Do You Understand Your Homeowners Insurance with James McKeever

November 14, 2023

109. Do You Understand Your Homeowners Insurance with James McKeever

It’s estimated that two-thirds of Americans don’t understand their homeowner's insurance policy. Our guest this week is James McKeever, an insurance expert in Dunedin, Florida.  From the lack of policy understanding to the impact of weather events on premiums, this is a comprehensive guide for homeowners to be proactive, informed, and prepared to navigate the intricacies of their insurance policies. 

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Transcript

George Siegal: 0:00

Thank you for joining me today on the Homeowners Be Aware podcast. Today we're going to talk about homeowners insurance, probably one of the most important things every homeowner should not only have, but should have a good understanding of what your policy actually covers. Most people have never read their entire policy and most of us really have no idea how things would go if we ever needed to make a big claim. So, after today's podcast, you are going to be on the road to being a knowledgeable and much more prepared homeowner. My guest is James McKeever. He's an insurance broker in Dunedin, Florida, and he has a wealth of great information. Today, you are going to learn seven things every homeowner should know about their insurance. I'm George Siegal, and this is Homeowners Be Aware, the podcast that teaches you everything you need to know about being a homeowner. James, thank you so much for joining me today.

James McKeever: 0:55

George, thanks for having me. Hopefully our topic is not too dry with insurance and we don't lose you any listeners, but I appreciate being here.

George Siegal: 1:01

Well, I think we should gain some, because I think this is such an important topic and it's something that people so do not understand. Now, before we started, you and I were just looking at some statistics that said half of the people out there don't understand their insurance policies. You and I probably said it was probably more than that. In your business, what do you find with your clients and other people about their truly understanding the policy?

James McKeever: 1:25

I think people have what they think is a high-level understanding. They know if they have a policy, they know if they made the payment. But I think if you got into any level of detail on a question, I think most people would stumble with it. I think the gross majority of people don't truly understand how their policy works and there's some common scenarios where they would be pretty stunned to find out it didn't respond the way they think it would.

George Siegal: 1:47

Yeah, there's a Seinfeld episode with rent-a-cars I don't know if you ever saw that where they didn't have he made a reservation but they didn't have his car and he said isn't having the car the most important part? I equate that to insurance. People don't think about it. You go okay, I'm paying for this. You need to know what you have, because when you need it, it has to be there for you.

James McKeever: 2:10

Yep, absolutely, and we see some pretty big gaps there. Just a common one we see is we'll see investors buy a property. They'll change the title of the property from their name into a trust or an LLC, not tell us for a year or two, that whole time, that whole year or two they didn't have insurance. The insurable interest changed. So that's just one really gross example, but there's a lot of those out there. It's a little scary sometimes the lack of communication that people will have with their insurance agent on what's probably one of their most valuable assets.

George Siegal: 2:42

Yeah, I would argue it might be the most valuable. What's interesting is when people have a year or two where they're not needing it, or they might have five years, they might have 10 years. I don't know that they value it as much because they think it's something. Why am I paying for this if I never use it? And that's really the wrong attitude. You can't look at it as well. I didn't get anything back. You should be lucky. You didn't get anything back.

James McKeever: 3:05

The hope is you never have to use it right. So it's an intangible. Insurance is a promise. If you spend money somewhere else at a clothing store, you give them money. You walk out with a pair of shoes or a shirt and with insurance, all you're getting is a promise. You give us and buy us where the broker but the carrier money, and then you get a promise back saying if this event occurs, you'll be indemnified.

James McKeever: 3:26

In this way, now there are many ways to indemnify, but that's what it is, and so I think people kind of lose focus of their insurance. They want to stick their head in the sand a little. We hope they never need it. But insurance is asset protection. The more assets you have, the greater the limits you want, because if you ever suffer a loss, whether it's property or liability remember, america's largest litigating law firm is based out of Florida, where the number one state for litigation in the country. So if you ever have a judgment where you're litigated against, you want the policy to pay that and not your savings, not what you've worked your whole life to obtain. So that really is how you have to look at insurance is it's asset protection?

George Siegal: 4:05

Now one of the things people also complain about all the time is you have this protection but if you make a claim, a lot of people say their insurance company then either raise their rates or dropped them. So you think you have this protection, but if you need it you really end up paying for it after the fact again, yeah, that's a dark truth.

James McKeever: 4:25

It's true that that is the reality of the industry. If you know, in my I've been doing this 24 years. So in my experience with insurance, if something is a legitimate claim, that wasn't aggravated by saying negligence or lack of maintenance. If it's a property claim, insurance companies are understanding of that. If you're going to pay that claim, yeah, you might lose your safe policy discount that you had, but it's, I tell you, what the insurance companies really look for are the claims on properties where there's a lack of pride of ownership or high frequency of claims.

James McKeever: 4:59

I know there's a misconception out there about windshields are free in the state of Florida for anybody listening. Maybe different in other states. They're certainly not free. Somebody's paying for them. So if you're auto insurance sees you're you're putting a windshield in your car every year to on their dime, yeah, that poses a problem. So there are a lot of instances where filing a claim will have an adverse effect on you. I certainly don't recommend claims for minor nuisance items, what I would maybe call maintenance items but for larger occurrences a tree fell on your house Absolutely. That's what you have insurance for and the carriers know that.

