Insured to Replacment Cost

[insurance1822]

I have plenty of real estate investors who choose to under-insure their portfolio & take the risk of coinsurance penalties based on the premium savings & the makeup of their properties. So under-insuring can serve a particular situation.

Over insuring is a real thing & there's a few carriers who are major perpetrators in this regard. There's plenty of class action lawsuits against carriers for this. I have carriers who's RCE can be 30% apart..so we're just going to assume the highest one is the "right one?" Get the hell out of here. I'll go w/ the lower one all day & slap on the 50% dwelling extension or allow the blanket coverage w/ a particular carrier to pickup the difference when there's no detached structures on the property etc.

Under-insuring is real. Over-insuring is real. The correct amount is somewhere in between & that's where a responsible RCE along w/ a fat dwelling extension mitigates the situation

bundles of sticks

 

[shawnmwalker]

Ins1822 Gets it right again.

 

[insurance1822]

Damn right Shaun-Sky-Walker...this MUURRICA!

 

[URDRWHO]

On the real estate investor --- you are talking a different policy are you not? That would not fall under our personal policy discussion.

Just wondering? Have any of those investors ever had a total burn on their property? If so, how did they feel at the time that the 80/20 math kicked in.

Well how silly of me. You can answer anyway you want. Heck you can say that the guy was elated that those dollars he saved on premium are now going out the door in a wheel barrow.

Not sure why you took this off personal into commercial area. Next you are going to tell me that you are writing commercial stuff on personal line paper.

I'm just yank'in your chain a bit for calling me old geezer.

There was a time that I had an S7 license and as part of my office I sold general securities. Did it for a long time. In the early 2000's there was an IPO craze and I had clients wanting to get into IPO's that should never be in that market. I wouldn't do it and sent them on their way to find another Rep. Two of those went else where, the Rep at another investment firm did the trades, the clients lost a lot of money. Client sued and won a lot of money. This is truth, at the time of a loss many clients will swear on a bible that they never knew the risk. You can take that truth of forgetfulness to the bank.

My clients all know that when they call me on the phone, I hit the F5 key (phone module) and start typing our conversation. As one client said the other day, you document everything. I said yes I do and started to explain. He laughed and said I know why you do it, I was just joking with you.

So if it were me, I would have those investors sign papers stating they know they are under insured and then I would have them sign again and again and again. I can with high certainty tell you that if they have a total burn, the next thing you will see is a summons to appear in court. The loss those investors so willingly accepted is now looking to you as the payer.

Sometimes you just have to walk away but that's just me.

Now back to the discussion...............

Companies that use the ISO forms which are many if not most stock companies, how do you address the (going under-insured on Cov A and using Extended Limits to make up the difference) idea and the language in the ISO form?

"To the extent that coverage is provided, we agree to provide an additional amount of insurance in accordance with the following provisions:

A. If you have:

1. Allowed us to adjust the Coverage A limit of liability and the premium in accordance with:

a. The property evaluations we make; and

b. Any increases in inflation; and

2. Notified us, within 30 days of completion, of any improvements, alterations or additions to the building insured under Coverage A which increase the replacement cost of the building by 5% or more;

the provisions of this endorsement will apply after a loss, provided you elect to repair or replace the damaged building."

Hm? Maybe this is a buy term invest the difference of life being applied to P&C?


Some people are willing to accept any risk............Yikes!!!!!!!!!


http://insidetv.ew.com/2014/11/05/anaconda-eaten-alive-discovery/

I have plenty of real estate investors who choose to under-insure their portfolio & take the risk of coinsurance penalties based on the premium savings & the makeup of their properties. So under-insuring can serve a particular situation.

Over insuring is a real thing & there's a few carriers who are major perpetrators in this regard. There's plenty of class action lawsuits against carriers for this. I have carriers who's RCE can be 30% apart..so we're just going to assume the highest one is the "right one?" Get the hell out of here. I'll go w/ the lower one all day & slap on the 50% dwelling extension or allow the blanket coverage w/ a particular carrier to pickup the difference when there's no detached structures on the property etc.

