If you drive a car and/or rent or own a home, do you know how to purchase and save money on home and auto insurance while maintaining adequate coverage?
In this episode of the Finance For Physicians Podcast, Daniel Wrenne talks to Andrew Wethall, an independent home and auto insurance agent for Energy Insurance Company. Andrew lives in Louisville, Kentucky, but works with customers all over the country. He makes clients’ insurance experiences easier all while maintaining adequate coverage at a fair price.
Topics Discussed:
- Most Common Pitfalls: Re-evaluate insurance every 3 years after residency
- Cheapest Option: Understanding the bones policy with state minimum coverage
- Basic Auto Policy: Physical damage, comprehensive and collision, liability limits
- Agent/Client Relationship: Pay attention to policy and continue to grow
- Risks: Insurance works great for high cost and very unlikely risks
- Umbrella Policy: Additional liability insurance to cover your assets
- No-Fault States: Who’s at fault for the accident or damage?
- Car Rentals: What should you do when they’re pushing the insurance add on?
- Insurance Pricing: Depends on credit, driving record, claims history, act of God
- Structure: Differences between homeowner’s and renter’s insurance?
- Out-of-Control Catastrophes: Earthquakes and floods are not usually covered
- Attractive Nuisance: Umbrella policy for fun things—from pools to trampolines
- Denied! Seek multiple opinions and work with an agent to get claims paid
Links:
Andrew Wethall’s Phone: 859-797-4384
Full Episode Transcript:
Daniel Wrenne: What’s up, everyone. Welcome to the finance for physicians podcast. I’m your host, Daniel Wrenne. Join me as we dig into what it looks like for physicians to begin using their finances as a tool to live better lives. You can learn more about our resources at financeforphysicians.co. Let’s jump into today’s episode.
What’s up guys, happy new year. Hope you’re having a great day today. We’re going to be talking about something that probably affects every single one of you. At least any of you that drive a car, own, or even rent a home. And that’s getting home and auto insurance. We’re going to be talking specifically about how to save money on home and auto insurance while maintaining adequate coverage. And also how to go about this process of purchasing and owning home and auto insurance without creating unnecessary headaches and poor experiences. It can be a tricky balance.
And I’ve brought in my buddy today to help us talk through this. My guest today is an independent home and auto insurance agent for Energy Insurance Company. He currently lives in Louisville, Kentucky. However, he’s able to work with customers all over the country. He’s been at this for about 10 years now and has also worked with a number of our clients in the planning firm. So I’ve been able to see firsthand the quality of his work. We’ve worked with many insurance agents over the years, and what’s unique about my guest today is that he’s very intentional about helping take more off of his customer’s plate to make life easier for them instead of harder, and to reduce the stress of having to deal with insurance all while maintaining adequate coverage at a fair price. Our guest today is Andrew Wethall. Andrew, welcome to the podcast.
Andrew Wethall: Thanks for having me on, Daniel.
Daniel Wrenne: Definitely. So we were going to talk about insurance today and I kind of wanted to keep it high level and talk big picture about some of the big things you should really be thinking about as you own and start to add insurance in your lives. So our audience is young physicians, mainly, and many of the clients we work with in our planning firm are in that demographic. And I know you work with quite a few, your wife is a physician. And so maybe we can get into some of the most common errors that you see as physicians are starting to, you know, purchase home and auto and those sorts of insurances.
Andrew Wethall: Yeah. So I’d say the most common error I see is people usually get off their parents insurance, in your audience’s place, they usually get it when they’re going into their residency, and when you’re in residency everything’s very price-driven because you’re not making the physician bucks yet. You know, you’re still working a lot of hours and you’re a lot of times moving to a new city and you’re more inclined to just go with a 1-800 number—“I’m just going to go with the cheapest thing.” And what I see with a lot of physicians is they get in with a company when they’re in residency and then they never readdress their insurance. They never take a look at it because, you know—my wife’s a physician she’s finishing up her pediatric residency—they have no time. Their time is very valuable. So they just know that their insurance is cheap and good, but they’ve never used it and then they never readdress it. So then when they start making that attending money, making the big bucks, their insurance needs change quite a bit, but they’re still on this bare bones policy that they paid a minimum premium for.
Daniel Wrenne: What does the cheapest option really look like for, you know, I guess it depends on the state, right. But…
Andrew Wethall: Let me dive into like what we’re covering with an auto policy. And so I’m gonna use the state of Kentucky as an example, but every state is at this level or a slight variance of this. So on auto policy, there’s physical damage coverage. So if you’re in an accident, to fix your vehicle, comprehensive and collision coverage. And then the other thing that I think gets looked over quite a bit is the liability limits. So in Kentucky, the state minimum requirements…so you’re required to have insurance. The minimum limits you have to have are $25,000 for bodily injury per person, $50,000 per accident, and then $25,000 for property damage.
