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"SHOW ME THE POLICY" A MORE THAN BASIC ON-LINE GUIDE FOR BUYING HOME INSURANCE FOR SINGLE FAMILY OWNER OCCUPIED DWELINGS IN CALIFORNIA BY DAVID SHAFFER DAVID SHAFFER INSURANCE SERVICES FEBRUARY 11, 2000 According to the California Department of Insurance(CA DOI)1998 Market Share report available at the CA DOI website, in 1998 a grand total of $3.4 Billion dollars of homeowners insurance was sold in the state of California. According to this survey there are 153 Insurance Companies among 87 Licensed Groups of Insurers that sell home insurance to California Homeowners. For many of us, our home is our most important asset. Yet it surprises me when I speak to potential clients how little even the most educated among us know about the coverage provided by their current homeowners policy. Most homeowners, I would venture to say, probably do not even currently have a complete copy of all the forms and endorsements that make up their homeowners insurance coverage. I have maintained for years in my insurance practice that shopping for homeowners insurance by price alone is the wrong way to go about obtaining one of the most important types of insurance policies you will ever purchase. According the CA DOI website section for residential insurance "If you only shop by comparing prices, you are doing yourself a disservice. Your home is one of the most important purchases you will make, and you should treat it as such. You should take time to get the facts before you purchase insurance to protect it." Yet many homeowners do not know what "facts" to get before they purchase a policy to protect their home. Furthermore, many aren't willing to spend the time to get the facts. I have spent many hours searching the web to find insurance websites that truly, in my opinion, provide helpful facts to consumers about the purchase of this product. More often than not, I have found misinformation or simply lack of information. Take for instance this statement I found at one of websites I visited regarding the basics of Homeowners Insurance: "Home insurance usually boils down to two crucial concerns — protection and price. Although regulated at the state level, home insurance is more of a national product than is auto insurance, meaning you will find fewer local variations". The above statement seems to imply that most home insurance is alike and that there are few "local variations". From my knowledge of the marketplace in California for home insurance I can honestly tell you nothing could be further from the truth. To the contrary, there are many variations in the types of home insurance sold to California homeowners! As a matter of fact, I decided to send the following email to the website www.insure.com that had the above statement. My email read: I am interested in your comments in the section Basics of Homeowners Insurance that states: "Home insurance usually boils down to two crucial concerns — protection and price. Although regulated at the state level, home insurance is more of a national product than is auto insurance, meaning you will find fewer local variations." It is my experience in California as an independent insurance agent that there are many variations in California for the type of home insurance being offered for detached single family owner occupied dwellings being sold in this state. Perhaps you can clarify what you mean by "fewer local variations". Do you mean to imply that no matter which insurance company in California that offers a home insurance policy for a detached single family owner occupied dwelling, the coverage will basically be the same? Thank You David Shaffer A few days later I received the following reply: Dear David, We examined that passage and couldn't figure out what the original writer meant (although he probably meant the types of HO policies available). Since we couldn't clarify the statement we have deleted it. Thanks for your note on the iffy statement. Sincerely, Amy Danise insure.com adanise@insure.com I want to complement the folks at insure.com for quickly responding to my email and updating their website. Let’s go back to the California Departments of Insurance advice on homeowners insurance. At their website it states "You should take time to get the facts before you purchase insurance to protect it". As stated above,in California there are at least 87 insurance groups that with 157 companies are marketing home insurance to California homeowners. How is a California homeowner to determine amongst all these companies how to buy the best, not necessarily the cheapest protection? What is the benefit to you as a consumer of buying home insurance on the internet, thinking it was real fast and simple and maybe even saved you a few dollars only to find after you have a serious claim you are inadequately covered? In addition, a home insurance policy is a legal contract that spells out exactly what is or isn't covered. How do you as a consumer after you have received a quotation get the opportunity before you buy the home insurance policy to see and read through the actual policy before you buy it? Software you can get for free on the internet, for example at adobe.com, acrobat reader, makes it real simple to download digital copies of doucuments. For many types of products you can buy on the web, such as cars, cameras, washing machines, vacum cleaners, stereo systems, vcr's, etc. you can get detailed product information before you make your purchase. Ironically, I have not seen a single insurance website that will show you a copy via an adobe pdf file a copy of the policy and endorsements that you are about to purchase. In my opinion, you need to have the ability to download and read the generic insurance policy and endorsements you can add as part of the process of shopping on-line for home or other types of insurance. Even if you could download a copy of a particular insurance company's home insurance policy, how do you further determine what type of coverage it offers and how it compares to other home insurance policies being offered in California? Quite frankly, from what I have seen on the web, it is impossible to make such a comparison at any of the major websites today offering on-line quotes for home insurance. Websites exist that provide detailed comparisons of other consumer products, such as brandwise.com, but nothing exists on the internet that I have found that provides comprehensive comparisons of home insurance polices among the 187 carries selling this coverage in Califonria. It is also interesting to me as a professional agent that specializes in home insurance why insurance companies or websites for on-line quotes are not allowing you to see and read their policies before you make a purchase. Perhaps it is because if you understood better what makes a quality home insurance policy and could learn which products had some serious defects, you would not purchase it! As a consumer, here is the scenario I want you to visualize: Your home has 1)suffered serious fire damage to the structure and contents or 2)the home and everything inside is a total loss. Amongst the 187 companies offering home insurance in California, is their little variation in in how each of the 187 companies selling home insurance will settle your claim? The answer is NO! There are major variations in policy language amongst the 187 companies that will effect the settlement you receive. If you are a consumer that truly wants to be fully covered, wouldn't you like to know before the fire happens which policy will give