a lot of different ways to approach the coverage questions that you’re asking. To begin with, as you mentioned, when anybody puts a policy in place with an insurance company, the first thing that happens is that the replacement cost is calculated, typically by the agent, may also be double checked by the carrier itself or their systems in the process. And so at that time, the home should be insured around the replacement cost. And you mentioned a lot about market changes, but that cost is really technically derived from what it would take to replace it from a construction standpoint. Now beyond the increase in home values, we’re still in the middle of a pandemic here. And with the lack of supplies for things like lumber and drywall and other things, that’s also driving up the cost of construction right now as well as lack of labor.
So there are other things at play here even beyond just the local market issues. But that replacement cost is derived, at least to some degree, by some of the things I’m mentioning here along with where it’s located, the size, and so forth. And so to start with, when that home is initially insured, it should be pretty close. But over time, as you mentioned, because of all these changes, you may end up in a place where your home would cost a lot more than it did a few years ago if it hasn’t been looked at. Insurance companies are pretty good at looking at those changes, so they will notify and sometimes even automatically increase the coverage levels for you. I can’t say that all insurance companies do that, but that is a fairly standard practice, especially as things are changing rapidly over the last few years. The other thing that many companies have, I can’t say all policies or all carriers do this, but quite a few of them have what they call extended replacement costs, which is built into the policy.
And that could be anything from 10% or maybe 25% over the actual coverage limit that you see in your declaration pages. It could even be higher than that. It could be 100% now, some of the companies are offering. And many companies even offer what’s called full replacement, which really means it doesn’t really matter what it says in the deck pages. If your house burnt down tomorrow, they’re going to calculate, along with your input, of course, but they’re going to basically calculate what it would cost to replace that home and they’re going to cover it to the fullest extent minus deductible, that kind of thing. So there’s a lot of safety nets, if you will, that those policies can have in them. That doesn’t mean they all do, so you really need to check with your agent or check with your policy if you can get through that and read through that documentation. But one way or the other, you should be able to look to see what safety nets are available there.

Mindy:
Okay. And it’s called extended replacement cost?

Steve:
Yes, normally. Right.

Mindy:
Or full replacement cost. And would that language be written into the policy? I don’t know if you know this or not, but those policies aren’t so easy to read.

Steve:
Yeah, it will be somewhere, and then that’s a little bit tricky too because you’ll see the main coverage limits on your policy, the dwelling, which is the building, personal property, which is the contents, and some of the other items. But you may not see that extended replacement cost listed right there. It could be a couple pages later, it could be 25 pages later. So yeah, if you’re not an expert or interested in reading through all of that, then it’s best to talk to your insurance agent, probably.

Mindy:
Okay. And yeah, that is something that I’m going to recommend to everybody listening right now, call up their insurance agent. Or if you really enjoy reading that documentation, plow through there and see if you have coverage. Can you request the 100% or the 10% to 25%? In the height of the pandemic, the cost of wood was going through the roof and some of these new build houses were calling up their previously under contract customers and saying, “Hey, it’s going to cost an additional $30,000 to get that house built. And if you’re not willing to pay that, I’ll just refund your money because I’ve got a line of people who are willing to pay that.”

Steve:
Yeah, again, it’s handled in different ways. I would say that typically if you’re with an insurance company that has some of those options available, if you have a good agent, they probably already have that in the policy, I would say at least the 25%. If you’re with a company that maybe doesn’t even offer that or doesn’t push it or something like that, it may or may not be available and then you may need to switch carriers or something like that. Or the other alternative is rerun the replacement cost estimate, even if nobody has done that. You can do it proactively, just ask your agent or your carrier to do it and then they could bump it up. But of course, that only helps you now and in the near term, because they’re, again, a couple years out. If there’s no real added protection beyond that, then that’s where you’re at. And if the prices change again, you forget about it, your agent forgets about it, you’re back to where you are behind the curve again.