Daniel Wrenne: So what does that actually mean? Like how does that translate to a real world scenario?
Andrew Wethall: I’ll give an example. Let’s give an example with me and you. So, Daniel is great financial advisor, hypothetically, maybe not the best driver…(laughter) And let’s say he runs into me, rear ends me and I have to go to the hospital. So if you have the state minimum liability limits, that’s only $25,000 for my medical payments; anything that might come up from that accident.
Daniel Wrenne: So I caused an accident I’m covering. So if I’m at fault of an accident, I’m covering the injuries—or I guess medical bills—of the people in the car that were injured because of the accident. Any cost that falls under the liability limits
Andrew Wethall: So $25,000 per person, $50,000 per accident. So everyone in the vehicle, and then $25,000 for property damage. Like, you know, if you hit a brand new Mercedes, and you total it as not going to be enough to cover the repairs, especially nowadays when every bumper has every sensor, self-driving lane sensor. So if you are in a fender bender, it’s a lot more than you think it’s going to be. So those are the basic coverages. And the thing people don’t think about is so, okay, you have $25,000 in coverage. Well, what happens if it’s more than that? And the answer is you have to pay out of pocket. So if you have the state minimum liability limits, you’re in an accident and you cause $50,000 in medical bills for the person in the other vehicle or damage to that vehicle, well, you’re going to have to pay $25,000 out of pocket in order to make that person whole again, if you’re at fault in then accident. Yeah. So that’s a big pitfall that no one really talks about and where I see a lot of physicians when they’re in residency, they get that bare bones policy because you’re finding a new city to live in, call 1-800 number, get into that bare bones policy, which might be fine, you know, starting out. I would never recommend having those low limits, but then when you start making attending money and you have a house, then your liability limits should cover your assets in order to protect yourself. So I always say you should always reevaluate your insurance every three years.
Daniel Wrenne: So, we got the kind of under-insured or in training, transitioning in practice, not reassessing and kind of being dramatically under-insured. What else, what other sorts of mistakes do you see?
Andrew Wethall: The main one I see is just not paying enough attention to their policy. And the main thing is always suggest going with an agent. And that’s another pitfall I see is a lot of times they just go on that 1-800 number, they get a plan and then stick with it because—
Daniel Wrenne: If they are doing an online kind of like Google auto insurance option (Geico) they don’t really have an agent. So it’s kind of on them to pay attention to their policy. Correct?
Andrew Wethall: Yeah. And you really need to look at like—and I have clients ask me a lot—how are you making money off this, as the agent? And so what happens is like when you sign on with a new insurance company with an agent, they get a commission for signing on the new business, but then they also get a commission every time you renew your policy. So they, you know, it behooves them to keep a relationship with you, make sure you understand your policy and keep renewing it every year. If you’re just calling into a 1-800 number, you don’t have that relationship and someone to grow with. So, I would suggest, you know, getting with someone that you’re comfortable with and then we’ll go over your needs.
Daniel Wrenne: So when you’re in training, what is inadequate? I think the state minimums, like you were talking about, are potentially inadequate. I mean, having just $25,000 of property damage coverage that doesn’t cover most new cars driving around, but as a resident, do you just say, well, I don’t have assets, so we’ll take the risk or, you know, what’s the risk? Like what if you have no money to pay out of pocket who cares? Do you have that mentality or do you say, no, I need to be responsible for the losses about that. So I need to get a bigger policy limit in training.
Andrew Wethall: Yeah. So, the lowest liability limit that I’ll sell on an auto policy is a hundred thousand per person, 300,000 per accident for bodily injury—it’s medical payments and then a hundred thousand for property damage. So that’s the lowest I would recommend anyone gets. And I’ve had people ask, “I don’t want that. I just want the state minimum bare bones,” and I’ll tell him, like, I’m not the agent for you. Cause when we’re bringing on new clients, we have to look at their claims history. We see a claim that’s over that $25,000 limit, I would say once a month, I see that. So we see quite a bit of claims that are, you know, above that $25,000 threshold. So yeah, a hundred thousand is the lowest I’d recommend going for anyone.
Daniel Wrenne: Gotcha. So your property damage on your auto insurance covers cars damaged; your liability protection covers kind of the injuries or those sorts of costs. You know, I think the liability number is the one that can get really high, right? Like is property damage a little easier to quantify or think about? Like I know what that car I’m looking at right now is probably worth. Maybe I hit something else, like a house or something. I don’t know. I guess you could do that. And that would get high, but I can’t see the property damage stuff getting ridiculous, but liability can get nutty, right? I mean, that’s the really scary number.
