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#82 California Apartment Insurance DOUBLED — How Investors Are Saving Thousands · Own More Doors

• 0:00
  SPEAKER_01: In 2023, nationwide just stopped writing insurance.
• 0:03
  SPEAKER_01: State farm non-renewed 72,000 policies in California alone.
• 0:06
  SPEAKER_01: People are used to paying like$3,000 for an apartment building.
• 0:09
  SPEAKER_01: Now they're paying six to eight thousand and sometimes even more than that.
• 0:12
  SPEAKER_00: Insurance has become one of the biggest expenses for apartment owners.
• 0:15
  SPEAKER_00: Premiums are rising, carriers are pulling out of California, and many investors don't know what they should actually be buying, let alone who's going to insure their building.
• 0:23
  SPEAKER_00: Today we're going to break it all down.
• 0:25
  SPEAKER_00: I'm here with Zach with IM Insurance.
• 0:28
  SPEAKER_00: Zach, thank you so much for being here today.
• 0:29
  SPEAKER_01: Thank you, Juan.
• 0:30
  SPEAKER_01: Happy to be here.
• 0:31
  SPEAKER_00: Zach, so man, uh the number one question that we get from clients, and a lot of times they're just calling me and saying, they're canceling my insurance on my eight-unit building.
• 0:41
  SPEAKER_00: Uh, my 12-unit building, uh, they no longer want to insure me.
• 0:45
  SPEAKER_00: Um, we used to tell people, yeah, their premiums are going up by 30, 40%, but that's incorrect.
• 0:50
  SPEAKER_00: They're actually doubling, you just finished telling me.
• 0:53
  SPEAKER_00: So they're going up by 100%.
• 0:55
  SPEAKER_00: Yes.
• 0:56
  SPEAKER_00: Um, we know that a lot of carriers have left California, and people are calling me saying no one wants to insure my building.
• 1:05
  SPEAKER_00: Tell us a little bit about what you guys do.
• 1:07
  SPEAKER_00: And and just for the folks listening, um, Zach and his family.
• 1:12
  SPEAKER_00: Um, you know, I've been introduced to them uh just a little bit over 12 months ago, and they've been able to successfully insure our buildings when a lot of other companies have either given us too high of a quote or simply flat out denied us.
• 1:26
  SPEAKER_00: And so a lot of times clients will call us and say, Hey, they're canceling my insurance.
• 1:30
  SPEAKER_00: Who do you recommend?
• 1:31
  SPEAKER_00: So we're sending them over to Zach, and then I get a response back saying, Hey, they were great, they were able to really help me out.
• 1:37
  SPEAKER_00: Um, I know you guys are here local in Huntington Beach.
• 1:39
  SPEAKER_00: Tell us a little bit about your company.
• 1:41
  SPEAKER_01: Um, well, first off, we started back in 1987.
• 1:43
  SPEAKER_01: My uh dad, Ralph Ignadossian, started the agency.
• 1:46
  SPEAKER_01: Um, he's been doing it for now almost 40 years.
• 1:50
  SPEAKER_01: Um, I have my brother that also works in the agency.
• 1:52
  SPEAKER_01: He's been doing it for 13, and I'll be coming up on nine years as myself.
• 1:56
  SPEAKER_01: So uh we've been writing commercial insurance for the whole time.
• 1:59
  SPEAKER_01: Uh we tried to dip ourselves in personal lines, but commercial has just been a lot easier to write.
• 2:04
  SPEAKER_01: Um and there's just been a lot of business out there.
• 2:07
  SPEAKER_01: So we just try to be a present um agency in the place, marketplace, and be able to provide services that people can't.
• 2:15
  SPEAKER_00: Um if you're Zach, thank you for that.
• 2:17
  SPEAKER_00: So if you're an apartment owner right now and and you've you're either buying a building or you're coming up for renewal, um in some cases you're getting a letter saying, hey, we're we're gonna cancel this completely, or the renewal's coming in.
• 2:33
  SPEAKER_00: Um what what should an apartment owner do?
• 2:36
  SPEAKER_00: Um let's just say that they want to shop around.
• 2:40
  SPEAKER_00: What can they send you?
• 2:41
  SPEAKER_00: Can they call you?
• 2:42
  SPEAKER_00: Um, what should they be looking for?
• 2:45
  SPEAKER_01: Um definitely, you can definitely call me.
• 2:47
  SPEAKER_01: Uh for the most part, what they should be looking for is definitely making sure the property is updated.
• 2:51
  SPEAKER_01: Uh electrical updates, roofing updates, uh, plumbing, uh, HVAC or heating.
• 2:57
  SPEAKER_01: Um, if those are updated within the past 15, 20 years, it makes it a lot easier to quote out with a lot more markets.
