Rethinking claims and the causes

***Working thought, from an idea via a longtime friend***

So the scenario is quite common, friend calls and says they want to have some tree work done on their property.  Pretty common.  You can also insert, new roof, new furnace, upgrade to electric panel, drainage dug, fire alarm installed, etc.  Think of it as any proactive, likely preventive measure that can reduce the likelihood and at worse the severity of a claim.

“Bill, is there an extra discount for cutting down the trees?  Will they(the insurance company) pay for it?  ”    No and No.

Why not?  Well, in theory, this is your responsibility.  Maintain your home.  Home insurance is not a maintenance policy.  Nor should it become one.  On the other hand, if we are engaged in this great mutual enterprise of protection, of a partnership with a set of people, why aren’t we working together.

What to we do first?  I think we come up with a pretty comprehensive list of items that can be done that can reduce or sometimes eliminate the likelihood of common claims;

  • Annual home inspection by a certified home inspector
  • Gutter maintenance
  • Improving or adding better drainage
  • Keeping trees/tree limbs off a certain perimeter of the home
  • Insect/animal inspections and preventive measures
  • Alarm systems; fire, smoke, co2, central alarms, mobile monitoring
  • Nest type thermostat with temperature sensors
  • Documented annual cleaning/inspection of wood stoves and fire places
  • etc.

Then set up a pretty basic incentive structure.  Say a $20 annual credit to be applied to your premium for completing 1-3 of these.  $30 for 4-6, etc.  Or maybe a deductible credit.  Right now it is popular to diminish/waive a deductible after a period of years.  This is nice but does it really make sense?  Is it something the customer can see/feel/touch/SHARE right now?  NO it is not.   Maybe doing something big like tree removal/pruning or a new furnace or a new roof gets you a $20 a year credit for say 5 years?  *Yes, some are already doing a roof discount**   Lets expand this.

Let’s get better relationships in place with say Angie’s List, Home Advisor or other similar site.  In theory, they are already filtering the good contractors from the bad, why replicate their effort?  No need.

If used properly this can be a massive retention tool as well as loss ratio reducer at the broker/agent level.   This will also help the carrier.  Not to mention, this is something actually worth talking about.  It is a positive incentive that can put more money back into the local economy while creating a marketing activity worth talking about.  Seriously, enough of this overplayed and diluted discount non-sense.

Thanks for considering.  Open to your thoughts.

Better uses for paper than this

So you,I and most households in america are inundated with not so good “advertising”  in our mailboxes on a daily basis.  This is also called “Junk Mail” and if it was electronic is called


So this showed up yesterday;



and I want to break it down a bit.  Since somebody killed a tree and likely did not use recycled content/paper

* If they did this is another failure of the piece; not mentioning something worth mentioning*

so the least we can do is provide it with some feedback.

1. It was sent by an agent who has been in business well over 10 years.  If just starting out, canvasing a neighborhood is not so bad.  If you have an existing client base, this kind of blind mailing proves how little you have kept up with the world.

2. If you need to include fine print in an offer(see the bottom, in orange) maybe your offer is to complicated or fraudulent or sort of like bait and switch?  Don’t give me the legal excuse, make it simple.

3. Seriously, is enticing someone with an artificially low rate still something people do?  Apparently it is.  Sad.  DO BETTER.  I do not know anyone who enjoys being deceived or discovering a “catch” once the engage you.

4. Oh and by the way, why are you still offering $300,000 in liability?  Seriously, read my note above, get with the times and offer $500,000.  Come on, does the agent who have this only have $300,000?  I hope not.

Bottom line, soliciting business by mail is alive and well.


Soliciting business by mail with boring, antiquated, unimaginative, dated, sort-of-fraudulent, non-value-adding pieces is dead.

Just some thoughts.


Math and value and flood insurance

Woke up early and was immediately thinking about one of my last conversations yesterday.  Let’s start with some math;

If you spend $1000 and in return I lower the cost of something by about $3000 what could you consider your return on investment(roi)?  $2000 not bad.  Not bad at all.