Andrew Wethall: Yeah. And that’s why I keep bringing up the liability. It is a harder number to kind of quantify and wrap your head around. So, I mean, I had a client about a year ago that like hit someone in a crosswalk, just wasn’t paying attention, complete accident and a person had, you know, serious injuries in a claim being well over a million dollars, you know? And luckily they had an umbrella policy, so they didn’t have to pay anything out of pocket, but yeah…It’s like you said, my wife is a physician often working the night shift, you know, 28 hour call shifts. I worry about her driving home after a long shift, trying to get home, might have accidentally hit a biker driving through a neighborhood. So that’s kind of what that covers, the liability.
Daniel Wrenne: Yeah. That’s the big kind of scary risk there. And I think people get it backwards. Sometimes they cover the little stuff like, “I have a fender bender and it’s a thousand dollars,” which is more common, but like, it’s not going to crush you financially, but then they don’t ever think about the $2 million claim that’s going to ruin you forever financially.
Andrew Wethall: 00:11:23 Yeah. And you think of the things that you do in order to better protect yourself from other financial ruins. So like life insurance, you have to have it. If something happens to the breadwinner, what happens to the family? You know, disability insurance people always say with surgeons insuring their hands, they’re very quick to get those insurances. And then the liability insurance on the personal auto and home is just as important because if you’re at fault in an accident, that can mean financial ruin. So you want to make sure you’re protecting yourself.
Daniel Wrenne: So I guess that’s kind of where umbrellas come in. I’m sure you guys listen and have heard of the umbrella insurance term terminology, but just to kind of clarify what that is, maybe Andrew, can you give us a breakdown of like, what it does or what the umbrella insurance concept is?
Andrew Wethall: Yeah. So an umbrella policy starts at a million dollars and then it is additional liability coverage. So as I mentioned earlier, I always say your liability limit should cover your assets. So let’s say you have a half a million dollars in assets. Well, the auto policies only provide a hundred thousand for liability coverage. The home policy only provides half a million dollars in coverage. So what you can do is in order to make up that difference is purchase an umbrella policy, which goes over those limits. So as opposed to having just a hundred thousand dollars of liability coverage with buying the umbrella, you now have $1.1 million in liability coverage. So that’s how you get that additional amount in order to make sure you’re covering your assets.
Daniel Wrenne: So it’s like a backup pool of liability protection…
Andrew Wethall: Correct. Yeah. It generally doesn’t cover anything like any additional coverages; it’s just an extra pot you can dip into if you need to.
Daniel Wrenne: Gotcha. So that helps in that kind of worst case scenario we’re talking about. I think another misconception I see is that people overestimate the cost of that kind of stuff. Like that’s the good news or not the good news, I guess that’s where insurance becomes ultra efficient is on those high dollar, very unlikely situations. That’s where insurance works great because they can price it really low and still make it a profitable business as an insurance company. So liability risk is a classic example of ultra efficient for insurance purposes because the likelihood of it happening is ultra low for the average person. Like the big, big time dollar claim. I mean, it is a possibility, you don’t know for sure what your risk is, but there is a low chance, low enough so that the cost is very, very low. I think a lot of people I talk to don’t realize how inexpensive it really is. Can you give us an idea of kind of costs?
Andrew Wethall: It’s priced accordingly, you know, so the odds…the chances of you actually needing it are very low. And that’s why if you were to get generally, if you’re like a family of two, two cars in a home, you’re probably—for a million dollar umbrella policy—you’re probably looking in the $200-$250 range to give that million dollars of blanket coverage a year.
Daniel Wrenne: Yeah. So I would consider that fairly inexpensive now. In training, I mean, I think that’s going to be a stretch and I’m not sure that it’s necessary for everyone in training now. Some situations may be so, but in practice, I think that’s a very serious consideration. People should be thinking about this.
Andrew Wethall: Yeah. And that’s why I brought up earlier, you asked what are the…one of the pitfalls that young physicians fall into with auto insurance, and it’s getting into that bare bones policy. So for me, bare bones would be $100,000 per person, $300,000 per accident. And then once you get into attending money, your assets are over that hundred thousand dollar threshold. So you definitely need an umbrella policy. Yeah. And that’s why I always say, make sure you’re re-evaluating your insurance every three years. Otherwise just put it to bed, pay your premi but every three years, get it out, look at it. Have your needs changed? Has your income gone way up? Kind of re-address it.
Daniel Wrenne: I think everybody listening at minimum should, if you haven’t ever done this, go pull out your most recent summary of coverage and look at what the numbers are and see what the dollar amount is. And kind of really just take a second to think about it. And if it’s low like that, you’ve really got to think about increasing that or reassessing that, and you don’t want to be driving around with a $25,000 property damage limit. I don’t think that’s a good idea.
Andrew Wethall: And it’s not as expensive as people think to increase it. But the repercussions of if you’re in an accident and you don’t have adequate coverage, can be financial ruin.
Daniel Wrenne: Right, right, right. So, we’re in a no fault state, Right? Andrew, we’re both in Kentucky. What is a no fault state? How does that work or…what if you’re a no fault state? What’s the opposite of a no fault state?