• 3:02
  SPEAKER_01: Um, if they're not updated, you're gonna get a very basic form coverage uh and it just won't be as comprehensive, and the premiums will be astronomical.
• 3:09
  SPEAKER_01: Like you said, uh it's gonna be probably a hundred percent increase.
• 3:12
  SPEAKER_01: People are used to paying like$3,000 for an apartment building.
• 3:15
  SPEAKER_01: Now they're paying six to eight thousand and sometimes even more than that.
• 3:19
  SPEAKER_00: I'm currently selling, I'm currently selling a um a mixed use building, and the so we could um during the sale, um my client called me and said, Hey, they're they're canceling my insurance, um, and I found a company to do it, but it's gonna be twenty thousand dollars.
• 3:40
  SPEAKER_00: And I said, That's outrageous.
• 3:41
  SPEAKER_00: And in fact, I contacted you, I said, let me let me help here.
• 3:45
  SPEAKER_00: And I said, I uh let me send this to somebody.
• 3:47
  SPEAKER_00: So then I sent it over to you, and you were able to send us, I mean, really save us around like ten thousand dollars on that property.
• 3:54
  SPEAKER_00: In some cases, if an insurance company doesn't want to insure something, are they simply setting a super high rate or because that's what I felt like that situation was that they're like, ah, geez, if if she's willing to pay twenty-two thousand dollars for premium, then then we'll insure it.
• 4:11
  SPEAKER_00: Is it that, or is it more common for them simply to say, well, we'd we're not interested in insuring it?
• 4:16
  SPEAKER_01: Um, it depends on what the company is.
• 4:19
  SPEAKER_01: I mean, there's admitted and non-admitted companies in California.
• 4:22
  SPEAKER_01: Admitted is companies that are backed by the Department of Insurance.
• 4:24
  SPEAKER_01: Non-admitted are not depart backed by the Department of Insurance.
• 4:28
  SPEAKER_01: Um, and the ones that are non-admitted, they usually just throw out any rate that they see fit because they don't have to file rates with the department.
• 4:35
  SPEAKER_01: Um, at that point, that's when you usually get those quotes that are about like 20,000, 22,000 and they just try to basically make sure they're collecting as much premium as they can for it.
• 4:44
  SPEAKER_01: But if you can find it into the proper home or like the proper market for it, um, that's when you can usually get a good rate on it.
• 4:50
  SPEAKER_01: And it's just those non-admitted companies basically just make up rates as they seem, as they see fit.
• 4:56
  SPEAKER_01: Basically, if they look at a building and they see it's a little bit older and they don't know if there's been updates or not, they'll just throw out a quote and see if that person's willing to pay without shopping it around.
• 5:05
  SPEAKER_00: Yeah.
• 5:06
  SPEAKER_00: But but it's important, it's important to shop it around.
• 5:08
  SPEAKER_01: Absolutely.
• 5:09
  SPEAKER_01: Yeah.
• 5:09
  SPEAKER_00: And what is it that someone could send you, Zach, so that you could um because I know sometimes people will call you and say, hey, well, they quoted me this amount, and then but that's not good enough for you.
• 5:17
  SPEAKER_00: You know, you always tell me, hey, we got to be able to compare apples to apples to make sure that I'm insuring what they're insuring.
• 5:22
  SPEAKER_00: Uh what is it that they could send you from their current insurance company so that you could be able to to be competitive at least?
• 5:29
  SPEAKER_01: Um, if you just provide a copy of the quote or the renewal policy, whatever one you have on file, uh usually that's good enough for us.
• 5:36
  SPEAKER_01: That way we can at least make sure we have the same building limit, the property deductibles, uh, it's rate being rated with the same classification because some of these companies will misclassify these quotes and then the rates are different.
• 5:46
  SPEAKER_01: So that changes the liability rates and then the property rates.
• 5:50
  SPEAKER_01: I mean, just making sure that you have the correct uh characteristics of the building in the system or like submitted with the application, that's a huge factor too, as well.
• 5:58
  SPEAKER_01: Like the square footage of the property, um, if there's been updates within the past 15, 20 years, and what the updates were like two, uh, those are definitely huge factors and definitely helped me quote uh correctly and make sure we get a proper quote with the best premium and best coverage for you.
• 6:12
  SPEAKER_00: Zach, I I know you've been doing insurance for a very long time.
• 6:16
  SPEAKER_00: When did you first start seeing this massive increase in premiums?
• 6:20
  SPEAKER_00: Like when did that happen?
• 6:21
  SPEAKER_01: Uh 2023.
• 6:23
  SPEAKER_01: The whole California, everyone just started like pulling out.
• 6:27
  SPEAKER_01: Um it started with gas stations and apartment buildings, which was our bread and butter.
• 6:31
  SPEAKER_01: We used that's pretty much what we write most of the time.
• 6:34
  SPEAKER_01: Um but in 2023, nationwide just stopped writing insurance.