Mindy:
Yeah. Okay. So this covers my second question, which is if I’m not in a situation where my house just burned down, how do I right now insure my home? So let’s see, is it possible to be over insured? And if so, what happens during a claim? If I insure my house for $750,000, but it’s only worth $500,000, they’re not going to just write me a tech for $250,000, right?

Steve:
No, they’re not the intent of insurance, pretty much all insurance policies, the intent is to not be better off than where you were before your loss. And you mentioned before we started this show about a friend of yours that was trying to increase their limit in a mountain home and the insurance company wouldn’t allow it for whatever reason. Maybe they just didn’t think that it was worth that much or something to that effect. So there are other ways to get around that a little bit. That replacement cost estimate that I mentioned, your agent, at least in our case, our agents have the ability to run those reports. And they can be tweaked a little bit. Sometimes you can change the quality level within that report and that could make a substantial difference.
So if somebody’s feeling like their home is underinsured, that quality could be bumped up and could convince the insurance company, at least to some degree, that they should have higher coverage limits. But most insurance companies aren’t going to go beyond a report like that much beyond a few percent or maybe 10% or something along those lines because they don’t want to get into that situation that you mentioned where you’re over insuring and then maybe even potentially making money on it. That’s not likely going to happen anyway because the way claims are handled is that whenever you have a loss of any sort, whether it’s a full loss or maybe just a new roof or something like that, they are really only obligated to pay out what’s called the actual cash value or the depreciated amount of the coverage.
So that’s usually going to be 60% to 80% of the full claim value or the full home if it’s a full loss. And then once the work is done and you can show receipts or your contractor does, then they will pay up to that amount, assuming, again, it doesn’t go over the coverage limit or the coverage limit with the extended endorsement on top of it. So you might think that you’re going to get away with making some money or something by over insuring. But at the end of the day, there’s too many checkpoints for that to even happen.

Mindy:
Okay. That is good to know because I certainly don’t want to pay for more insurance than I have to. Let’s see, you sent out a letter to all of your clients recently that was super, super helpful. One of the things in the letter mentions a binding restriction and says you can’t write any new policies right now or make any changes to policies within a certain location. Can you explain what this binding restriction is, because I’ve never heard of this before? And does this include people who may be buying a new house? What if I just bought a house three blocks away from where everything burned down? Can I get a policy?

Steve:
So those binding restrictions happen anytime there’s a catastrophic event that occurs pretty much anywhere in the country. But I would say here in Colorado, we see binding restrictions probably about every quarter for some reason or another. It might be because of a hail storm or a threatening hail storm, many are fires. And of course, last week we definitely had some of those. They’re usually limited by zip code and every carrier doesn’t necessarily restrict the same exact locations. But usually within 24 to 48 hours, almost all the companies have the same four or five zip codes or whatever it is on the list. And then normally after the event occurs, fairly quickly within a day or two, those binding restrictions would go away. And technically, I haven’t seen anything yet from last week, but I’m sure now with the snow and the fires pretty much being gone that you could go in now and insure a home or something to that effect. But they’re made to protect the companies, quite frankly, so that people don’t call in and try to insure their burning building, unfortunately. But that’s what they’re there for.

Mindy:
That makes sense. You can’t not have a homeowner’s insurance policy, discover that your house burned down, and then call up and say, “Ooh, could I get this retroactive?”

Steve:
Yes, exactly.

Mindy:
“Let me pay you $100 for this one month of coverage, and then you’re going to pay me $700,000.” That makes sense. Okay, so if I’m in an affected area, when can I revisit my policy? You said 24 to 48 hours, does it last for a really long time or is it just… We had a fire and the fire lasted because we had those winds and the fire lasted for probably 24 hours. Is that when it’s locked out or is it still under a binding restriction right now?