Andrew Wethall: So it’s a very misleading term that is out there. So people think that you’re in an accident. Well, no one’s at fault. Cause we’re at a no fault state, which is not the case. So all that means is, whenever you’re in an accident, it doesn’t matter if you hit a tree or you hit someone else, your auto policy is required to pay out the first $10,000 for medical payments or personal injury, regardless of who’s at fault. So that’s what it means by we’re a no fault state. Other States do not have that coverage. They have medical payments, which are not as easy to tap into. So yeah, it’s a very misleading term.
Daniel Wrenne: Okay. So it’s not like, it seems like the common conception is like nobody’s at fault. Well, what about if… so in Kentucky, at least my understanding is, there’s quite a few people in Kentucky that are not insured at all or under-insured or whatever. Let’s say I’m the one that gets rear-ended and I’m hurt. I have pretty high medical bills. And the person that hits me is not injured at all. What happens? who pays for it? Am I on or off the hook…
Andrew Wethall: On every auto policy, in addition to the liability coverage, there’s also uninsured and under-insured motorist coverage, which should be the same limit that you have for your liability limits. And what that does is if you’re in an accident with someone that does not have insurance and they are at fault, their policy would pay out like yours would, and then it doesn’t really count against you. And then they would recoup the cost by going after that person. But it keeps you from, you know, if you’re injured and have all these medical bills, lost wages, it helps make you whole again.
Daniel Wrenne: Gotcha. So what about car rentals? If you’ve ever rented a car, you know what it’s like, when at the car rental desk, usually they’re really pushing some car insurance. So like, should you buy it? What does that even provide? Why would you buy car insurance at a car rental place? Does your current home or your current auto insurance potentially cover that?
Andrew Wethall: Yeah. So I would say, do not buy the rental insurance that they’re trying to sell you. As long as you have full coverage on your policy, meaning comprehensive and collision coverage.
Daniel Wrenne: On your primary auto…
Andrew Wethall: Primary auto. Yeah. So any vehicle you drive that’s a rental, or you borrow a friend’s car, your auto policy follows you wherever you drive. So if you wreck a rental vehicle, your policy is going to pay out as if it’s yours in order to fix it, minus the deductible.
Daniel Wrenne: Yep. And they don’t tell you that at the rental car desk.
Andrew Wethall: Yeah. But you want to make sure you have full coverage, comprehensive and collision. If you don’t, if you just have liability coverage, then you definitely want to buy that because you’d have to pay out of pocket for any fiscal thing.
Daniel Wrenne: Yup. Or add full coverage to your policy.
Andrew Wethall: Yeah. Where they get you and where they really try to sell you on is that you are technically on the hook for loss of income, so income that they could not collect because the vehicle you wrecked, the rental car, was being repaired…but I’ve never seen or never heard of them actually collecting on that.
Daniel Wrenne: 00:20:00 Yeah. Gotcha. What about like cars? I don’t think a lot of people think about this when they’re looking at cars. Is there a pretty wide range in pricing, on different cars, like a red sports car…I think it’s the classic people think of versus like, you know, minivan or whatever, is there a pretty big spread or does not matter as much as you might think?
Andrew Wethall: The main thing is like, what’s the value of the vehicle? Like what it costs to repair it, whether that’s a sports car or a high-end luxury car if it costs the same, it’s going to be insured about the same. Yeah.
Daniel Wrenne: Gotcha. And nowadays, I guess they incorporate all kinds of stuff to pricing, like credit scores and your risk of, I guess your driving record. What are all the things now that they use to price it?
Andrew Wethall: So when you go and you get an auto and home insurance quote, they do a soft credit check. So that’s the first thing, it doesn’t affect your credit score, but the better credit you have, the better rate you’re going to get. Other factors they look at is your claims history. Some companies go back three years, some go back five years. So if you’ve have more claims, your insurance is going to be a little higher. And then another thing to keep in mind is, they call it “act of God.” So like a comprehensive claim, like a hailstorm that damages your vehicle. If a tree falls on your vehicle or on the roof on your home, those are not going to count against you as much as an at-fault accident. Like if you backed into a tree or something like that. And then as far as the pricing with getting insurance and how they come up with a rate, another big factor that people don’t think about is insurance companies value how long you’ve been with your current carrier when they’re putting a quote together. So if you’re shopping your insurance every year, you’re not going to get as good of a rate. I find the best price break is to shop it every three years at a minim five years is where you really see it. Cause they want a client that’s going to stay with them. So they’re going to price it accordingly. So that’s why I always recommend re-evaluating every three years, taking a look at it.
Daniel Wrenne: So we talked about like coverages. So the thing you got to watch out for, I think is advertising or shopping and alternatives being, not apples to apples, like you have a good well-structured policy and are comparing it to like state minimums. It’s going to be less expensive and you’re not really comparing apples to apples. So I think we covered this a minute ago, but I guess if we are comparing apples to apples, is lowest always best or is there some point?