George Siegal: 5:28

Well, explain to me how this is fair. So if I choose to buy a house on the beach, it's vulnerable to storm surge. It's vulnerable to being the first victim of a hurricane blowing through. Why is my risk something that everybody else ends up footing the bill for? It seems like all of us pay more because of all the damage, when some of us haven't had any damage.

James McKeever: 5:51

You're exactly right and there certainly is an inequity. And there's two really really stark kind of examples we can give of that right. The first one is the National Flood Insurance Program. It was kind of derived by Congress in 1968, the Flood Act of 1968. So the gross majority of flood insurance in this country, that burden falls on the NFIP, which is a branch of FEMA, so it's the federal government. I would say probably 90% of all kind of flood exposure falls under that umbrella.

James McKeever: 6:21

Historically, up until 2021, the person lying in a low area of Nebraska paid the same rate for the same exposure as the guy that lived maybe on Clearwater Beach or St Pete Beach. There certainly wasn't an equity there. Now FEMA has released a new rating methodology in October of 2021. The tagline they put on it was equity in action, something along those lines. So now they're really trying to make it so the person in the higher risk area is paying their share of the premium. We're seeing again for those maybe that aren't in Florida, art state secondary markets called Citizens Property Insurance. We lovingly call them the market of last resort. They're a secondary market. Same problem there They've had artificially low rates. Again, the people with vacation homes on the beach kind of got this subsidized premium but that's going away.

James McKeever: 7:07

So I think you're seeing the industry maybe late to the game. Start to recognize that inequity and start to move away from it but it's certainly been present, you're right no-transcript.

George Siegal: 7:17

Well, I had Lisa Miller on as a guest a few weeks back and I was shocked to find out in researching for her and then talking to her about this, that with citizens, if there's a statewide catastrophe or just a major disaster let's say Tampa got wiped out and citizens didn't have enough money to pay for it we all would have to pay for it. So that was really a surprise to me.

James McKeever: 7:40

It is yeah, and so there's a couple of mechanisms there, and I hate walking in the footsteps of Lisa Miller because she's brilliant with insurance. She probably knows more than I'll ever. She'll probably have forgotten more about insurance than I'll ever know, so I hate coming in after her but citizens can do 45% assessments on their policies.

James McKeever: 7:56

Of course, the state has a guarantee fund we call FIGA Florida Insurance Guarantee Association. So if a carrier becomes insolvent in Florida, that fund picks up and pays those claims right now. So it's for anybody listening, it's October of 2023. If you look at your current Florida insurance policy every policy in Florida your home owners, your auto, your boat, anything you'll see a little fee on there at the bottom called a FIGA assessment and they started that. About a year ago Another one got added. So right now we are all paying for prior carrier insolvencies. So again, does that add to the inequity?

George Siegal: 8:29

Is it in the general?

James McKeever: 8:30

public's best interest for a carrier to go under and claims not be paid? No, I think that you want your neighbor's house to be rebuilt. I don't think you want to live next door to a pile of burned down rubble because his carrier went under. But yeah, citizens is meant to be a secondary market and we find ourselves in a situation where they're a primary market and they're actively trying to walk that back. I think citizens has about 1.6 million policies on the books. Historically, that number generally floats around 300 to 400,000, to give you context on how swollen citizens is.

George Siegal: 9:05

Well, a frustration for us is first of all, it was really difficult for us to find home owners insurance. Then I thought we were way overpaying. Now Lisa told me maybe we should feel lucky we're paying what we are, because a lot of people got it a lot worse than we did. But with carriers that are leaving Florida, with ones that are penalizing Floridians and I hear this in California too for people that are just paying obscene amounts for insurance, what's our hope for the future of being able to live here and, if you live in a risky area, even being able to get coverage in a risky area?

James McKeever: 9:41

Markets are cyclical and we are. Everybody in my industry knows, we're aware we're in a hard market cycle. It's the worst folks that have been in this industry longer than I have 40, 50, 60 years they're admitting that this is the hardest market they've ever ever seen. It really is. I don't want to use the word market implosion, but it's been a bit of a slow implosion of our market. We know this again. I hate to walk in Lisa's footsteps. She probably touched on this.

James McKeever: 10:06

Our problem in Florida really has been a legislative issue and it hasn't so much been weather. These insurance companies can model the weather and the damage that they'll cause and the dollars that'll cost them, and that modeling has been accurate for a number of years. Hurricane Ian proved to be really accurate. Plus or minus about three or four percent was the margin of error on what the insurance companies thought that storm would cost them and what it cost them. But they can't model human behavior and we've had a twerk problem in Florida. Without diving too far into the weeds. That problem, hopefully in large part, has been addressed with some legislation signed in the law this year.

