EP #3: Navigating Insurance Demands
EP #3: Navigating Insurance Demands
Sergio DeCesare:
Hi. Again, my name is Sergio Max business profits. I’m here with my friend and home inspector extraordinaire, Richard cleaning, also known as Rick Kooyman. He owns trade secret inspections. And we are on the third segment of our little talk. Today’s information is going to be insurance inspections and why it matters to everyone. So, Rick, take it away, where would you like to begin this conversation?
Rick Kooyman:
Well, it’s good to be back with you, Sergio. Let’s start there. And let’s go with man, I hope everybody out there is listening to this one, I really do this one comes up, I gotta say, every day, I have someone with this exact problem in my world of what’s going on. And it comes down to what you don’t understand about what is changing with the insurance world, what the significance of these forms. And these inspections. Now they’ve been around for a while they’ve had these forms since 2012. But they didn’t use them the same way. They didn’t really reference them the same way as they are now they didn’t rely on him as much. And now they absolutely are. And they’re absolutely the thing that is standing between you and your insurance. And that’s because when you get told to have these inspections done, your insurance is just about to expire, or has expired. And eight and 10 people have something that needs repaired in their house according to these horns. So what does that mean? That means that now you’re under the gun, to get to whatever spec you don’t understand, the insurance company is actually looking for you to be at. And now you have a time constraint. Or you’re looking at going with and the bank putting PMI on it. And you’d have to deal with that. And my message to this is why I say everyone is just because you call and ask for a four point inspection doesn’t mean you have to send it to your insurance people. You can use it for your own perspective, and go hey, is this a clean four point? And if not, why isn’t it and let’s take some time, and I need anywhere conditioner, I need a new hot water tank or I need repaved or I need a new panel or I need a new roof or, you know, the list is long. And it’s expensive. And, you know, I, every day I’ve got one today. They’re just like, I got the the four point you sent us. It’s it’s the insurance says that there doesn’t need approval. And you know, I’m like, Well, I told you that when we did it. And it’s all in what needs to be corrected. It’s all cited there. And there’s nothing I can do about it. It’s, you know, it is what it is their pictures. They they’re labeled. So before you get into
Sergio DeCesare:
the forms, and the four point inspection, which we’ll explain what that is, we have wind mitigation inspections on their roof certificates. I’m a little confused, right, because my insurance has basically doubled. I haven’t had any claims. You know, my roof isn’t a brand new roof. And you know, I’ve had this conversation before where I’m really fearful where they’re going to come back and say, Hey, we’re not going to insure you unless you replace the roof. Now mind you, I have no leaks, no matter no missing shingles I true I had the roof treated, protected, which they don’t doesn’t seem like they really care about. So I don’t understand because I’m only paying a little over five grand a year for homeowners. But I know people who are paying six 912 $1,000 Right? Yeah, sure, absolutely. But I feel like the insurance companies are either a trying to not write a policy on that property. Or just trying to basically just say, you know, we don’t we’re not going to cover all these things because you know, there’s hurricane deductibles and everything else that goes along with that, at the end of the day are really getting the coverage. So tell us how these forms kind of integrate with what we’re getting for what we’re paying for which seems like we’re paying a lot more now than ever.
Rick Kooyman:
And you are you are you absolutely are. Obviously everybody can see what prices are in prices don’t double and triple is pretty obvious. What is going on is exactly what you said the insurance industry Free is doing everything they possibly can, to, in their words, get back on their feet, they need to recover money from you, and not write you checks. So that’s where this stuff comes in. So they’re very much paying attention to these forums. Like I said, they, they didn’t just create them, they’ve been around. They’re just now saying, hey, we want only yeses and satisfactory ease, no issues of any kind. And there’s definitely age limits that we’re looking at. It’s not conditional based on some things. It’s just simply it’s this, this is how old it is, and we’re not going to touch it. And that’s where, you know, like, your roof situation comes in, and you know, well, maybe the roof is fine, and you can come out and the roofers will say, well, there’s nothing wrong with this roof, there’s no problems, there’s no leaks, there’s no reason to do anything to it, except that you want to buy insurance. And insurance doesn’t want to write you a policy on an old product. They’re just not doing it anymore.