Andrew Wethall: Yeah. So that’s a great question. A lot of people don’t realize this, that there’s a standard form for auto and home insurance coverages. So if you buy a home policy or auto policy from a state farm, from an auto owners, from a Kentucky farm Bureau, wherever, the policy is going to be just about the same. Same coverages, same everything, except for a few small differences based on the company. So what you want to do is make sure you set what your minimum requirements are when you’re going to get quotes. I want this, this and this, and then have a discussion with your agent. Like, what do you think? And then set that minimum. I want a $100,000 per person, $300,000 per accident. I want $400,000 in coverage on my home and then make sure that all the quotes you’re getting all have that coverage in it. You know, if one’s significantly cheaper, make sure it’s not leaving off a coverage.
Daniel Wrenne: Right. But as long as it’s apples to apples, for the most part, it’s probably better to…I mean, you said you don’t want to shop every single year, but—
Andrew Wethall: Yeah. It’s one of those things where sometimes one of the best insurance companies out there will also offer the lowest price. It isn’t always a bad thing. You just want to make sure that all the coverages are accurate.
Daniel Wrenne: Okay. So we’ve talked a little bit more about auto insurance up to this point. I wanted to kind of hit on some home insurance and more of that sort of thing. Maybe before we get into that, what’s the difference between homeowners’ insurance and renters’ insurance and do you see a lot of people not having renters’ insurance that maybe should?
Andrew Wethall: So it’s pretty much the same policy. It’s the same coverage and everything. The main difference on the home is you’re insuring the structure and your contents.
Daniel Wrenne: So like contents are my stuff, like my couch and my…
Andrew Wethall: Yeah. Everything that comes in the U-hall and goes into the rental property, that’s covered under personal property. And that’s also covered on a home policy, and covered on a renter’s policy.
Daniel Wrenne: Okay I’m a resident and I have my couch from undergrad, it’s worth nothing and I have nothing else in my entire place. Maybe I shouldn’t worry about renter’s insurance?
Andrew Wethall: No, renter’s insurance is extremely inexpensive, very cheap. I’d recommend that everyone get it. It’s usually about $150, $200 for the year. And the main thing you’re also getting with that, is I keep going back to liability. That’s the big thing. I had a claim two weeks ago where I insure the rental property, the actual structure. And then the tenant…on Christmas Eve, one of those hoverboards caught on fire, burned the house down. So in that scenario, the tenant is required to pay for all damages to the rental property. So that’s the property damages. So if you leave a stove on, cause a fire, you are required to pay all the damages as a result of that. So yeah. That’s why, you know, $150, $200 a year for peace of mind…
Daniel Wrenne: Okay. Yeah. That makes sense. So home insurance, or home owners, someone that owns a home that has an insurance, that’s covering more of like the actual building structure. And so I’m curious, I really haven’t worked with somebody that’s actually had this experience happen, but like in the event, let’s say your home is just completely, you know, destroyed or damaged, like burns to the ground. They lose everything, all your stuff, all the house, maybe even, well, let’s just stick with that scenario. So how does that work from an insurance company’s perspective, like who covers, what is it, what type of insurance covers what thing?
Andrew Wethall: So the first thing that pays out is the more obvious ones, so coverage to repair the building. So building coverage, and then there’s also, as we mentioned, personal property coverage to cover your contents. But the thing that gets overlooked a lot is, you’re going to need somewhere to live for a while, while those repairs are being done. So the policy also pays for you to get a home or a hotel and those repairs are done. So yeah, those are the main coverages on the home policy. How do they know your contents? That’s a great question. And I always tell people to just like, just take a picture of every room, just to remember. And then another big thing to look at on your policies is to make sure you’re insuring everything for replacement costs, not actual cash value. And we see that a lot. Sometimes, there’s a client: “Hey, I got a cheaper quote somewhere.” And they’ll send me the quote and I’ll take a look at it and it’ll be, “Oh, well this is at actual cash value,” which means the street value for that item, not the replacement costs. So you want to make sure that’s on there. Yeah, yeah, yeah.
Daniel Wrenne: Okay. So the home rebuild process and then housing during the rebuild process, is that limited, like the housing replacement, like the place to stay? Do you get like six months at a hotel kind of a thing or…
Andrew Wethall: Yeah, it’s different. It’s usually a percentage of your coverage amount usually around 50%. Whatever the cost is that can vary, like whatever it costs, you know, it doesn’t matter if we’re working on it for three months or three years, we’re going to pay however much it costs to put you up in a hotel or a rental property until it’s fixed.
Daniel Wrenne: So in the catastrophe scenario, my home burned to the ground. Does that like crush me for pricing forever? Like what happens to my pricing?