James McKeever: 10:41

So now a lot of the indicators are pointing to the insurance companies having a bit of a fresh appetite for Florida. There's some market capital on the sidelines that's coming in. There's new carriers coming into Florida. We're now seeing a bunch of policy assumptions out of citizens. Into this year there should be about 350,000 policies that carriers are trying to assume away from citizens. Those are all good signs, george, so hopefully I'm long on insurance. I think I hope our darkest days are behind us. It's a tough time to be an agent. Hopefully our clients are frustrated. They're taking it out on their agents because they can't get the carriers on the phone. But I think in the next maybe 18 to 24 months we should see some relief. Now what relief looks like can be debated, but I think we'll see some relief.

George Siegal: 11:22

Yeah, you kind of stole my next question. I was going to say people used to love their insurance agent. Do people still love you? No, it's a tough time.

James McKeever: 11:31

And I get it. I'm a Florida resident. We're active in our community. We're in downtown Dunedin. For those familiar with the area, I'm a Florida native, so I'm a resident here as well. I'm feeling the same increases, but I get it. If you get a 40% or 50% increase, something you didn't budget, you're going to have some frustrations and we have to listen to those frustrations and we certainly empathize, but there's no way around it.

George Siegal: 11:55

It's a tough when everything else is going up.

James McKeever: 11:58

We know what inflation is, so insurance is just piling on.

George Siegal: 12:01

Okay, now you've put together a list of seven things every homeowner should know about their homeowner's insurance. Let's run through that, because there are some things on here that I think everybody needs to hear. You got it.

James McKeever: 12:12

So you know. I think the first one is really basic. It sounds really simple, but you would be stunned with how many of our clients we speak to that they don't know who their insurance company is. They don't have a copy of their policy. They haven't seen their policy in years. I don't know if they throw it away, thinking it's junk mail. What kind of policies are written on? Did you write this policy 10 years ago when you bought the house and it was a rental and you've since moved into it and now it's your owner occupied home? Well then, it's on the wrong policy form. So I think that they're. You know, number one. What do you have? Get a copy of your policy. Know who your agent is.

James McKeever: 12:44

We've had some clients that premiums are so high they haven't paid them and they have a mortgage on the property and so the lender put force place insurance on. You're not insured. Force place insures the bank. It only ensures for what you owe the bank. That could leave a huge amount of equity exposed without coverage. So you know, number one know what you have for insurance and if you don't know, pick up the phone and call your agent and find out. Learn what you have.

George Siegal: 13:07

Get a copy of your policy. Yeah, let me ask you a question about that. So when you have that situation, my feeling is that whenever there's a claim and insurance company is looking for a way that maybe they don't have to pay that claim, so if you don't have your house designated right, if you haven't dotted the eyes and crossed the T's and done things properly, are they just flat out not going to pay you? They can.

James McKeever: 13:28

You know insurance is a contract. It's a very, very and it's basic form. It's a contract. So if you violate that contract then of course the contract's void right. So if you are using the home as a daycare and you told them you know it isn't a daycare, they didn't contemplate that exposure in their premium, yeah, they cannot pay that claim. It would be frustrating. And then the insurance company is a big, bad, evil institution and they're going to get a one star review on Google. I can see it coming. But yeah, you do want to make sure you do dot the eyes and cross the T's.

George Siegal: 13:59

Yeah, good luck ever trying to see those guys. All right now the next one on the list.

James McKeever: 14:03

So the next one you know, in Florida we're all experiencing as we know we've touched on it really high rising rates. So there's some home hardening things people can do. There's a program out there right now called my Safe Florida Home. Lisa may have touched on it in your interview with her. I encourage people to look into it. I know that funds are running low. I don't know that they're taking new applications. It's a $10,000 grant, not alone, available to homeowners in Florida for things they do to harden their home against wind, adding hurricane clips, impact resistant doors and windows. You don't need to do all the doors and windows to qualify for the funds. The funds are 66 cents on the dollar. So if you spend 5,000, the state will give you 10,000. If I'm hearing the T, hearing the wind, correctly no pun intended I believe that that market, that program, will probably see some additional funding.

James McKeever: 14:53

You know, one of the other things I think people want to look for is their roof. It's the first thing insurance companies look at. When you come to me as an agent and say, james, can you write us homeowners insurance, whether you're buying a house or just trying to save some money, the first thing we look at as an agent is how old is your roof? And if the roof's 18, 19, 20 years old, we tell people it's time for a new roof. And we get this question all the time George, why would I replace my roof if it isn't leaking?

James McKeever: 15:16

Well, that's akin to saying, why would I replace the tires on my car? It still holds air. The tire hasn't blown yet. Well, you know, if it's out of tread and if tires bald, it's time for new tires. It's the same with the roof. The insurance companies know it. They don't want to be on the hook for you discovering the roof has a leak, because once it happens, then they owe for the interior damage. So keep your roofs up to date, budget for the roof and look into those home hardening grants. Those are really helpful for people to keep premiums low.