Under-insuring is real. Over-insuring is real. The correct amount is somewhere in between & that's where a responsible RCE along w/ a fat dwelling extension mitigates the situation

bundles of sticks

 

[insurance1822]

I bet you get signed permission from prospective insured's confirming you've read them the disclaimer on ordering consumer reports before you run every quote too right? I know an agent who got sued..lost his home & was sentenced to 40 years in a North Korean labor camp because he ran a CLUE report w/o signed confirmation from the prospective insured.

He insisted he read the disclaimer, but once the insured lawyered up it was all over. Rumor has it that some of the jury had to be escorted out by medical professionals once they realized the agent had become knowledgeable of a zero pay inquiry on the insured's CLUE report. The insured was embarrassed & must have "forgot" the agent read the disclaimer & in the absence of the signed form...well we know the rest. He's serving the remainder of his term in Haengyong.

Children were crying outside the court room...his wife was committed to a mental institution not being able to deal w/ the fact her husband was sentenced to hard labor.

I urge all of you to reconsider your business practices.

 

[VolAgent]

“Only a fool learns from his own mistakes. The wise man learns from the mistakes of others.”

Commonly attributed to Otto von Bismarck.

 

[URDRWHO]

Ha ha! That was pretty good.

Reconsider my business practice? Nope...not gonna do it, wouldn't be prudent (think Dana Carvey).

If you are cool with your practice that is fine we all have different thresholds of pain.

This is what one agent said about under insuring Cov A and expecting the Endorsement to kick-in.

"I have a friend that is a large loss adjuster for a top 3 US carrier. He is one of the adjusters that goes out in the event of a total loss. I have asked him this same question. His answer: They scrutinize the coverage A dwelling coverage amount at claim time, to make sure it is insured at replacement cost. If it is not at RC, they do not extend the ERC, or the extended replacement cost endorsement. So the agents that are underinsuring homes, betting that the ERC will kick in no matter what, had better have a very good E & O policy in place. His words, not mine.

IMHO: Any agent that is greedy enough to make a $150 commission, and value that over properly insuring a house and risking their livelihood, is well deserving of what they get."

I also have a friend who's wife works as a senior claims person for (Liberty Mutual Ohio Cas, Peerless or whoever they are today) anyhow said the same thing as the adjuster.

I bet you get signed permission from prospective insured's confirming you've read them the disclaimer on ordering consumer reports before you run every quote too right? I know an agent who got sued..lost his home & was sentenced to 40 years in a North Korean labor camp because he ran a CLUE report w/o signed confirmation from the prospective insured.

He insisted he read the disclaimer, but once the insured lawyered up it was all over. Rumor has it that some of the jury had to be escorted out by medical professionals once they realized the agent had become knowledgeable of a zero pay inquiry on the insured's CLUE report. The insured was embarrassed & must have "forgot" the agent read the disclaimer & in the absence of the signed form...well we know the rest. He's serving the remainder of his term in Haengyong.

Children were crying outside the court room...his wife was committed to a mental institution not being able to deal w/ the fact her husband was sentenced to hard labor.

I urge all of you to reconsider your business practices.

 

[insurance1822]

I'm not talking about KNOWINGLY UNDERINSURING A PROPERTY you self righteous moron. I'm saying that if you run your RCE & it's coming in a pretty good amount lower then the competition...slap on the extension & move on. If that RCE is based off the CORRECT INFORMATION on the property...why assume the competition (who's RCE is more..) is accurate & somehow yours is flawed? And furthermore that if you continue...you're guilty or misleading / lying & all the other bull$hit your alleging? Typical old fart bum agent fear monger.

If you input the correct information based of tax & real estate records there's not going to be a problem. You're not dealing w/ E&S carriers who look to deny..we're talking about preferred carriers who may come to different RCE'S.

***.

 

[URDRWHO]

Ok...I get ya now. You had left me under the impression that you would fudge the numbers for your real estate investors. I guess I incorrectly read the post.

But in the article that you mentioned (I think you mentioned on another thread) said that 90% use the MSB RCE. I think the craps table in Vegas have worse odds than running into an insurance company that doesn't use MSB.

Coinsurance/Insurance to Value Revisited - Adjusting Today

Then when I use the building-cost.net that was also mentioned in the article and come up with almost the same darn values......there is something smelly on the bottom of my shoe.

Not to be an old geezer again but I am confused. Since when do tax & real estate records have replacement / rebuild values?