• 6:39
  SPEAKER_01: Uh State Farm non-renewed 72,000 policies in California alone.
• 6:43
  SPEAKER_01: And so that just left a flood of these properties that needed insurance.
• 6:47
  SPEAKER_01: And so it was flooding the market and all these other companies so much so that they actually had to put a pause on it too, and then re-uh assess their filing or their rates and what they're like charging for these uh properties.
• 6:59
  SPEAKER_01: And it took about a year or two for it to kind of come people to start coming back into the market and uh being able to provide competitive quotes and something that they're gonna collect the correct premium for.
• 7:09
  SPEAKER_01: So 2023, that's probably when it all started.
• 7:12
  SPEAKER_01: 24 is when we started seeing some quotes come in again, but the premiums, like I said, were doubled, and now it's kind of starting to stabilize in 25 and 26.
• 7:20
  SPEAKER_01: But I mean, these a lot of these people are still not used to paying those insurance premiums.
• 7:25
  SPEAKER_00: It really um it really changed the landscape for an apartment owner.
• 7:30
  SPEAKER_00: Um, all of a sudden their their cash flow is going to be changed, all of a sudden the expense expenses go up, which then really kind of uh ruins the the asset as a whole.
• 7:42
  SPEAKER_00: If someone like you said, someone was used to paying$3,000 for um a year for an eight-unit building and now it's eight thousand dollars, um that that you know we factor the expenses and the income and all that type of stuff to come up with value, and that affects us negatively.
• 7:58
  SPEAKER_00: And so not to mention interest rates are going up.
• 8:02
  SPEAKER_00: So interest rates are going up.
• 8:03
  SPEAKER_00: Um the just the the cost, the cost to do repairs has um increased tremendously, electrical plumbing, roofing, everything else has gone up.
• 8:12
  SPEAKER_00: Um and then the insurance is just killing everybody.
• 8:15
  SPEAKER_00: Um, but what I want to just get into right now, and so I I bought a building 12 months ago, it was an eight-unit building, and you know, all of us are scrambling to get insurance, right?
• 8:28
  SPEAKER_00: And we're trying to get it in time to be able to close Askrow, which I guess before 2023, getting insurance, you got that so quickly.
• 8:36
  SPEAKER_00: And now it it takes a long time to get a quote.
• 8:40
  SPEAKER_00: Um I mean, sometimes it could take over a week, and we're like waiting to and I'm not saying, I mean, for from from uh working with with your company, um the communication is a much quicker, like we're we're kind of get uh quotes um much, much faster, which is good.
• 8:56
  SPEAKER_00: But what I was saying about my eight-unit building, I we started getting to a point where we told everyone, look, if you have a four-unit building, um we're like allocating like uh$1,000 per unit for the year.
• 9:09
  SPEAKER_00: If it's a five-unit building, it'd be five thousand, eight-unit building, eight thousand.
• 9:13
  SPEAKER_00: So when I closed it, I was at eight thousand dollars.
• 9:16
  SPEAKER_00: I'm like, oh well, that's the going rate.
• 9:18
  SPEAKER_00: The renewal came in for July, and I was like, huh.
• 9:23
  SPEAKER_00: It was eight thousand dollars, and then I sent it over to you, and we were able to shave thousands of dollars off of that.
• 9:30
  SPEAKER_00: And so I'm just like one thing, you know, a lot of times people think of insurance like when they're first buying a building, but they have to know that if you own an apartment building, it's constantly renewing.
• 9:40
  SPEAKER_00: And I just want to remind people like know when that is, find out what uh what amount that is, and double check with a company like yours because they could, you know, they could be saving thousands of dollars, which then does what?
• 9:53
  SPEAKER_00: Increases cash flow and really helps out the valuation once um once you know if they decide to sell, we're able to show the buyers like, hey, well, this is the actual insurance that's being paid out from this property.
• 10:05
  SPEAKER_00: And so I just want to remind people like if you're uh it's not so much just when you're buying something new, it's on every asset that you currently have.
• 10:13
  SPEAKER_01: Yeah.
• 10:14
  SPEAKER_01: Absolutely.
• 10:15
  SPEAKER_01: Um, I mean, when you uh brought that property to me, you came out and you told me you're like, hey, we just replaced the roof, we just did new electrical panels, the plumbing's less than 10 years old, and that opened up a lot of markets for us.
• 10:27
  SPEAKER_01: I mean, it allowed me to submit to the some of the preferred and admitted markets in California.
• 10:31
  SPEAKER_01: And when you can do submit to that to preferred markets, you get a little bit more flexibility.
• 10:35
  SPEAKER_01: They offer more comprehensive coverage, um, and the pricing is usually a lot more competitive.