George Siegal: 15:45

Absolutely. I think people need to realize that even if you have to finance it, whatever you have to do to pay for it, the grief you will save by having that as something that doesn't go in a storm could be. You're saving a life altering problem potentially from happening, because if the roof goes, the whole house is going to go. It is and we can touch on it again in a minute, but I think that there is a little bit of a misconception that people are.

James McKeever: 16:09

I've seen it with first-time home buyers really more in the last few years. Maybe it was an infusion of pandemic money into the economy. I don't know what caused it. It's a little out of my lane, but I'm seeing where homeowners aren't budgeting for certain repairs. You know, if you have a water heater in your home, it's only going to last 20 years and if the water heater is $2,000 installed, to make round numbers you have to budget $100 a year. Same with your roof. If it lasts 20 years and a new roof is $20,000, you should be putting away $1,000 a year. So what? $85 a month? I don't think people are doing that. So I think what's happening is, when they get to the point where they need one of these things because of a critical failure, they're looking to their homeowner's insurance. And that's where we're running into some issues before, maybe the litigation reform and some of the pressure on these rates that now we're all paying for you and I may be paying for our neighbor's roof that the insurance policy had to pay for, that it shouldn't have.

George Siegal: 17:03

Yeah, everybody's looking for that hail storm to roll through so they can have the adjuster come out and say, yeah, you need a new roof, even though they needed a new roof before that happened Exactly.

James McKeever: 17:11

The tires were bald.

George Siegal: 17:12

Exactly Number three on the list.

James McKeever: 17:14

You know it's great marketing, but we get this a lot. What about combining my home and auto? I want to save some money. Combining home and auto is a bit of a myth in Florida. Anybody maybe listening or watching in the insurance industry?

James McKeever: 17:26

I'm sorry if I've slighted you with this but it is a bit of a myth, I think in other states where a carrier not to pick on any one carrier, but carrier A may have a robust appetite for auto and homeowners insurance and it maybe makes sense to combine them. Those carriers don't exist in Florida. The carriers that write auto insurance by and large in Florida travelers and mercury and progressive and Bristol West and Kemper. They don't have an appetite for homeowners insurance. Progressive does a little but I've seen the rates to be high. So there are some narrow exceptions where we can combine home and auto, but for the most part it would be a disservice to the client because the best auto rate maybe with carrier A, well, the best homeowners rates with carrier B. So we don't want to fit that square peg in the round hole. We get it a lot but it really in practice doesn't work the way that the consumer wants it to.

George Siegal: 18:15

I want to shake Flo and Jamie so badly because they don't even tell you. Oh, by the way, if you have a 16-year-old male driver in your house, everybody's going to screw you Everybody there's no way around it.

James McKeever: 18:28

On average, a male driver aging into 16 pops a premium by about 400 a month and female is 2 to 300. It's a lot and we have the clients tell us well, we bought an old beater for our son, he's turning 16. We spent $1,000 on this car. It isn't the cost of the car driving the premium, it's that third-party liability Remember, florida is the most litigious state. It's the damage that you can do to another human, not the value of the car that drives the premium.

George Siegal: 18:54

Wow, 400. I wish we could get that. We are just paying so much. I mean, it just makes me want to cry.

James McKeever: 19:01

So I may cry? Can I put? My head on your shoulder and say go for it, I'm well conditioned, thank you.

George Siegal: 19:07

Okay, next one so the next one.

James McKeever: 19:09

I think that we get a lot of shock on and we just had Hurricane Idaille roll through our area, maybe four or five, six weeks ago. Hurricane deductibles Look at your homeowner's insurance. Most of these policies have a 2% hurricane deductible. That can be a 10 or $15,000 deductible If the storm has a name. So if it's Tropical Storm George or Hurricane George, not a Tropical Depression number nine or number seven, but if it has a name and you sustain damage, new roof, whatever that damage is you're subject to that 2% deductible and I think if I'm reading a lot of our clients accurately, they're not sitting on

James McKeever: 19:47

10 or 15 grand, ready to go the next day to satisfy that deductible to get their home fixed. So we've seen some crocodile tears in recent weeks. People kind of open their policy again back to the first point. Most people don't know what they have. Take a look at your deductibles and budget for that. Be ready for that. I think a lot of people maybe stick their head in the sand and say, well, I have insurance, I'm good this storm's rolling through. I have insurance, I'm okay, you do. But you also have a very high obligation. A good chance. You have a high obligation if the damage comes from a named storm.

George Siegal: 20:21

Absolutely. You need to have somebody like you, as the agent, explain those exclusions for how that deductible is going to apply, because you've already just faced damage. Now you have to face the bad news that you don't have the money to fix the damage. That's a pretty horrible thing. And then, just while we're on this subject, tell people why they never want to assign their benefits to a contractor.

James McKeever: 20:43

Well, and part of the legislative package passed this year is really outside of some narrow instances you no longer can. So as of July 1st this year you can't.

James McKeever: 20:51

Oh good Now the same holds true for auto in homeowners, but it really has been a thorn in the industry side. Lisa probably touched on this with you. Once you assign your claim away, you're out of the claim. You're no longer a first party to that claim. So the company that you've assigned your claim to normally they want you to assign it to them, in my experience for nefarious reasons. I'm sorry for anybody in that industry that I'm sliding with this.