Andrew Wethall: No. The only way that it, where it really crushes you is if, as I mentioned earlier, there’s a difference between “act of God” claims and not. So, if you have a lot of pipe bursts or things that are kind of in your control that caused the claims, if you have a lot of those over five years—and when I say a lot, I mean, like two or three—that’ll kill you when it comes to your premium… things that you can control that you still have a claim on.
Daniel Wrenne: Pipe bursting. What else? Like, don’t replace your 40 year old roof. Is that…
Andrew Wethall: So roof and hail claims, claims like those don’t count against you as much as things you can control.
Daniel Wrenne: I’m just trying to think of what are those…some of the things you can control?
Andrew Wethall: Yeah. It’s mainly like interior water leaks. So like when you see it on the claims report, they’ll say water, non weather related. That’s a big one.
Daniel Wrenne: What about like cooking, frying your Turkey inside in a big fryer and it blows up, that’s ignorance. Most people would say…
Andrew Wethall: Yeah, so that would hurt. That would count against you more than if you had a lightning strike that hit your house, and that caused the exact same amount of damage. When you get your renewal premi the lightning strikes going to be a lot lower than the fryer inside. Yeah. Okay. Insurance companies want to see that you’re responsible and you’re taking precautions to prevent claims. If they see a claims history that has a lot of “Oh, the, the faucet was leaking, we didn’t do anything about it. And then we just realized, you know, there’s a ton of damage in the guest bedroom.” And then another thing I was going to bring up is there’s also a lot of coverages on—especially on the home that a lot of people think are covered that are not, the main one being earthquake. 00:30:30 You have to specifically ask for it. It’s not automatically included on all home policies. And then I always, the way I go about it is I send people to home quote, and then also let them know what the additional premium would be to add earthquake. I would say only about 20% of my clients go with it. And it’s one of those hard things to kind of wrap your head around, like it’s a lot more expensive in California than it is here. And it’s always a possibility.
Daniel Wrenne: Flood is like that too, right?
Andrew Wethall: Flood’s another one. Flood is automatically not included on any home insurance policy.
Daniel Wrenne: I’ve also seen it in Florida. I think like sinkhole coverage, maybe, is that—
Andrew Wethall: Yeah. Depending on what state you’re in—and it’s very state specific—sinkholes are also excluded, you know, when you get your renewal, when you look at your deck page there’ll be a list of excluded coverages. So I always suggest going through those just to make sure there’s not anything that really pops out at you. So something might pop out at you. What would be the sinkhole, like coverage of that’s not included. You might want to look into getting that and then also cosmetic damage. So that would be like if there’s a hailstorm and your roof looks really janky, but it’s still water tight, the insurance company’s not going to pay to replace it because it’s just cosmetic damage. Yeah. So that’s another one…
Daniel Wrenne: So we had talked about property damage on the home. I think we hit on a little bit of the liability stuff, but I’m curious. So like the scenario I think of is most people have pets. So let’s say you have friends over and your dog, for some reason goes nuts and attacks one of the kids or something that causes a lot of injuries. That sort of scenario. Who’s covering the medical bills?
Andrew Wethall: Yeah, that’s a great question. I usually default to the auto liability, cause it’s a little more cut and dry like, oh, you ran into him, he’s at fault. You’re injured, his pays. So on the home, equally as important. Yeah, that’s a perfect example you just gave, the most common liability claim we see is dog bites, and most dog bites…I’ll read the claim report and it’ll say like, “Fluffy has never bitten anybody.” Well, he did now, you know? Yeah. So every home policy in addition to the coverage for the structure also has liability coverage, and the lowest I recommend going with is a half a million, $500,000. It’s about like $8 to $10 a year to increase it from the minimum of $100,000. So just for peace of mind, I would recommend increasing it to that. And then also people ask, “Well, when should I have an umbrella policy?” In addition to the assets, if you own anything fun at your house (trampoline, pool), you absolutely need an umbrella policy.
Daniel Wrenne: I have a fence in my yard. Like, well actually the children know how to open the door.
Andrew Wethall: Well, the thing is, even if you have a friend over or your kids’ friends over, if they dive into the five foot pool, break their neck, you’re still on the hook.
Daniel Wrenne: Yeah. We were out of town and we get the security camera notifications and this was the one from the backyard. And we look on it and like, there’s five kids jumping on our kids’ trampoline. Like where did they…? It was our neighbors and we knew them all. And it was all good. But…
Andrew Wethall: The insurance term for that is an “attractive nuisance.”
Daniel Wrenne: Yeah, it is definitely. It’s fun though.
Andrew Wethall: Yeah. So if you own a boat, you definitely want to umbrella policy, anything fun. And then also if you have a teen driver also you want to have one.
Daniel Wrenne: I hear a lot of people talk about or run into water damage. It seems like water…You never want water in your house. That’s dicey, but it seems I have had more than a few people I know of come across water damage unexpectedly and they didn’t know it was happening. And sometimes that ends up being an insurance claim. Somehow I don’t quite…how does that work and why should that be an insurance claim?