Steve:
Of course, I don’t follow every single email about these things. But usually we get a whole bunch of emails restricting an area for a period of time when the events going on. And then normally, like you just said, within a day or two, those are off. I would be really surprised that they’re still having binding restrictions in those areas, but this was also a pretty severe fire. Things could be a little different. Maybe the companies are just nervous and they just don’t want anybody to possibly try to pull any wool over their eyes and do anything that is out of line. So I don’t know. I think the answer is check with your insurance company and find out if they’re still under restrictions and they’ll let you know.

Mindy:
Yeah, as soon as I’m off the call with you, I am going to call up my insurance company and be like, “Hey, we need to revisit this because my house is worth a whole lot more than it was when I bought it.” Okay, so let’s talk about some general tips and advice for how to handle your homeowner’s insurance policies going forward, with specific focus on ensuring rentals because a lot of our audience are investors. Should you review your policy year on its renewal date or a specific calendar date, January 1st? This would’ve been really, really good for people to review their policies on December 29th in our local area.

Steve:
Well, the renewal process is pretty automated these days. Almost all auto policies, rental policies, homeowners policies, they almost all automatically renew a year from the date that they were started originally. Those dates can be moved around for people if they need something more convenient at a certain time or if they wanted to renew on the first or something. It’s a little bit of a pain, but it can be done. But I would say yeah, a good idea is probably a month out or so we typically will remind all of our insurers that they have an upcoming renewal, and if they have questions or want to change anything, to get in touch with us.
And a very small percentage of them do, everything else just automatically renews and continues forward, typically with little change unless the insurance company has done, like I mentioned, a replacement cost estimate and has decided that they feel it’s underinsured, then things could change in that regard. But I would say that’s probably more rare. But an annual review a month before is always a good time and some insurance agents, if they have a lot of time maybe outbound calling people, but I think that’s probably more rare. I think everything tends to be more automated with reminders and emails and things like that.

Mindy:
Okay. And I don’t know if you’re the right person to ask, but is the mortgage company, do they have any responsibility to keep up with how much the home is insured for based on… Or would they not because they only have the fixed mortgage amount out?

Steve:
I would say probably not in most cases. The one exception to that though is on the front end, when we’re initially analyzing the replacement costs and putting a policy in place or at least quoting one, mortgage companies or lenders sometimes do come into to play there because the coverage limit needs to be at least the amount of the loan to protect the lender. But with our previous discussion and talking about the increased costs of building and so forth, that becomes more rare these days that it would ever end up being lower than the loan amount. But that would really be the only time when the mortgage company is involved in the evaluation process, if you will.

Mindy:
Okay, that makes sense. Let’s talk about a claim. Let’s go back to our 1,000 homeowner nearbys that now have to start a claim for their property. How do you start a claim? Is there any negotiating with the insurance company or do you just get what you get? Can you appeal what they’re offering if you feel that you are owed more and is it better to go alone or can you hire somebody to help you through this? This is an insurance company that it’s not really an adversarial relationship, but it kind of is because you’re now at odds with each other. “Hey, I want this much.” “Well, it’s only worth this much.” Are there people that you can hire to advocate for you? And I don’t know if you saw pictures of the burned out locations, but there’s a lot of cars that are sitting on driveways burned out. So is my burned out car an auto claim or a homeowner’s claim?

Steve:
Wow, yeah. A lot of questions, Mindy.

Mindy:
Yeah, that’s my MO, is throwing a bunch at you.