George Siegal: 21:14

Don't feel bad for them. Well they.

James McKeever: 21:18

I know it's a tough one, um, but you know they'll run the claim up. They will prejudice the rights of the carrier by not allowing them an opportunity to inspect the damages. If you have, if you have a contract, you have a policy which we've established is a contract between you and your carrier. Now, under the current law, you have to remain the first party to that claim. You can't assign the claim away and it really is no good for you, the homeowner. The company isn't watching out for you most of the time. You want to be involved in it. Certainly no good for the insurance company, but she cares about them. They're big, wealthy insurance companies, except for when they all leave the state of Florida and they go make their money in 49 other states. And now we don't have a private market, uh we you know, they're a necessary evil.

James McKeever: 21:57

We need insurance if we're going to live here. Uh, so yeah, assignment of benefits is what it's called when you assign that claim away, and that's a real problem, but hopefully one that's that's going to see a sunset soon.

George Siegal: 22:06

Disasters bring out the best and the worst in society, and what we saw with Hurricane Michael and then with Ian, with people swooping in and taking advantage of victims it just it's heartbreaking, it is and it happens.

James McKeever: 22:20

I think you and I discussed previously. Right, I sent you. I was a claims adjuster. I was a flood insurance adjuster for FEMA's National Flood Insurance Program for 14 years. So I was in Katrina for six months after after New Orleans, after Katrina, I was in on the coast of Texas after Ike and Hurricane Sandy. So I've seen it and you're right, it brings out the best of people, but it does bring out some bottom feeders and some ambulance chasers. Unfortunately, there's there's some profiteering that takes place.

George Siegal: 22:45

Yeah, it's really sad. So the next one on the list plan maintenance.

James McKeever: 22:48

Yeah, you know, we touched on it a minute ago, but it's I almost I'm going to get on my soapbox here for a minute.

James McKeever: 22:54

I almost wonder if first time home buyers, if they have a federally backed mortgage. Here's my idea. I'm going to pitch this to you, the first to hear, george they should be required to take a class on this plan maintenance. We talked about it with the roof and the water heater and again we just see it. So often. We had a call. This is not hyperbole. This happened two weeks ago.

James McKeever: 23:12

Somebody had bought their first home about a year ago. A year in the home ownership, their garage door opener stopped working. They called and said hey, my garage door opener won't go up anymore. Can I file an insurance claim? And my first question is well, why wouldn't it go up? Did you have a lightning strike? Did you back into the garage door? And they said no, no, it's just somebody looked at it and it's just old, it just needs to be replaced.

James McKeever: 23:30

Well, that's not an insurance claim, that your insurance policy is not a home warranty, it's not a maintenance contract, it's for sudden occurrences. And I think you know they're just as a kind of a void of education on some of the newer home buyers, knowing that these are the things you have to budget for and we get it a lot. I have a slow pipe leak. I have a pipe leak under my slab. The roots are growing into my sewer line. I need to file an insurance claim. That's not an insurance claim, that's. And then there's some heartbreak on the other end when they don't have the $10,000 to fix it.

George Siegal: 24:01

Yeah, and for any of those people that think that they can buy one of those home warranties, they really need to look into the company that they're working with, because first, in my experience, they send out the subs to fix things that are just available for a reason because they usually aren't the A team for fixing stuff. And then the other thing is, when something really breaks, it's usually not covered by that.

James McKeever: 24:24

You're exactly right. I'm not a big fan of those home warranties. Probably I'm going to again. I'm out of lockstep with the other agents in my industry. We don't write them. We've never written one out of our office. I'm with you. I'm just not a big fan of them. There's no way around budgeting for what you know is going to be home maintenance. Home owning a home is more than paying the taxes and insurance and mortgage. There are things in the home appliances and water heaters and roofs and plumbing. They don't last forever. Electrical systems don't last forever. Circuit breakers and breaker panels don't last forever and people need to budget for those. It's a planned item.

George Siegal: 24:58

Yeah, or rethink buying a home because it's a lot of work it's. Sometimes it could be a full-time job taking care of your house. And the next one on the list.

James McKeever: 25:05

The next one on your list and I'm circling back here to where we started. But call your agent, know who your agent is. I know I said that in the beginning when I talked about people that don't even know who ensures their home. You should know what's their financial stability. But call your agent. We've had a lot of them lately where an alarm system company goes door to door, sells you an alarm and they say, hey, george, if you pay us $30 a month to monitor this alarm you're going to get a certificate, you're going to turn it into your insurance company and get this massive discount, and then, of course, our client realizes that it's a $20 a year discount.

James McKeever: 25:39

It's not nearly enough to cover the cost of the alarm. It's too late, though. They've signed the contract. Call your agent. We've had another one where somebody spent a bunch of money $30,000 or $40,000, putting impact windows in their home, only to find out they didn't get a discount on their policy because they didn't do the skylights. The person selling the window sure didn't tell them. Call your agent first these things.