Sergio DeCesare:
So that’s an that’s very disheartening, because I can tell you,
Rick Kooyman:
and the coverages you’re getting are less and you’re not paying more. And you’re going to end there, the barricades between you and that claim are getting greater in the sense of, you know, House Bill 7052, where they amended all these things. And they said, No more assignments of benefits. And you know, now you’ve got to pay your own attorneys fees is one way the attorney fee things over with, well, those are game changers. That’s not just about, oh, we’re gonna stop the abuse. You’ve put the power now in the insurance company’s hands, and now they’re gonna abuse you. Well, you kind of took the words out of my mouth.
Sergio DeCesare:
I was sitting here thinking, Well, I happen to know that, that a lot of where the money’s going with these insurance companies is for litigation. Most
Rick Kooyman:
of it, the attorneys are make 80% of the losses are litigation losses. And then you have these users and I can make an argument in there. There’s, there’s truth to be had to these stories. And there’s truth on both sides of it. Right? So there’s no one place to point the finger and say, this is where it went bad. It went bad. When the weather changed, and there was catastrophic loss. That’s when he went bad. And then everybody went, right, you know, not me, you. And they were left holding the bag. And there was there was a lot of different languages in the coverage policies. In particular, after Irma regarding the roofs where there wasn’t a proration wrote into the coverage policy on your roof. So the insurance company got held responsible for the 100% cost of the replacement of that expired roof, they got damaged. And they’re like, well, it was 25 years old and expired anyways, but we didn’t catch up to it in time to pay for all those new roofs. And we’re gonna do that ever again.
Sergio DeCesare:
Right. Understood?
Rick Kooyman:
Yeah, I mean, it’s for real. And that’s why I say everybody is under the guise of how it used to be. And that, you know, insurance is here to help you out and we have this stuff to be our coverage. Right. And we still do, we just have to understand that it’s actually not an entitlement. It’s something that is an investment, and we have to work towards, and we have to make sure that we’re meeting our side of the agreement. Well,
Sergio DeCesare:
it’s worse than that. Even I think, because as a as a guy who has a mortgage on the property, I don’t have the option of insurance or no insurance or self insurance. Exactly. So I have to do it, basically pay 9000 miles a year for the benefit.
Rick Kooyman:
Yeah, for sure.
Sergio DeCesare:
And God forbid, put contents on my policy. You know, because I’ve looked at that too. I’ve taken contents off my balls, like crazy. It’s crazy stupid. And I don’t know, it’s I look when when you have in here 2030 years in our house, they only have 510 years left to pay on their mortgage, and they can no longer afford to even the mortgage payment because now it’s escrow the new amounts are escrowed into a mortgage payment. And there we go. We got a sack
Rick Kooyman:
stamp come south Florida. Yeah, yeah, we inflation is driving people, retired people, you know, at the end of the whole program, saying, Oh, by the way, we’re going to take your house now. Right? Yeah, like, there. That’s no joke. Yeah,
Sergio DeCesare:
no, it’s a serious, serious issue. So that being said, Tell us about the wind mitigation? Well, let’s start with the fourth point. Tell us tell us what the fourth point is. It’s so important. Well, let’s
Rick Kooyman:
start with Mike just changed. Now it’s gonna be okay. The four point is what insurance sees as their biggest expense risks. So it’s ROOF, ELECTRIC, PLUMBING, and HVAC. Those are the four points, if you will. So under each one of those content sections, there’s a bunch of what is it? How old is it? And what kind of problem questions and they’re basically checkbox stuff? It’s very specific to what they want. It’s not subjective. Right? So are there these things are there? Is there corrosion? Is there signs of leakage? Are there water stains on the ceilings? Is there water staining around the air conditioner, we have to provide a photo to them. So if you had an old condensate leak that got fixed, but you know, the standard of the air conditioners all stained out, and that looks like a mess, and they’re going to look at it and go, No, thanks. Yeah, that’s a problem. We think that looks like a problem. You know. So this is what I’m saying, you know, everybody needs to catch on, that these things need to happen for their own edification. So that they understand when they get asked these insurance questions where they stand, right? Because for so long, nobody ever thought that these things mattered. And now all of a sudden, all these things mattered. And everybody was like, I have that fixed. And I don’t care about this thing. I understand that you don’t care about the stain. But the underwriter looks at it. And all they do is look at the photo and go, Well, there’s a risk there. And I don’t want to bet on high risk stuff.