Steve:
So interestingly enough, I sat through the first of probably many calls that the Division of Insurance held last night, they called it their town hall meeting, the first one, they’re planning to do many others. Commissioner Conway did a great job of going through a lot of that, at least at a high level, and talking through mostly with homeowners who have lost their homes. I think there were 800 people on that Zoom call last night. And he went through some of that. Their office is really set up. I don’t know how well they’re set up to handle 800 or 1,000 people. But one of the big things their office does is helps homeowners to deal with these kinds of issues where there’s some kind of disagreement that’s going on and trying to get claims handled effectively.
I don’t even think anybody’s to that point yet. Everyone’s still trying to sort out what’s going on. Who’s going to do the cleanup? How construction or reconstruction could possibly happen? Is it everybody for themselves or is there going to be more of a consolidated effort? But some of the things that you’re asking about related to claims, first of all, anyone who’s had a loss needs to get out there and get their claims started, and the Commissioner mentioned that many times. And so that’s really what needs to happen to get the whole process started. Now as far as being underinsured or having those issues, yeah, that’s possible because all of those safety nets that we mentioned before, people may not have. They may have been insured for 30 years and have a plain Jane policy with no extensions on it.
And there, unfortunately, are going to be some people in that case where maybe nobody can help them. I don’t know that for sure. Certainly, the Division of Insurance can get involved. There’s also something called a public adjuster, which the Division, I think, has some of their own but you could also go and hire. So if you believe that maybe the insurance company’s evaluation of some kind of replacement cost is different from what’s reality, you could hire them to do their own analysis, which would be much more extensive than the kinds of reports that I was talking about earlier. The other thing that the Division mentioned a couple of times too is that FEMA is involved in this loss. So be because this is considered, essentially, a state emergency, FEMA has funds and has people and resources available as well. So if you were uninsured, that’s probably another place you could go to talk to them about potentially helping you cover that gap.

Mindy:
And FEMA is involved every time that it’s declared a… What was this declared, a state of emergency? What is the phrase?

Steve:
Yes. Well, the FEMA is the Federal Emergency Management Administration or something like that. But yes, at any time that you have a big disaster, whether it’s a flood or a fire in this case and the state basically declares a disaster area and is looking for federal support, then that’s when FEMA steps in.

Mindy:
Let’s talk about people who had rental properties there. Is loss of rent automatic in a rental policy? As a landlord, is that automatically covered or do I have to ask for specific loss of rent coverage in the landlord insurance policy?

Steve:
Yeah. So both renter policies, or I should say landlord policies, a little different than renter policies, but a landlord policy or a homeowner’s policy both have that kind of coverage, could be called loss of use. The more generic term is ALE or allowable living expense, that’s more on the homeowners side. But those kinds of costs related to the fact that the billing is not usable or if a landlord policy is not rentable. They do have a whole wide range of coverages that could be available there. Again, that was a big part of the discussion in last night’s town hall meeting that I was mentioning. Some of those policies restrict the amount of coverage based on a timeline, some of them on a total amount, and some of them both. And so that was another discussion because most people don’t believe, and I’m sure they’re right, that they’re going to get their house rebuilt within a year. And many of those policies do restrict it to a year. So it’s a bit challenging for some of these folks.
Because they’re trying to figure out, “Well, where am I going to live for this period of time? How much is it going to cost me and how long will that loss of use coverage be able to retain me? If I need to spend a couple thousand bucks a month just to live in a VRBO or somewhere that I find and if I have a year’s worth of coverage, well, what happens next?” And the state, again, is going to try to get involved in that. Apparently they did that previously when they had the fires up in Grand County. I don’t know when that was, a year or two ago, I guess. And they basically went to the insurance companies to say, “Hey guys, we’re not really looking necessarily for more coverage, but how about a longer time period? Let’s get rid of this time limitation so people have more time to get their lives sorted out.” So that’s a discussion as well, that I’m sure is going to happen again. Exactly where it goes and so forth, it’s too early to tell, but hopefully they’ll be able to help.

Mindy:
Yeah. So in the case of this specific event, does loss of rent coverage cover the entire amount of rent that you would’ve been getting for as… Well, I guess not as long as it takes to rebuild or we don’t know yet, but does it cover the entire… If I was renting this house out for $3,000 a month, am I going to get $3,000 a month until it’s rebuilt or for the length of time?