James McKeever: 26:01

If the policy's old, if you took out your insurance when you bought your home 10 years ago, maybe you've added a pool, maybe you've remodeled, maybe you've gotten a pet, maybe you've saved a lot of money in your 401K and now you need an umbrella. Again, insurance as asset protection Call your agent. So I'm going to give a little shameless plug here Use a local agent. If not us, that's fine, but a local agent, not a call center agent. Nothing against GEICO or Progressive or USAA even I know they have great brand loyalty but it's a low wage call center person. We're all writing the same widgets. We all, as independent agents use the exact same insurance companies, so you're going to get the same product in the end. But if you can speak to an agent that understands the Florida market and can help you navigate it, you're going to be far ahead than using somebody in a call center that's helping clients in 49 other states. They can't know the local landscape the way a Florida agent will.

George Siegal: 26:54

That's definitely true. There's nothing like having that personalized service of somebody who feels your pain and knows your situation.

James McKeever: 27:02

And it won't cost you anymore. I know a lot of people think that there's some mystical unicorn, carrier's a rate lock right. So if you call me or you call my competitor down the street and we price homeowners insurance for your home and we both price the exact same insurance company, citizens or any private market, so long as we input the data the same, the rates the same. You're not buying a used car, you're not calling an agent, and we get that sometimes. Hey, we need to trim some money off this, and so we use that analogy.

James McKeever: 27:28

Look, you're not buying a used car, the way to trim money is to lower coverage or increase deductibles, but there really is not a secret weapon other than the home hardening steps that we discussed earlier.

George Siegal: 27:38

Yeah, maybe sell your house and get an apartment.

James McKeever: 27:40

It's tough these days. I mean, the market sure has shifted right and I know that and I'm seeing. I saw an article in the Wall Street Journal a couple of days ago I think it was the Wall Street Journal that for the first time in four or five years, rent is cheaper in this country than homeownership. It's expensive, it's not something to be undertaken by everybody.

George Siegal: 27:56

Unless you're trying to rent a house in South Tampa. That's insane.

James McKeever: 28:00

There are some micro markets that the article certainly didn't look at, and Dunedin's one of them. I don't know if you're familiar with our area, but it's not a whole lot better here. It's rents have certainly bloomed.

George Siegal: 28:09

I love your area. I would move to Dunedin tomorrow if I could get away with it. So the last one on the list. Is there one more?

James McKeever: 28:16

There is. There's one more on the list and we'll bring it home with this one and it's a big one, right? So I understand the podcast really focuses on homeownership and homeowners beware you and I have a mutual contact Him and I have discussed this before. A shout out to Jay Jenkins.

George Siegal: 28:30

One of the good guys. When it comes to builders, he is one of the good guys.

James McKeever: 28:34

Yes, the good one. So the last one is use insured vendors. So we're talking about all these things that we know you're going to do on your house, and that's if you don't voluntarily update your house. But anybody that comes to work on your house, use an insured vendor. I'll give you some examples.

James McKeever: 28:50

Well, first of all, as you can imagine, a lot of vendors are running around without insurance. Let's assume they have insurance. They give you a certificate of insurance. First thing to know about a certificate of insurance is it's a snapshot in time. When the agent or the insurance company issued that certificate, it validates the policy was active when they issued it, policy could have been canceled five minutes later. Feel free to call and verify. Call the agent. Say hey, I'm Joe consumer. I'm having Bob's tree service come out to my house and remove this 100 year old oak tree overhanging my house. Can you confirm, as of right now, he still has insurance agents going to be happy to do it? So keep in mind the piece of paper they flash you in, the three ring binder when they're taking your deposit, was a snapshot in time. They have to be covered for the class of work they do.

James McKeever: 29:36

There's some nefarious actors out there, as you can imagine, and we have some folks running around with handyman insurance holding themselves out to trim trees, and they have a piece of paper saying they're insured, but they're not insured to do the task they're selling themselves on. So again, pick up the phone, call the insurance company, call the agent and say, hey, I see your name on this, this insurance document. Can you confirm Bob's tree services? Okay, to cut a tree that's overhanging my house. Okay, Do they have workmen's calm? But here's the other one, and this is one that kind of, I think, brought you and I together.

James McKeever: 30:08

Jay and I were having a conversation. What are their limits? There are some folks running around out there with 100, 300, 100,000 other limits, or 200, 400,000 other limits. There's a lot of houses out there that can't be rebuilt for $200,000. When I say 200, 400, that means 200 per anyone claim for 400 for the term of the policy. So if you have a vendor come out and they drop a tree on your house or burn your house to the ground and they have a $200,000 limit and it costs 400 to rebuild your house, you have a problem. You, the homeowner, have a problem.

George Siegal: 30:39

Yeah, but is there going to be something in my insurance policy that says if a bad tree trimmer drops a tree on my house, I'm not covered? Would that be an exclusion that I don't know about, or I would think maybe I would have some coverage for that?