So in the first year of this new product you saved $2000 by spending $1000.  Now in the second year(assuming current numbers stay the same) you actually save $3000 since you do not spend the $1000 again.  So you have now made $5000 by investing $1000.  500% return.

Now let’s say you need to keep that product for 10 years so $2000 the first year plus $3000 *12 = $36,000 for a total of $38,000 . **Average time in a home is 13 years** All because you invested $1000.

DISCLAIMER; This is math based on the current situation in flood insurance.  Where a provisional rate is approximately $6000 but if  you invest $1000 there is a very good chance you will see that reduced by about $3000.  With this being a brand new situation(roughly 4 months old) it is to early to make these figures more accurate.

**Real Estate version;

Is not spending $1000 worth losing a buyer?

Is not spending $1000 worth delaying a sale…and possibly losing the buyer?

Is not spending $1000 today worth saving maybe $38,000?

This is no different than upgrading your bathroom, lighting, landscape, paint, etc.

So at the present time here is my explanation as to why I will not guarantee the above;

Let’s look at it another way; DEDUCTIBLE math

So you are getting $250,000 in coverage and want the same $1000 deductible as your home.  Your rate is $6370 BUT factor in you think FEMA is nuts (they are) and you firmly believe there will be NO FLOOD at your home.  So you take a $5000 deductible.  New rate of  $4988 savings of $1382.  The math looks weird, you take on $4000 more in risk but this year you save $1382 plus year two $1382 plus year three and what do you know you are now in the clear (assuming you saved this savings)  risk averted.

Remember insurance is an exchange of risk.  Flood rates are nuts because people were not paying enough into the big pool of insurance.  The only act of government that I believe will fix this is when the government GETS OUT OF THE FLOOD INSURANCE BUSINESS.

When deciding on how to spend your insurance budget don’t just settle for what the crowd says is right.  Your willingness to take on more risk is rewarded with a savings which you should value.  Especially if you place no value on the flood insurance you have to buy.

Just some thoughts.  Please open your mind to some new ideas.


But what will it cost to rebuild your home?

This might be the toughest question I have to answer when it comes to insuring a home.  Why?  Because the reality is that at the time you start a policy, unless you just built the home, you really have no definite way of knowing this number.  So here is my take; When in doubt always make sure you feel comfortable.  Here are some things to do;

1. As an agent I use any public data I can get my hands on.  This is combined with what you tell me then I input it into the company provided home replacement cost estimator.  Out comes your homes replacement cost and per company policy you have to have this as your minimum level of coverage.

2. Some people do a quick calculation, this guy included, so you take $150 and multiply it by the home’s square footage and you have a value.  Some people use $200, me as well, depending on the type of home and where it is.

3. Here is a resource I played around with while thinking about this topic; .  Easy to use but like all estimators it is limited.

4. Here is a free one;

5. And another paid one;

6. You could find a home builder and get them to give an estimate

7. You can research Modular Construction homes that look like yours

8. You can find a newly constructed home near yours and see what it is selling for.  Keep in mind that if it is brand new somebody is trying to profit on it so the sales price could be a solid number to compare with yours.

Now I have done options 1-5 as well as 7 and 8 and can say, at least for my home, all seven figures were different.  BUT they were all pretty close, so now what?  My home is covered to the standards of the company I insure it with.  It is also at a figure that I feel more than comfortable with.  Could I get less coverage?  Yes, but then you need to do the math.  I can probably lower my coverage from $300,000 to $250,000 and might technically still have plenty of money to build my home.  But I am not comfortable there and I think it is silly to save maybe $50 and lose $50,000 in coverage.

Should you do this every year?  Well yes, to some extent you need to check in on your coverage every year.  As bad as it would be to be under-insured it is still pretty bad to be paying for more insurance than you need.

Now what, well I could use some help.  See I did all of these steps but would love for you to do them and let me know what you find.  E-mail me here [email protected] so we can discuss.  Also, as long as you would share the final reports I would be happy to pay for the estimators in steps 3 and 5.

As always, just some suggestions you may want to try.