Andrew Wethall: So home insurance pays for a claim for an event. So like I had someone that called in once they said, “Oh we need a new roof. Cause we had wind damage.” And I was like, I don’t know, last year it was just a windy year. Like that’s not, that’s not covered. That’s not gonna be covered. Like you got to be able to point to a specific time and date like, “Oh, the wind storm was on this date.” So, you know, home policy did not cover for wear and tear. So that’s what you just brought up like, “Oh, is this water we just found? Is it covered or not?” That’s a lot of times where that gray area kind of falls in. So if you have a skylight and you notice that there has been water leaking in there for, you know, years and causing damage and dry-rot. A lot of times that’s not covered because it’s a maintenance thing. But if it happens because of one rainstorm, you get a lot of rain in and there’s a lot of damage, then that is covered. So I always think of, you have to be able to point to a specific date in order for it to be covered. And that’s not to say that it’s absolutely never covered. Sometimes it is. But generally wear and tear, not noticing something, that generally is not covered.
Daniel Wrenne: I was talking with a friend the other day and they were talking about how they got a new roof recently and they had roofers going door to door and they happened to talk to them and they said, you know, we’ve had a lot of damage in the neighborhood. And do you mind if we go take a look at your roof? So they’re like, okay, whatever, they came up, went up on the roof, came back down and said, “Oh, we found that you have wind damage and we think you need a new roof.” And she said okay. Okay. What? And they’re like, well, we can take care of it completely. All you gotta do is just say, you can do it. And she said, fine, if you can replace my roof. We’re great. And according to them, they said it played out to where they had to do nothing and it was replaced completely. It sounds too good to be true to me. Like what’s up with that.
Andrew Wethall: Yeah. So in that scenario, I would say file a claim and have a claims adjuster. So whenever you file a claim for, let’s say, in the example hail or wind claim, you know, call your insurance company, file a claim. They’ll send a claims adjuster out to the property to look at it and they’ll determine if there’s damage or if there’s not. And then if they say, “Yeah, there is damage,” then call that contractor, call that roofer back and say, “Rock and roll. You guys are good.”
Daniel Wrenne: So should you talk to a roofer first? Cause like I have no idea how to determine if I have damage on my roof, you know?
Andrew Wethall: You can talk to a roofer first. I would just also make sure that your insurance company comes out to look at it. They…
Daniel Wrenne: Have to eventually.
Andrew Wethall: To determine if they’re going to… And sometimes, you know, this is another reason I think everyone should have an agent, is a lot of times, I’ll have clients call me and say, “Hey, this claim was denied. I filed it…” And I was like, all right, well, let’s look into this. So in that scenario, let’s say the roofer says, “Oh, there’s damage.” And the insurance company comes out and says, “Oh no, there’s not damage. We’re not going to pay this claim.” So what you can do, and this is in every home insurance policy, you can get another opinion. So if you can get another roofer or two to come out and look at it and say, yes, you know, there is damage to this. And then send that to the insurance company. Then they will pay the claim a lot of times. So even though they say no, right at first, you know, you can always push back and get a second opinion and get that covered. I see that a lot. And I think that’s the benefit of having an agent, is that you have someone to work with in your corner to kind of get that paid.
Daniel Wrenne: As the agent, I guess the incentive is to keep the customer happy, even though you get dinged, if you have claims, right?
Andrew Wethall: So when you, when you file a claim, you know, if there’s zero paid out, if you just consult with the claims adjuster, have someone come out and look at it, it doesn’t count against you. It only counts against you if it’s paid out. And then as far as the agent goes, as I mentioned earlier, if you call a 1-800 number, you know, they just want to write the business and be done with it. If you have an agent, they get paid every time you renew your policy. So they want to make sure you’re happy, to make sure you’re taken care of.
Daniel Wrenne: Another thing I’ve noticed about what pricing is, it seems to be a little bit different for homes. And I have noticed some strange pricing with home insurance, for example, we’ve had clients get—especially with people that are kind of doing it themselves—They’re talking to like USAA, Geico, progressive, an independent insurance agent, a state farm agent, like the really aggressive do-it-yourselfers are looking at like 10 different companies. And I’ve noticed in those situations, sometimes the spread is like huge and they’re not far off; apples to apples. Like some companies sometimes are just insanely way more expensive. I saw it recently with USAA because USAA has good financials and they seem to be a well regarded insurance company, but they were just like triple or quadruple everybody else. And I was like, what is up with that? Do you know?