Steve:
Well, I think that’s the $64,000 question, especially related to what I was mentioning about potentially changing some of those restrictions through the state’s negotiation. But as I mentioned too, every policy is different. Some are based on a certain amount, some are based on time, some are based on both. On average, I would say most of the time, what I’ve seen as a default to that is it’s typically somewhere in the order of about 10%. If you’re just talking about the dollar limit, it’s about 10% of the dwelling amount. So if you had, say, a $400,000 house, again, if you’re going with typical, you might be looking at a $40,000 limit for that kind of thing, which that could last you a while if you didn’t have to worry about the time element. But on the other hand, if you’ve got to go two, three years without a house, $40,000 may not get you there either. So every situation is different and I think it’s still a bit fluid right now.

Mindy:
Yeah. What I’m hearing from you is that if you have a home, you need to talk to your insurance company and make sure that you are getting the proper coverage based on how you’re using that house. And a landlord policy is really, really a great thing to have, but you have to have the proper coverage even through your landlord policy. And I know insurance is getting expensive, and part of the reason it’s getting expensive is because there’s these claims like this. But you need to be covered. And can you imagine saying, “Ah, I don’t need that coverage.” And then all of a sudden your house burns down and you’re like, “Oh, $50 a month would’ve really been a better choice.”

Steve:
Yeah, you’re absolutely right, Mindy. And that’s one of the things that we’ve dealt with over the last few years is that with the increase in rates, everybody’s looking to save a dime, to be honest. And sometimes it almost really is a dime. And I’ll put a little plugin for our agency. We’re really, really careful about getting people the right coverages in all of these different areas you mentioned, and even some that we haven’t talked about, so that people have maybe not the Cadillac, but certainly a very good policy in the event of, especially major problems like this. Not everyone in this industry, unfortunately, works that way. People sell all kinds of stuff and it looks like it’s going to save them $1000 a year or something like that. Well then in the end, when there’s a major claim, it could cost some tens of thousands of dollars.
The other area that we really haven’t talked about at all, which doesn’t really come into play necessarily in this fire, and that is roof coverage. And that has really gone in a lot of different directions in the last five to 10 years in that there’s some carriers out there who have still have very, very good coverage, rates are probably not as good. But at the end of the day, if another big hail storm comes through and hits homes like it has in the last four or five years, you really want to pay a little bit extra to make sure that you’re going to get replaced cost on your roof because there’s so many carriers now that are not doing that. Actual cash value is the other route that many of them go. They don’t necessarily call it that, they’ll call it a sliding scale, but it’s the same thing. So if your roof’s 20 years old and you’re on a sliding scale, you’re probably going to get 80% of the value of what it would take to replace that, unfortunately.

Mindy:
Oh, okay. Well 80% is still a lot more than I thought you were going to say because our roofs get degraded with the sun. But yeah, a roof is $15,000 to start. I was shocked the first time that I got a quote. I was like, “What? I thought these were $5,000.” Well, they used to be when I was doing them 10, 15 years ago, but now they start at $12,000 and $15,000. So you need that coverage or you need to have money set aside to pay for it yourself. And the difference in policy cost can be really nominal. And of course, every policy is different. I can’t ask you to quote on my house because you’re going to need 17,000 different points of information in order to give me an accurate quote.
But your coverage goes up to what you need. It doesn’t exponentially raise your premiums. And you need the coverage unless you have the funds to be able to replace it. And my heart breaks for these people who probably didn’t listen to my show and aren’t financial independent and don’t have the funds to cover this. And if they are very under covered, this could be financial ruin for something that isn’t even their fault. Okay Steve, let’s move on to a renter’s policy. If you were renting in one of these homes had renters coverage, what does a renter’s policy typically cover?