you the best coverage and settlement options? Wouldn't it be helpful if you could go to a website that could rank the 187 offerings of home insurance in to categories such as 1)the best; 2)better; 3)average; and 4)below average? Wouldn't it be wonderful to understand what makes one policy better than another? Quite frankly, as of February, 2000 I have not found a single website geared to the California homeowner that I believe allows you to determine before you suffer a serious fire loss whether or not the policy you can get with either 1)an on-line quote or 2)from an insurance agent you send email to and get sent back within 24-48 hours a quote will truly provide adequate insurance protection. If your home burns down, will your current homeowner insurance policy adequately cover all your potential losses? If no company wants to show you their home insurance policy and endorsements that can be attached before you make your purchase, how can you as a consumer make an informed decision? How can you get the facts you need to determine if you will be fully covered? If you are like most homeowners, you probably don't understand what are the major variations offered in home insurance policies and how these variations can leave you seriously underinsured. You may rely on statements made by major insurers of homes in California that you since you have purchased home insurance from one of the largest writers of home insurance in the country you can sleep peacefully at night. It is my opinion that if most homeowners in California were to take a look at their current home insurance policy, and have a better understanding of what their policy does and does not cover, many homeowners today would discover they are inadequately covered for serious or total fire losses. Rather than throw up your hands and hope that your policy offered by a major insurance company does offer adequate coverage, read on. If you don't have a complete copy of your current home insurance policy,i.e. the twenty to fifty page basic home insurance contract and copies of all the forms and endorsements attached you should ask your current agent to "show me the policy" and refer to your policy as you read this on-line guide to home insurance. It would not surprise me if you find your current agent can't immediately supply you with a complete copy of your policy insurance contract, with all its forms and endorsements. I can deliver this information to my clients via the internet or via fax immediately. With the above in mind, I have prepared a more detailed discussion than I believe you will find anywhere else on the internet about this most valuable insurance product. It will take time for you to go through my on-line guide to homeowners insurance. You will get enough facts I believe you need to know to help you determine how well covered you are currently. Please note, at this time, the majority of this on-line guide pertains to the purchase of home insurance for detached single-family owner occupied dwellings. I hope to expand this on-line guide to condominium owners at a later date. I believe you will be more informed than ever of the facts you really should know about the types of homeowners insurance protection being offered to California homeowners. As a result of this knowledge, you might be able to find substantially better homeowners insurance protection than you currently have. Will it be more expensive than what you are currently paying? Perhaps, but not necessarily. And even if it does end up costing more, at least you will appreciate why it is worthwhile to spend the extra money! I would venture to say that based upon substantial changes in home insurance policy language in California after the Oakland Firestorm in 1991 and the Northridge Earthquake in 1994, the majority of California homeowners now have home insurance coverage that will not adequately cover them from serious fire losses. In addition, as respects earthquake insurance, it is virtually impossible to get adequate insurance protection today from a devastating earthquake in California. My on-line guide will talk about earthquake insurance as well. Although my independent insurance agency represents or brokers home insurance policies for insurance companies that can offer superior protection and claim settlement options than most Californians currently have, not every homeowner will be able to qualify for these products. An important chapter, therefore, in this on-line guide is "Underwriting Guidelines". Insurance companies have criteria you will have to meet in order to qualify for their home insurance products. Not everyone will meet the criteria. For example, many homes in California are located in critical fire areas. Although cities allowed these homes to be built in these locations, insurance companies are not required to offer homeowners insurance in California to anyone that applies. Finally, my on-line guide is based upon real experience and knowledge of this product. I had clients who suffered serious damage in the 1989 Loma Prieta Earthquake and 1991 Oakland Firestorm. My clients who suffered losses were all well insured. Despite major complaints by policyholders after the Oakland Firestorm and continued mistrust many of you may have of insurance companies, I can tell you from first hand experience that the insurance system can work exceedingly well. It will require some time on your part to understand how to make the insurance system work, and an agency like mine to work with in the process. What are my credentials? -My agency has been in business since 1983. -I had the opportunity to see up-close right after the Loma Prieta Earthquake and the Oakland Firestorm what type of devastating damage was caused. I was able to see too how the products I sold for just such events responded. -My experience and insurance knowledge with the Oakland Firestorm in particular led to my being asked by my professional trade organization, Independent Brokers and Agents of the West to testify in Sacramento on legislation that has been passed effecting home insurance in California. -I was asked to be on the board of United Policyholders, a consumer insurance group that helped policyholders after the firestorm. -Tom Vacar and Brian Banmiller from the award winning Channel 2 10 O'clock news have interviewed me for their newscasts on consumer issues regarding home and earthquake insurance. -One of the companies that paid claims to my clients after the Oakland Firestorm, Atlantic Mutual, featured me with my clients in their national magazine about how the insurance system can work right after a major disaster. To those that meet the criteria for a better home insurance policy than you now have and that I can obtain for you, I want the opportunity to earn your business! Although I can insure modest size homes, I prefer to work with clients with insurance reconstruction values starting at over $500,000 and into the millions. Many of my clients also need additional protection for -Vacation homes -Jewelry -Furs -Fine Art Collections -Other types of collections -Higher personal liability limits to protect their assets. -Automobiles My agency can offer all these types of insurance coverages. I hope this on-line guide will be of benefit to many. Please send me your suggestions for any ways it can be improved. Stay tuned for the on-line guide which should be available by the end of February, 2000. Thank you David Shaffer David Shaffer Insurance Services © 2000 |
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David Shaffer Mortgage and Insurance Services