James McKeever: 30:51

You may have some coverage under your homeowner's insurance. Hopefully you have it. Hopefully you know what policy you have. Hopefully your eyes are dotted in your teaser crossed. At the same time though that vendor for him to have the correct policy, maybe a 1 million, 2 million policy. It's a 10% cost differential, it's minor. So you want to look for the vendors that understand their value and the value that they bring to the consumer by having the proper insurance and licenses. There are some other instances, though, where where maybe the homeowners isn't going to you know again if you're not on the correct form. There are many different policy form. There's not one homeowner's policy. You have an H01 and H02 and H03 and H04, h05. I could keep going. There's a ton of different policy forms and, depending on the one you're on, you may have some coverage, coverage limitations where it won't respond to that scenario.

George Siegal: 31:37

You know, I think if people truly vetted everybody that came to their house to work, there would be a lot of unemployed people, because I would. I've had some real low-lifes come through here. I've had some great people come through that that did a really good job, but I've had just as many come through. I had one guy given estimate for fixing our roof leak without ever going up on the roof.

James McKeever: 31:56

Yeah, what's that? Tell you?

George Siegal: 31:58

That's insane. So I'm sure he didn't have insurance, because he certainly didn't know how to fix a roof. So it just seems like, with so many things coming coming our way, insurance is something that you can't look at, as I hate paying this. It has to be your peace of mind so you can sleep at night.

James McKeever: 32:15

It does. And again, these are big at the home. For most people, probably you and I included, our homes are biggest asset, so we do have to ensure it. You know we don't want to put that asset at risk. Of course we have other assets. We have savings and other kind of assets that we want to protect. We want to know the vendors we're working with use good vendors. There's an old saying that one of my mentors use that if you, if you pay with peanuts, you get monkeys. So the guy that comes in that that's 50% less than all the other vendors. There's a reason why he is insurance for these, especially roofers and tree guys, not to pick on them. But insurance for those classes it's expensive. I mean the average roofer could be paying 20 or 30 grand a year in insurance. That's not nothing and that's on top of workman's comp. They could be paying 30 40 cents on the dollar for work comp. Those are really high cost.

George Siegal: 33:00

So yeah, the vendor that comes in with the low number.

James McKeever: 33:02

There's a reason it's low.

George Siegal: 33:03

Yeah. So why do you think, then, that that people, with their biggest investment, are as cavalier as they are and is unknowing about what can happen as they are? I think that they're relying on fate, luck and hope that nothing is going to happen to them. I just I don't understand it. I don't understand why people are so laid back and non caring about something that's so important.

James McKeever: 33:29

I guess it's, and we hear it a lot. It's never happened to me. I haven't had an accident in 17 years. Why do I need this much insurance?

George Siegal: 33:36

Well, but you can have one this afternoon.

James McKeever: 33:38

The past is not a predictor of the future, but they are. There are a lot of people that are cavalier with it. I think it circles back to what we discussed earlier. It's an intangible. Again, if you go to the store and you buy a new suit and a cheap suits $400 and a good suits $1800, I don't know, you'll know you'll feel that difference.

James McKeever: 33:57

If you go to a good restaurant versus McDonald's, you're going to taste that difference. You don't with insurance, and because most people don't understand it to begin with and they don't take the time to ask somebody to explain it to them, I think they would just rather kind of look the other way, kind of ranks up there with taxes, maybe medical. I know there's, you know I can speak probably for you as well. As guys, as we get older, we hate going to the doctor because we were worried they're going to tell us they found something.

James McKeever: 34:19

it's easier not to go, so you have to be proactive with this, and I think insurance falls into that same category.

George Siegal: 34:26

Yeah, one of my favorite lines that I'll take credit for writing in my in my last film with people with their houses. They seem more concerned about the icing on the cake than the ingredients that are in the cake, and that's. That's crazy.

James McKeever: 34:40

Yeah, it is crazy, they're worried about what color to paint the living room, but they're absolutely bearing their head on the fact that they have 50 year old galvanized plumbing. That's a time bomb. And it's true, and I get it. I'm on my third or fourth house, you know when you're you do? You want to look good you want to feel good when you come home from work, but but there are some kind of greater parts to the puzzle that people need to be aware of.

George Siegal: 35:01

Yeah, and I wish people would learn and that's one of the things with my podcast if people just listen to the things that have happened to me and could avoid those, I think they would be so much better off. So, final thoughts what would you say to people as the takeaway about insurance?

James McKeever: 35:17

Well, you know, insurance is probably again. I made the medical reference a minute ago. If you thought you had a good, if you've been having this pain in your your left shoulder for six months. You've been having these headaches. You can't explain.

James McKeever: 35:31

Don't bury your head. Go to the doctor and find out what's going on. It's better to get ahead of it. But the same thing with homeownership insurance. Don't bury your head on it. Don't call the day. It certainly don't call your agent two days before the storm hits, because our phones are ringing off the hook. Can I get a copy of my policy? Can I increase my coverage? Can I lower my deductibles? No, you can't. The insurance companies are wise to it. As soon as there's a storm warning, we all go under a binding suspension. We can't make those changes. This is what you want to plan in the calm season get a copy of your coverage and have that local agent you can talk to and just get at least a basic understanding of what you have If. If life changes and you know you want to run again, run a daycare out of your home, pick up the phone and call your agent. But but at least have a good idea of what you have to start with.