Sergio DeCesare:
Yeah. And so like we were saying earlier, they’re looking for reasons not to insure,
Rick Kooyman:
yes, they’re looking for any reason that might cost them money. Right. And yeah, ultimately, that means that they’re not going to offer you an insurance coverage for they might offer you a policy that right out that issue. Or you know, you get no water coverage, or you get no wind coverage, or you know, whatever it may be, but at the end of the day, what you’re doing is you’re paying a bunch of money, and you’re getting the right of saying you have insurance, but the actual end of the day coverage of what you’re getting back is unfortunate. Let’s just leave it at that. You’re making your mortgage company happy. But that’s about it. Yeah, you’re meeting your specific required obligations, obligations. But yeah, the industry, homeowners, just being a homeowner, as an industry is changing. And it’s changing because of the insurance industry. Right. And it’s actually finally starting to show stuff in the market leases. And these older people getting basically thrown out of their homes, because their fixed income won’t pay the property tax, and the property insurance, and by food. Medicine, they own a house, they’ve owned a house for 30 years. It’s true. Yeah, I’m seeing more and more of this. Right. And this is all inflation, every which way you look at it. But you know, at the end of the day, the ultimate cost of the what happened is someone had move.
Sergio DeCesare:
Yeah, I think a lot of it is inflation,
Rick Kooyman:
because obviously something needs to be fixed or replaced. There’s materials involved and the materials labor have gone up in price. But I think ultimately, too, I mean, a lot of this is just caused by the change in weather patterns. Oh, yeah. You and I talked about this in the last episode. I mean, there wasn’t even, you know, we never ever ever had hurricanes here. And it was it was like What? No, not here. The last major hurricane was like in 1965, Hurricane Donna. Yeah, the cycles are changing. Yeah, the cyclists changing and the city and the insurance companies are catching on. And the older homes are not going to be allowed to be put back to how they were post damage. There’s, you know, so you get a requirement now to do a full up to code renovation. When you only had to do a partial repair instead. Now, sorry, if you want to do your doors and windows, you’re gonna do all your doors and windows. You know, they’re there. They’re getting tight on things and every which way you go and you know, the property values go up your property insurance goes up. And again, the people on the fixed income side of things, you know, People see it as a when your property value went up? Well, they didn’t want to leave their fixed income didn’t make it to the property tax and the insurance requirement anymore. Right. Right. Right for the property value.
Sergio DeCesare:
But true. So going back to the four points, yeah. So
Rick Kooyman:
you know, going back to the four point, you know, that’s it’s just important for people to be proactive is the message. If you have had insurance forever, and you’ve got an older home, think about spending a couple 100 bucks to find out ahead of time, you know, and at the end, you still have the completed form. For when the day comes in, they ask you for it. And you’re like, okay, whatever here. Is a four point good for is there’s a ton of them. Yeah, unfortunately, the four point is technically only valid for one year, or if anything gets changed. Part of it is is the windmill is valid for five years. But technically, they made the four point valid for one power tool for the industry, so that they can keep every time they rewrite the policy, have someone come back through it and relook at it.
Sergio DeCesare:
Well, in all fairness, I guess things could change, like an AC can break down. I mean, that stuff happens all the time, especially down
Rick Kooyman:
here. Yeah, it just goes back to that presumptive coverage, you know, that we all grew up with, where you’re just like, I don’t know, you just call and get insurance and whatever. And now, insurance is difficult.
Sergio DeCesare:
Yeah, and you know, I don’t know what it’s like in other states. Actually. Do you know what it’s like in other states? I don’t know what it is. Well, I guess it’s a Florida thing more than anything else, because I can tell you owning property in North Carolina. Now, I sold that property a year or two ago. But I can tell you, I had a very similar sized house in North Carolina, is the one I have now. And my bill here is 5200 bucks. My bill there was 300.
