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Episode-2659- Insurance for your Home and Homestead

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Michael Walsh is a long-time listener to the show and works as a farm insurance underwriter. He is not an agent and doesn’t have a policy to sell you. His goal today is to educate us on insurance for the home and homestead to make informed decisions.  He joins us today to discuss insurance for the home and homestead

Essentially, many listeners to the show have designed a lifestyle in the gray areas. They kind-of farm; if they don’t it often looks like it. They probably run a business…. well maybe it’s just a hobby. Unfortunately, insurance is designed for black and white scenarios. I’d like to educate people on how to best cover those gray areas.

Michael has experience with all types of insurance including life, health and disability and we discuss a bit of that.  However his real expertise and passion is property/casualty insurance. Insuring autos is simple, but properly insuring your home (especially a homestead) is unique so we take a deep dive into that today.  This is incredibly important as for most people it is their single largest at risk investment.

Some topics we hit on today include…

  • Homeowners vs Farmowners vs Commercial Policy
  • The proper ways to insure your homestead tractor, livestock, feed, etc.
  • Why your agent might not “get it” and how to deal with that
  • Chargeable claims vs non-chargeable claims (which claims raise your rates)
  • Extra/optional coverages to look up and which to avoid
  • Do you have the right liability for what you’re doing

 

Finally I just want to point out that Michael is a salaried employee of an insurance company and he doesn’t have a particular company to recommend or anything to sell.  In fact in this interview he mentions one company only due to its association with the veteran community and never even says which company he works for.  This interview is a true community member just trying to help you understand how to mitigate the risks in your life.

Resources for today’s show…

 

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Comments

Episode-2659- Insurance for your Home and Homestead — 10 Comments

  1. Looking forward to this podcast…..purchased a cabin last year that needed a little work….$750 every six months for course of construction insurance was all I could get…..because it needed a new roof and grass wasn’t mowed.

    • If you’re putting a new roof on a cabin, consider looking into a standing seam hidden fastener metal roof as opposed to a painted rib with exposed screws. These are usually what is called a “UL Class 4” and will get you a discount on your homeowners insurance, often substantially.

      They aren’t cheap. But if you live in a hail prone state, it might be for itself with insurance premium savings.

      • Good call…I was going to do a regular metal roof but then a friend who had just done standing seam asked my why I would spend thousands of dollars on a roof only to put several hundred holes in it.  Point taken and truth be told those neoprene washers don’t always seal and if the screw goes in slightly crooked then the washer will not be parallel to the roof material. I did one side of my barn to the tune if 4200 square feet and I did get some screws crooked, but it’s just a barn and the metal was cheap.

  2. Hello Jack,

    Great show.

    Personal experience, had 2 house fires back about 2009.

    We had bought the house from a couple who had bought the property from a bank.

    Banks are NOT held to the same level of disclosure as actual people, end result, due to un permitted modifications, it cost me about 4400 USD to get certain repairs done, in order to get Insurance to pay for the work and the city inspectors for structure and the like to sign off.

    For any homebuyer, please , please , please, take the time, go to City Hall, or what ever the permitting authority is in your region and get things checked out, BEFORE you agree to buy.

    Backup documentation saved my rear end, with things like Elk steaks listed as cost equivalent as Sirloin, which Insurance agreed to.

    If you have any type of freezer , use both a surge protector and make darn sure that there is at least 14 inches of clearance between the outlet and the device.

    Serial numbers, device names and things like service tags recorded somewhere, is always a good idea. While not the best, even Google Docs, is better than nothing,

    Oh Yes, keep the document name, user name and password in your document kit and have at least 3 backups, even if that being three USB flash drives, one given to your Insurance agent, one in you document kit and one with a semi distance relation or friend.

    Okay, password protection of the USB device, a good idea.

    Reviewing your insurance every six months might not be a bad idea.

    Thanks for all you do.

    • Why 14 inches.  Have a dozen 25 cubic foot chest freezers and most have about 3″ on 3 sides for over 5 years.

  3. Jack, you answered this similar question for me years ago on the thinkline.
    I found https://floridafarmbureau.com/

    They have a homewners rider that was about $50 a year for under $5k gross sales.  Unfortunately they ask if I store any fuel onsite and to send pictures.  Turns out if store more then maybe 30 gallons you have to buy commercial policy which has some benefits like not raising (or affecting) homeowners insurance if a claim & more coverage, But cost more.  It is also based on gross sales and our sales are only like $2500 and it is still only $212 a year.

    Bonus was they are farm insurance and don’t penalize me for be far from fire hydrant and I saved 2k from geico insurance!  Some areas you have to wait for a slot to get coverage.

    Thanks!

  4. For Tropical Farmer, I got that information from the insurance investigator.

  5. I was excited to hear this show but Jack kept derailing the guy with commentary, it was frustrating, but maybe just me….at the point where they were talking about under-insure and over-insure.  It sounded like I could say to my insurance company “insure my shed for 50K”  in other words over-insure and then Jack tried to boil it down to something like to over-insure is good for me bad for the insurance company and vice versa.  I didn’t think I could tell them what amount to insure my shed for, anyone have insight?  I think what Michael was saying was the difference between replacement cost and actual value.  That was the part in the show where they talked about how  50K policy could yield 12K

    For example I have a Farm/Ranch policy with State Farm and my 50×55 bank barn is insured for $43K but I know that a new barn like that, it has 2 floors, could not be built for 43K.  Maybe that size with one level, but how would they build a second floor that can store 100 rounds bales of hay at 700 pounds each?  Of course I will call my agent to get the details, but can anyone shed some light on what Michael was getting at because I missed it.

     

     

    • “50K policy on a 100k shed yielding 12K insurance payment” I listened to that portion twice and I still don’t understand it. I could use some clarity too.

      • Hey guys I’m the dude that was interviewed. I’m sorry, I guess I didn’t feel that Jack interrupted me or anything, but let me explain.

        If you have purchased replacement cost coverage on your outbuilding, you need to insure for 80% of the true replacement to get it. So let’s say the true RC is $100,000. You need to insure for at least $80,000. If you instead insured for $40,000, that means you only insured for 50% of the true RC and will only get 50% of the claim. It will also be paid at actual cash value. This is a mechanism to persuade you to insure to full value.

         

        Conversely, the carrier has an incentive to not over-insure in some states. Some states require they pay the full amount of insurance in a total loss. So they do their due diligence and make sure you don’t overinsure.

         

        In the case of your barn, you might have it insured for Actual Cash Value. Carriers will suggest this to save money or perhaps because the building can’t really be replaced; maybe outdated like a tie stall dairy barn is. In this case of having ACV coverage, this insurance percentage is largely irrelevant.

        As far as determining what to insure a building for, it is somewhat of a collaborative effort. The carrier should estimate the full replacement cost and tell you how they did that and what the results were. They might say “but we’ll only insure it for half of that at ACV” and then you guys decide together what to insure it for.

         

        If your barn costs $100k to rebuild but is obsolete and falling over, maybe I’ll only insure it for $25k ACV. Make sense?

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