James McKeever: 36:14

And there is a grace period for flood insurance, right, it's 30 days, 30 day wait right To get flood insurance and when I started it was two weeks 20-something years ago. It was two weeks wait. There are parts of this country I know you and I are in Florida so our focus is on the exposure we have here. There are parts of the country that flood pretty regularly, parts of the Mississippi River Basin. Some of these folks know there every few years, three or four years are going to flood. So there was a trend where and they know weeks ahead of time If the Mississippi River starts flood stage way up north in the country, they know down south two weeks before it happens. So there's kind of this tronch of people that would take out insurance a couple of weeks before they knew the flood was coming. So FEMA got ahead of that, I don't know 15 or 18 years ago and made it a 30 day wait, and that's why they do it. You have to carry a year around.

George Siegal: 37:03

Another recent guest of mine is the Executive Director of the Anthropocene Society Foundation and they help people in communities where a lot of times you're not in a flood area, but because they built a new community up the road from you that diverted water, your neighborhood is now at risk of flooding. So everybody needs to understand flood insurance doesn't cost that much if you're not in a flood zone.

James McKeever: 37:27

That's right. Yeah, unless you have a house on the beach on the coast, you're right on the water's edge. Certainly those flood policies are expensive and they're getting more expensive quickly. That's kind of aggravating a lot of Florida homeowners with kind of already skyrocketing homeowners rates. As I mentioned earlier, fema changed the rating methodology in October of 2021. And it's because they're bringing equity to the market. People that were maybe paying not maybe but people that were paying subsidized rates are quickly approaching non-subsidized rates. For some people that's three or 4,000 a year, heading to 15,000. My own home insurance I pay about $500 a year but I'm heading to 3,600. I already know what that number is.

James McKeever: 38:05

It's an 18% a year increase until I get to 3,600. So whatever that is 7 or 800% increase. Now imagine that for somebody that's starting at 4,000 or 5,000. So I get it. Flood insurance is expensive on the coast but inland it really isn't. If you live in an inland area that's maybe low-lying. Lots of clients we have lots of clients with $300, $500 a year premiums.

George Siegal: 38:25

And if you live in Florida, to some extent you're in a flood zone, you just are. You really have to understand not just where your house is but everything around it. Look at a map and say, gee, what about that damn two miles up the road? What?

James McKeever: 38:38

about that river a half a mile up the road.

George Siegal: 38:41

Where's the storm?

James McKeever: 38:41

drain you have a storm drain on your street. We have palm trees here, so a couple of palm fronds plug up that storm drain and we get a good afternoon. Rain and water gets into your garage. It doesn't sound like much, but if it tears up the drywall in the garage or anything you have on the floor, your garage door sensors, it can easily be $4,000, $5,000, $6,000 that a flood insurance policy would respond to that a homeowner's policy is not going to respond to.

George Siegal: 39:04

Yeah, just a little bit of water can make your life miserable. It really can it can.

James McKeever: 39:08

And to tack on, I know so many people listening. Probably if they're in Florida they have citizens insurance, just so you're not caught off guard. Citizens is rolling out where they're making everybody carry flood insurance. If you're going to remain with citizens, so it's coming by. January 1st 2027. Everybody's going to have to have it if you're going to remain with citizens, so it's good to start budgeting for it now.

George Siegal: 39:27

Do we all have to move to Montana?

James McKeever: 39:30

It's for some people. You know it's funny, we say it in jest, but there are some people that are saying, look, I am getting priced out and we do live in a catastrophe prone state. We do, it's the real, I love it. I'm a lifelong resident. I don't see me living anywhere else, but but it's. We have to be realistic with ourselves about you know what we face and the exposures we face, and there's a cost, there's a price tag that comes with it.

George Siegal: 39:51

You know we had a cold front recently and I didn't like it that it went down below 60. So I don't think I would last five seconds in Montana. I wouldn't either.

James McKeever: 39:58

One day a winner and I'd be begging to get back to Florida. No, it's. If you've lived here long enough, your blood's thin. It's. We're not built for colder climates.

George Siegal: 40:04

No, we're not. Hey, James, what a wealth of information. Thank you so much for coming on today. I'll put your contact information in the show notes, but I really appreciate your time.

James McKeever: 40:13

George, thank you very much. I really appreciate you having me. Hopefully we didn't bore your listeners to death, but thanks for having me. I appreciate it.

George Siegal: 40:20

The best ways to get in touch with James are in the show notes. Hopefully, after today, you reach out and talk to whoever your broker is and get the answers to the questions that we pose and how they apply to you. We may not like paying that bill every month, but the alternative is much more costly. And if you have a story good or bad about being a homeowner, fill out the contact form in the show notes. Let me hear about it. And if you liked what you were listening to today, please become a regular subscriber so you don't miss an episode. The new one comes out every Tuesday morning. Thanks for listening today. See you next time.