Now if you will excuse me I have to get some water. I took a bit of the yogurt that I sprinkle on my dogs morning food and the yogurt had gone bad. SOUR!!!!!!!

I'm not talking about KNOWINGLY UNDERINSURING A PROPERTY you self righteous moron. I'm saying that if you run your RCE & it's coming in a pretty good amount lower then the competition...slap on the extension & move on. If that RCE is based off the CORRECT INFORMATION on the property...why assume the competition (who's RCE is more..) is accurate & somehow yours is flawed? And furthermore that if you continue...you're guilty or misleading / lying & all the other bull your alleging? Typical old fart bum agent fear monger.

If you input the correct information based of tax & real estate records there's not going to be a problem. You're not dealing w/ E&S carriers who look to deny..we're talking about preferred carriers who may come to different RCE'S.

***.

 

[insurance1822]

Ok...I get ya now. You had left me under the impression that you would fudge the numbers for your real estate investors. I guess I incorrectly read the post.

But in the article that you mentioned (I think you mentioned on another thread) said that 90% use the MSB RCE. I think the craps table in Vegas have worse odds than running into an insurance company that doesn't use MSB.

Coinsurance/Insurance to Value Revisited - Adjusting Today

Then when I use the building-cost.net that was also mentioned in the article and come up with almost the same darn values......there is something smelly on the bottom of my shoe.

Not to be an old geezer again but I am confused. Since when do tax & real estate records have replacement / rebuild values?

Now if you will excuse me I have to get some water. I took a bit of the yogurt that I sprinkle on my dogs morning food and the yogurt had gone bad. SOUR!!!!!!!

Tax & real estate records will give you accurate square footage's, interior finishes, stories etc. I have carriers that want the square footage of the home listed & any built in garages included as well. So you input 3k square feet 2 story home & indicate there's a 2 car built in garage...then you get a RCE number.

..Another carrier will say take the total square footage of 3k..input a 2 car built in garage & also take an average of 250sq ft per garage & add that back into the total square footage. Now we're essentially (on the same property) saying it's 3500 sq ft w/ a 2 car built in garage getting a way higher RCE.

Some of my carriers do this...others don't? Who's right? Should I just assume the anal one is correct & over-charge people when the next carrier (both reputable) is spitting out an obviously lower RCE? Maybe my assigned underwriter's for those carriers are just nazi's?

If I'm going against the competition & I've accurately input the building features into the RCE & the competition is insisting upon a way higher RCE..I'm slapping on the extension & winning the business. I almost exclusively run into this w/ built in garages & homes w/ additions.

I had an underwriter tell me that 1600 sq ft bi level home w/ an addition of about 400 sq ft should be rated as follows. Take the RCE of the 1600 sq ft bilevel home w/ built in garage...then run a brand new (and entirely separate) RCE for a 400 sq ft 1 story home (to account for the addition) & add those together. How he's coming to that? I will never EVER know. I write 50+ policies per month alone (P&C) and I'm as immersed in this market as anybody can be. There ARE PLENTY of issues w/ different carriers & their RCE'S and there's plenty of times you can get a much lower RCE and have done everything correctly. I've had Chubb come back $600,000 higher then other carriers on the same home...both of which using the same inspection company.

It sounds like you just don't have the personal lines P&C experience to draw from to comprehend that RCE'S aren't entirely BLACK/WHITE. Between MSB/Market 360 & built in carrier RCE'S that populate w/ information you can't change (insisting a home is solid brick when it's veneer..) the potential is endless for inconsistencies. I've seen RCE's populate data from brand new homes which are including finished basements into the total square footage, I've seen them pull inaccurate square footage's on newer homes to the tune of 500 sq ft. Brand new subdivisions (for whatever reason based off how they exchange data w/ MSB Express RCE'S..) have come back showing features of a larger model then the person ended up actually building. Then I'm chasing down realtors for appraisals to overturn them etc.

On my own freaking home home the RCE was taking my 2 story great room & counting the unused airspace as living square footage increasing the sq footage by almost 350 ft. Anybody who does alot of P&C with many carriers in their arsenal will know exactly what I'm talking about. You're just running around w/ your hands in the air crying wolf.

Check yo-self before you wreck yo self & go run fixed annuity seminars in a nursing home because the market will steal all the senior's money! Better yet put them in fixed CD's because everything else is a scam.