Rick Kooyman:
Yeah, no, it’s very much a part of thing. And I can tell you in in defense of a much older veterans in defense of the insurance industry, and this is the reason it’s a Florida thing is the state of Florida by itself represents more in financial loss than the entire rest of the country combined. And it goes back to legal fees and all that other stuff. But that’s why it’s so intensely different down here. Because I mean, that’s a big statement. Right? That’s a that’s a yeah, that’s, that’s what they’re saying. That’s what they’re saying. This state by itself represents a bigger risk to an insurance company than the whole rest of the country. That all of it together, they don’t pay as much as they pay out down here, then you
Sergio DeCesare:
wonder at what point does it just get so economically unfair insurance in the state? You know,
Rick Kooyman:
we’re coming to and that’s why I talk about property age, and staying up with this insurance thing. And, and, and getting a little educated on why being a homeowner is a little bit more of a task than it is just a privilege.
Sergio DeCesare:
Now, maybe it’s the difference between the American dream and the American bad day, maybe a nightmare, but the real American I mean, I mean, look at Florida, it’s become really economically unfeasible? Yeah, yeah. Everybody talks about the migration and, you know, a two or 3% Oh, my God, the whole world is moving here, right. But nobody talks about the migration now with a just last year with 700,000 people. That’s a big chunk. So it was a big chunk.
Rick Kooyman:
The industry has the wind mitigation. And the whole program of the wind mitigation is a crediting system to try to reduce the rates based on that four point I asked premium that they assess that risk to be and then they go back and say, Well, according to the widmet, you meet these upgraded things that we would like to see because of this Florida weather. And you know, this this unique condition that we live in down here and these problems we have to deal with. So if you have these improvements and the structure is modified a little better than the original older stuff, is they’ll they will acknowledge and give you a discount on. But even on that end, now they’re getting way more strict on where those discounts apply and what right.
Sergio DeCesare:
Real quick explain to everybody what a win mitigation report is.
Rick Kooyman:
A wind mitigation report is a study that describes, basically houses assembled and what materials was it used? So they want to know what kind of doors and windows are there? Are they impact rated? If not, are there shutters? If there are shutters? Are they large missile rated they small missile rated? Are they not rated at all? Are they Florida approved? I mean, all these little nuances now suddenly matter. It used to be like, Oh, you got wood shutters that you handmade and you put up when the storm comes? That’s cool. We’ll give you a discount for that. And it’s literally on the form. But they have not given a discount out anymore. I can promise you that.
Sergio DeCesare:
Why do you think that is why when they give a discount for for a protective item?
Rick Kooyman:
Well, for the plywood thing, particularly because at this point, everything has to be like what we call a Florida approved product, meaning it has what we call a notice of acceptance, or an NLA. And that product went through Florida approval testing, where they stand. And they literally shot two by fours at eight times. Every product, every window, every door, everything that says it’s hurricane rated, goes through this testing procedure. And this is where a large missile comes from and small missile and blah, blah, blah, these testing standards. So at this point, they want the biggest and the best they want large missile. And that’s it. That’s the full two by four.
Sergio DeCesare:
That’s right. I think what they were they do is that what 90 or 100?
Rick Kooyman:
Our tests? Yeah, yeah. Basically, it’s an air cannon. That’s four out of it. Yeah.
Sergio DeCesare:
It’s in crazy stuff. Okay.
Rick Kooyman:
It’s basically 100 mile an hour impact.
Sergio DeCesare:
So the wind mitigation reports
Rick Kooyman:
the insurance, so yeah, it’s it’s windows and doors. It’s how is your roof attached? Meaning the trusses right to the walls? Because we want to keep the roof on the wall and the big thing. And then the second layer of the roof is the roof deck. So how is the roof deck now attached to the truss that’s attached to the wall? And then how is the roof covering? What is it? How old is it? And how is it attached? So we can start to see where this is all going? Right? We’re looking at durability stuff here, you know? And then it goes back to well, what building code is it built to? How old of a house? Is it? Exactly? You know, that’s a question. And all these things amount to discounts on this forum, or they amount to hire policies on your property, which is why I bring up these topics about each and four point and understanding these things. And I keep saying it over and over again, that what used to be is no longer the case. And what goes on North Florida is north of Florida. Right minutes will be another planet. Yeah, it might as well be because it doesn’t mean anything here. Let’s move on
Sergio DeCesare:
to roof certificates.