Andrew Wethall: So the way it works is, you know, they call it buying some of the market. So like Erie insurance came into Kentucky, you know, not a couple of years ago, five years ago and they wanted a lot of business, so they priced it accordingly and then were very cheap. And then that lasted maybe a year or two, and then the rates went up, and then they had a lot of claims, you know, weren’t as profitable on that business. So then they increased their premiums and it’s like that with every insurance company for like a year or two, you’ll be really hot, can’t beat them, you know, best premium out there. And then they’ll be ice cold, very expensive, you know? So that’s again, why I say, look at it every three years, just see what the market’s doing, get quotes and you know, and also that’s why I like being independent is because when I was a captive agent, just riding for one company, if someone’s rate went up, I was like, “Well, you know, we had a lot of claims last year, sorry,” but with the independent agent if someone’s not happy about their rate going up I can shop around with another company that might be hot trying to buy some business in the market.
Daniel Wrenne: 00:41:10 Yeah. So we talked about home, we talked about auto. I kind of wanted to wrap up with some bigger picture sort of discussion around kind of managing this. And I think working with an agent versus doing it yourself, or working with a person, I was using the example of how you talked to three different agents, one was captive, one was independent. They went to you know, consumer direct route and maybe a good starting point is what are your channels you can go to, to get insurance and how do each of them differ?
Andrew Wethall: So the first one is like, you know, your Geico, your direct, you’re winning a hundred numbers. We just call, they want to sell you a policy, right. Then that’s the direct online market. I would not recommend that. I think an agent is important. I am very biased. I think the independent agent is the best way to go. Just cause they have multiple companies they can work with. But there are a lot of good State Farm agents. State Farm is the biggest auto insurer in the country and a very good company. So it’s not to say that, you know, they’re bad. I think the most important thing is that you’re working with someone that’s not just trying to just sell you something real quick. They’re saying, “Hey, let’s look at your situation and put together something that’s best for you.” So that way, if you’re in residency, that’s going to look different four years from when you’re out of residency. So that way you can grow with the same agent and they’re not just, you know, selling you something and then just kind of putting you off.
Daniel Wrenne: Yeah, so if you’re shopping, looking around. I think I’ve seen people talk to multiple independent agents. I’m not sure that’s…that seems like kind of overkill because maybe it’s better to look at what the independent agent—ideally you work with an independent agent that has a very big market where they can use multiple companies. And if that’s the case, we’re talking to three different independent agents it’s not really gonna differ or is it…
Andrew Wethall: You know, they might have two or three companies that one has and the other doesn’t. But I think the most important thing is to make sure that you’re comfortable with that agent. And if you start working with them, and they’re slow to get back with you, they’re never answering your calls, someone else’s always calling you back, then maybe try another independent agent is what I recommend. But it can be a little redundant to get quotes from…I would just pick one, maybe two independent agents to get quotes from.
Daniel Wrenne: Here in our planning firm with clients, they kind of get annoyed by…it seems like transaction points is where they have to deal with this kind of thing. And they’re like, “Oh, I bought a car,” or you know, selling and buying a house. And it seems like when they’re working with consumer direct options, that’s annoying. Or if they work with bad—like not bad agents—but very poor servicing agents it seems like it almost makes it harder on them when they’re working with that kind of people. They’re like, “It’s annoying. I don’t want to have to call them. They’re going to put it on me to get all this stuff done and it’s going to be painful.” And they’re not looking forward to it versus like our clients that work with you. They’re like, it was easy. He made it easy. How are you making it easy? And what does that look like? And why is it important?
Andrew Wethall: Well, when I bring on a client, I’m like, I want this to be a long-term relationship. And I expect, if a client goes with me, they can expect quick service, quick turnaround, and just like being easy to get in contact with. So I give all my clients my cell phone number, you know, if they buy a new vehicle, just send me a text with the new VIN number. I’m just making it as easy as possible for them. So that’s very easy. So I find, as quick as you can get it done—the ease of doing business is transferring of information—the better. So yeah, I give my cell phone. Call me, email me anytime and just get it taken care of.
Daniel Wrenne: I think our clients and the people we both mutually tend to work with are typically like super busy people. So ideally you’re saving time instead of losing time by working with somebody. So I think when you’re working with a good agent, you should be having a more efficient time. Time-saving is less stressful, you know, experience versus the alternative. Well, if people want to reach out to your have questions or that sort of thing, what’s the best way to find you or reach out to you?
Andrew Wethall: Yeah. I would say my phone number is (859) 797-4384. Give me a call. And then my email is awethall@gmail.com.
Daniel Wrenne: Yeah. Awesome. Well, thanks for joining me Andrew.
Andrew Wethall: Good. Thanks for having me on and thanks for putting this all together.
Daniel Wrenne: Yeah, man. Good talking. We’ll talk to you soon.
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Finance for Physicians is not an investment, tax, legal, or financial advisor. All content included in this podcast is for informational purposes only, and should not be considered financial, tax, or legal advice. Material presented is believed to be from reliable sources, and no representations are made by Finance for Physicians as to another party’s informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant, or legal counsel prior to implementation. If you don’t have an advisor or would like a second opinion, feel free to check out our website for recommended advisors.