Steve:
Well, a renters policy is really, in a way, kind of like a slimmed down homeowners policy. There’s also something called a condo unit owners policy, which is essentially the same as a homeowner’s, it’s just you don’t ensure the shell of the building really, it’s just your own unit, things that you’ve put into your unit, attached appliances, things like that. Renters is slimmed down yet again, where it doesn’t have any of that. It just has the contents and the liability. All of these policies have personal liability on them. So that actually brings up a good point. There was a lot of discussion in last night’s meeting about personal property because that’s really the sticking point when it comes to these claims. If your home is destroyed or mostly destroyed, figuring out the value of that is not rocket science. That’s fairly easy to do with construction costs.
Figuring out the plan of how to get it replaced is different, and there’s certainly a lot of discussion there. But the contents is really where things get sticky. And there again, insurance companies are all over the board when it comes to what do they want, what do they need? Historically the request has always been, “Hey, give me a list of every single thing that you lost and if you can show us that you had it or at least give us a list somehow, we’ll give you the money for it.” And companies are starting to make that a little bit easier. They’re not necessarily requiring receipts for everything. They’re giving you spreadsheets, take as long as you want. But even that’s hard, and extremely emotional for people to try to go through your home. If you think about it, if you’ve had a home for 20 or 30 years and you had all of your memorabilia and your photos and everything’s just gone and now some insurance companies saying, “Well, I need a list of everything in order to pay for it,” that’s just really hard.
It’s hard in a lot of ways. So that’s another negotiating point, believe it or not, with the Division of Insurance. They’re really pushing these companies to try to make it easier on people, try to get it to be streamlined as much as possible. The one thing that was mentioned last night is that right off the bat, the insurance company, by Colorado statute, is required to give homeowners, this does not apply to renters, but for homeowners, they’re required to provide at least 30% of the insured amount for personal property, right off the bat with no list or nothing. So that will help people get back on the ground at least a little bit.
They’ll get that money and they’ll be able to start purchasing things if they’re living in an apartment or VRBO or something like that, at least it’ll kind of get things going. But many of the companies do want as much documentation as you can dream up, or maybe if you have videos or pictures or something. Every time one of these things happens, I get this idea to go around and videotape my house, and I think I’ve done it before, but I need to do it again because you just know ever know. And if you have that somewhere, hopefully offsite, and something bad happens and you could go back to that recording and then go and start with that.

Mindy:
Yeah, I’m trying to think. I don’t have receipts for any of the stuff that’s in my house. And even if I did, it would be in my house. If my house burned to the ground, all of my receipts are there too. I think it’s rather silly for them to ask for receipts. Let’s talk about that, 30% of the insured value just being sent to you right off the bat. So for ease of math, I have a home that I have insured for $100,000. They’re going to send me a $30,000 check?

Steve:
No, that 30% is of the property limit. And the property limit, again, can vary a little bit. But typically it’s about 65% or 70% of the dwelling amount. So again, you have to look at your declaration page of the policy to see that. But if you do the math, you’re looking at more like 30% of 70%. So it’s still a significant amount of money, but I’m sure you’re going to burn through it pretty quickly if you lost everything.

Mindy:
Yeah. But that’s going to be helpful to get… This fire was no notice at all. It wasn’t smoldering for a while and then flared up, it was nothing and then it ripped through this neighborhood. And it was all of a sudden, “Hey, I think I smell smoke,” and you walk outside and you’re like, “Holy crap, my neighbor’s house is on fire, as are all the other houses and the winds are whipping up. I need to grab my kids, grab my pets, jump in the car and leave.” And you couldn’t grab even your bag of things that you might… I wouldn’t think to go through and grab birth certificates. In that situation, it was grab your keys and get out of the house. And there’s just nothing left for these people. So they’re going to get a check. They don’t have clothes. You have the clothes on your back and that’s it.
You need socks and underpants, you need coats. It was kind of warm that day, and then the next day we had seven inches of snow, which was bringing up new problems because all of the electricity and gas was turned off. I hope that the water was turned off. I don’t know if you can turn it off remotely like you can do gas and electric, but now we’re talking about burst pipes. So your house didn’t burn down, but now everything’s ruined because the pipes burst. So you need homeowner’s insurance, unless you’re a batrillionaire, and even then you need homeowner’s insurance too. Let’s talk about processing a claim. My house burned down. I am over the initial shock and now I need to start processing a claim. Do I call insurance agent or my insurance company first?