Rick Kooyman:
Yeah, roof certificates are almost non existent anymore. And that’s funny, because the roof certificate specifically is simply the roof section of the four point form. So taken out and made into its own separate form. It’s the same thing. It’s the same questions. And it goes back to that topic where you were talking about your roof, where we used to be able to go out and say, based on our expertise, that yeah, the roof is this old, but it’s in good shape. It doesn’t have these problems. We expect it to live another five 810 years? Well, one, we got to understand what numbers are defined as when we say those now because if I say it’s good for five years, the insurance industry goes Okay, we’re done now. And you’re like what I have for five more years. And they’re like, Yeah, with no insurance. Like, five years, your expectancy
Sergio DeCesare:
on your roof is not enough anymore. No, to insure it right now for a year, they’ll give
Rick Kooyman:
you one year on a five year life expectancy. They used to go they used to go to three, they were given a one they would write you a one year policy on something that we would say it’s at the end, but you know, it’s going to be in the next three to five years, this is going to be due to be replaced. And they go okay, well, we’ll write a one year policy, limited coverage on a roof side of things, of course, because you know, we’re not going to buy you a new roof on this old deteriorated roof, but we’ll write your coverage policy for the rest of the structure. And they’ve taken that now to five meaning they’ll do one year on a five year estimate. And honestly, that roof certification form it used to allow us to say that your metal roof that you know The product is a 50 year product, your roof chart says that the roof is 65 or 30 years of age. Again, it goes back to the underlayment. But they don’t they’re the assessments aren’t being read anymore, they’re not being heard. The roof certification thing is really just, hey, we want to know how old it is we want someone to actually go out, verify is anything missing from it, and write down with their license number. When was it installed? I want to know the math. And that’s the end of the conversation.
Sergio DeCesare:
So there’s not even a point in buying a 25 or 30 year shingle or even a 50 year shingle, I know they have those as well, there’s no point it because at the end of the day, the insurance company’s gonna make their judgment call. And even if you have five years left, they’re going to treat you like you got one year
Rick Kooyman:
left. Yeah, that’s crazy. Man. It is really unfortunate, but honest to God, it is mostly true to say that, while some super expensive metal roof, or high finish, you know, co coated tile roof that, you know, amazingly awesome. That should be a 50 year roof. There’s nobody on this date that will ever give you a policy to cover it for that amount of time. So as when we are i We love this I go I’m certified by the same people that the roofers get certified through so that I can go up and say, you know, I know what’s going on, just like you guys do. Okay, so I’m in the same room with them all the time for the trainings. And I asked, you know, they asked, well, what would you what would you put on your house? 30 years shingle. And this story, why would I spend any more money, right? I’m going to put the best product for the lowest cost that is going to do what everything else is going to do. You’re only getting virgin everything else that you’re going to give our Matt. That’s my polarity or shame. So if I buy the Taj Mahal, my 30 year shingles still the same value.
Sergio DeCesare:
Right? That’s
Rick Kooyman:
crazy. Yeah. It’s a shame. But that’s that’s just how this has come down to shake down to, in this whole gamut of who’s gonna pay for what?
Sergio DeCesare:
Okay, well, we’ve pretty much covered a lot of stuff on the inspections in the forums. So in a nutshell, what did the homeowners really need to understand based on everything we just said, put yourself now, where you need to be for the homeowner in this.
Rick Kooyman:
Yeah, this is my message. And most most homes I go into for the four point is the standard 20 year old house or whatever, and the valves aren’t really leaking in the house is in typical average condition, you know, dust in the corner person, whatever, camera from years of storing things here and there. And nobody ever looks at that. But the insurance industry there, it doesn’t need to be actively leaking to them. If it looks like it’s old, if it got blue on it, if it’s got mineral deposits building up on it, these are all indications of age, these are all the things that they’re not wanting to take part in. So, you know, over and over again, I go in and I see old air conditioners, water stains at the air conditioners, water stains, on ceilings, from old loop leaks that got repaired, whether it be a roof or a condensate leak, whatever. I mean, all these things that we all just thought it was my prerogative how I want to live. Now we’ve got this other party that’s coming in evaluating us in a way and saying, You know what, if you want me to put my money up on the board with this stuff, I’m going to ask for newer things here. And that’s what’s catching most people off guard. And that’s why I really want to get the word out to just you know, don’t wait, don’t wait. It’s only a couple of 100 bucks. Don’t you don’t want to find out when you don’t have insurance that you need to spend 10 grand to have new pipe put in or five grand to have a new panel or 17
Sergio DeCesare:
grand for an agent or square foot house on a roof Yeah, I mean 17 grand I mean that’s very low love oh my god I almost had a stroke when they told me was gonna be 17 grand like it’s very low. Go North Carolina. That house I talked about for the insurance. I replaced that roof how much it cost me Yeah, yeah know we’re panels building or something. Yeah.
Rick Kooyman:
Yeah. Typical shingle home roof is in the 20 1000s. And is in the upper 30s, low 40s. Something’s
Sergio DeCesare:
got to change because there’s a whole slew of people out there who can’t afford 20 grand for a roof just to get insurance.
Rick Kooyman:
Well think about I go into these neighborhoods, and the whole development is the same, you know, they all got the same. And everybody’s like, no, they’re fine. And I look at it, and I go, the whole neighborhood’s about to go. And that is, the whole neighborhood’s about to get reroofed. Because they’re all gonna go like dominoes. Like, they’re all the same age, they’re all gonna get the same notice, whoever it is their underwriters might be, it’s all gonna go down the same course. It’s just a shame. But yeah, I get it all the time where the you know, the homeowners are resistant? Let’s put it that way. No, it’s not my opinion. It’s not your opinion. It’s not anybody’s opinion at this point gets to write the rules, and how we get to play the game.
Sergio DeCesare:
All right, well, you heard it right from Rick. And Rick is probably more qualified than anybody I know, to make the statements and the advice he’s giving, we covered with mitigations, we’ve covered four points, we covered roof certificates. Rick, I’m assuming you can do roof inspections. If you go out there and take a look at stuff. I
Rick Kooyman:
do roof inspections on roof replacements, believe me. You know, just because it’s brand new doesn’t mean that they did a good job. And not only that, it’s so easy to, to do the minimum, they get they get it they say well, it may past it, we build it the code. Code is the minimum. Right? You can do better. It doesn’t mean that you had to spend a lot more. But you could have done a couple little things here and there that make a whole lot of difference. Right? And these steps are now being skipped. It’s just not there’s not pride, taking in numbers work when you’re doing high volume stuff, that you look around and you’re like, I don’t know, the roofs kind of don’t look the same anymore, that they’ve used to be prettier somehow. It’s probably true. Yeah, that our attention to detail is gone. And they meet the minimum standards. But yeah, roof inspections for sure. Old Ones new ones. Yeah, yeah, yeah. Yeah, lots of them. Please.
Sergio DeCesare:
You do the four points, you do the wind mits. So why don’t you tell them how they can get a hold of you.
Rick Kooyman:
You can find me online at trade secrets. inspections.com you can email me at Rick at trade secrets. inspections.com Or you can call text 239-537-1186. I will get to you as soon as I can. I don’t always answer it right away. But I call him right back. A great.
Sergio DeCesare:
So we’ve got a couple more topics coming to be sure to check in and the topics that are coming up. We’re gonna be very, very interesting. So stay tuned. Yeah, we’re gonna, we’re gonna dig into some real good stuff on the environmental side of things and our health issues and living in our homes. It’s more than just looking at it. Right. Hey, Rick, thank you. Take care. Great
Rick Kooyman:
talking to you Sergio till next time.