Steve:
Well, that probably depends a little bit on the situation. I think most people probably call their agent. With us, typical cases, many of our claims, we really just forward them on to the insurance company because there’s so much back and forth that goes on, it’s better that they just get in contact with them from day one and get their questions answered. So if we’re the middle man here, it’s just so inefficient for everyone involved. There’s some exceptions to that, and certainly in this case, we did have a few folks in those fires, not many because we’re way up here in Longmont and that’s 20 miles from here or something like that. And luckily for us, we didn’t have a lot of losses there. But the couple that we did have, we’ve been handholding them quite a bit just because of the whole situation. But in most cases, once people get the claims started, they’re going to be assigned an adjuster who’s going to ask a million questions and give a lot of information about what they need to do next and collect their contents list and that kind of thing,

Mindy:
Oh, my heart just goes out to all these people that lost everything. And it’s not just one person, there’s almost 1,000 buildings. I think it was 991 buildings that were destroyed and they had a list of the addresses. Nine of them were companies and the rest of them were all houses. And most of these houses are just to the ground. There’s nothing left except these weird charred cars on the driveway and then these weird brick stacks that used to be the entrance around the door and the trim around the bottom of the house. And even in some cases, not even that. Steve, is there anything else you want to tell people about homeowner insurance policies or processing a disastrous claim before I let you go?

Steve:
Well, a couple thoughts here. One is just in comment to what you were mentioning, there are a lot of other homes, and probably businesses as well, that were damaged in different ways. So safety is number one there. There could be a lot of different things that are existing there, there could be broken pipes or about to break pipes. There could be damage related to smoke and so forth. So there was a lot of discussion, again, on that meeting last night about what are the next steps and just being very cautious in going back into those buildings. Securing them, of course, at some point is important too. But people just need to really follow the local laws and the local regulations. There’s a disaster site that is set up in, I guess it’s South Lafayette off of Public Road, where there are a whole bunch of people there from FEMA, people there from the state, there’s maybe a dozen insurance company trailers.
It’s just kind of a whole village, if you will, of support that people can get for all of these different areas, and certainly getting advice as far as if you have a property that it’s still standing, what to be doing next. As far as homeowner’s insurance goes, I think we’ve covered it pretty well. But just the summary is that a lot of times people are not very excited about insurance. They don’t like paying for it because they never use it. But having it there when it’s available after an event like this and having good coverage is so important. And to skim to save a dollar here or a dollar there, you may think that you’re saving some money over a long period of time, and you certainly are, but if it comes to a situation like this, that savings could be go out the door just immediately, unfortunately.

Mindy:
Yeah. Well Steve, I really appreciate your time today. It sounds like the situation isn’t quite so dire as I initially thought, although you do need to check, if you haven’t renewed your policy in the last six months, I would call up your insurance agent and just double check that you are covered, that your policy does have that extended replacement coverage, and check in and see exactly what your insurance policy does cover because this could be you don’t need it until you need it and then you can’t change it when you do need it. So Steve, I appreciate your time today. Where can people find out more about you?

Steve:
Well, our website is weensurecobusiness, that’s Colorado business, weensurecobusiness.com, where we’re focused in the business arena. But we also do a lot of home and auto, quite frankly, for many of our business owners and for other people who need it in the area. You can also reach us, our main phone number is (303) 808-9351.

Mindy:
Okay, Steve. I really appreciate your time today. I learned a lot, I’m very glad I had this conversation with you. From the homeowner’s insurance fire bonus episode of the Bigger Pockets Money podcast, I am Mindy Jensen, saying stay safe and protected.

 

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