• 10:40
  SPEAKER_01: Like I said, the uh admitted companies have to file rates with California, so there is uh a set rate that they have, whereas these non-admitted companies, they don't have to file rates and they can charge pretty much whatever they want without like any consequence or like actually like uh providing a reason behind it.
• 10:57
  SPEAKER_01: They just know that they they look at this property, they see the size of it, the value of it, and they'll just spit out a premium for you.
• 11:04
  SPEAKER_00: Zach, so when we you know, when we get called out to a building and someone wants to sell, say, hey, like, you know, hey, my dad owns a 10-unit building, he's getting up there in age, he's thinking about selling it.
• 11:15
  SPEAKER_00: The first thing that I do is I go out to the property and and I want to look and I want to see if if there's like um evidence of copper plumbing, you know, either like in the garages or if there's a water water spigot that looks like it's copper, you know, I can make some assumptions that possibly there's copper everywhere.
• 11:32
  SPEAKER_00: And it could be half and half, but for the most part, I'm like, okay, that's good.
• 11:36
  SPEAKER_00: And then I look at the electrical panels.
• 11:38
  SPEAKER_00: Um why don't we go through the the electrical panels out there, the names and the providers that you guys don't want to see?
• 11:46
  SPEAKER_00: Because when I go out to these buildings, the owners say, Well, they're currently insurance insuring me now.
• 11:53
  SPEAKER_00: I'm like, Yeah, because they don't know you have that electrical panel.
• 11:56
  SPEAKER_00: But when we go to sell, we'll have to get a new quote.
• 12:00
  SPEAKER_00: And then at that moment, you know, there's there's certain ones that you guys don't want to see because they're 30 years or older, they're prone to fires.
• 12:07
  SPEAKER_00: Uh, let's go over those.
• 12:08
  SPEAKER_00: Yeah.
• 12:09
  SPEAKER_00: Um, you know, I'm sure you got them memorized.
• 12:11
  SPEAKER_01: Yeah, absolutely.
• 12:11
  SPEAKER_01: Um, federal stablock, Zinsco, Challenger, those are usually the biggest three.
• 12:16
  SPEAKER_01: Um, if it's less than 100 amps, that's also a huge factor.
• 12:19
  SPEAKER_01: And the biggest thing is, like you said, these uh owners, they say the entrance company's on them now, but now when you have to rewrite the policy with a new company, these companies are coming out and inspecting these properties, usually within the first 30 days of writing that policy.
• 12:31
  SPEAKER_01: So they're gonna find out and they'll take a look at it and they'll ask you to replace it.
• 12:34
  SPEAKER_01: And those three brands are big no-nos, they do not like that.
• 12:38
  SPEAKER_01: It's a red flag, and they'll ask you to either replace them or they'll just cancel your policy within the first 60 days of it being written.
• 12:43
  SPEAKER_00: So let's go over those again.
• 12:45
  SPEAKER_01: So it's Federal Pacific, yeah, Federal Pacific, Zinsco, uh, Stavlock, and then Challenger.
• 12:51
  SPEAKER_00: Okay.
• 12:52
  SPEAKER_00: All right.
• 12:52
  SPEAKER_00: So there you go, folks.
• 12:54
  SPEAKER_00: Go out to your property, and if you see those, now listen, I do have a question, Zach.
• 12:58
  SPEAKER_00: Sometimes we go out there and we see no name on them.
• 13:01
  SPEAKER_00: And it looks like they've been painted.
• 13:03
  SPEAKER_00: So I'm not I'm not making I'm not uh but but sometimes it you can't tell.
• 13:07
  SPEAKER_00: Okay, most times there's a little sticker on them and you could tell what they are, but sometimes you can't tell.
• 13:13
  SPEAKER_00: What do we do in a situation like that?
• 13:15
  SPEAKER_01: That uh you can get a licensed electrician out there, just usually costs like a hundred, two hundred bucks for them to just come inspect it real quick.
• 13:22
  SPEAKER_01: Uh just say, hey, can you take a look at this?
• 13:24
  SPEAKER_01: Let me know what brand these are and what kind of amps they're dealing with.
• 13:27
  SPEAKER_01: Uh that way at least you know what you're what you have on your property and if it's going to be a red flag for the insurance companies or not.
• 13:33
  SPEAKER_01: Um, these panels usually are not cheap, so I understand replacing them can be a pain in the butt, but um, it's better to just check and make sure you know what you have on your property and also just that way you can get ahead of it and don't have to worry about the insurance companies coming and telling you, hey, you know, you need to replace this.
• 13:49
  SPEAKER_00: I noticed um a lot of times when we're selling a building, sometimes the owners, you know, offer our recommendations will will go ahead and replace the panels.
• 13:58
  SPEAKER_00: Sometimes they'll do it with permits, and sometimes they're like, uh, I just had a licensed electrician do it.
• 14:03
  SPEAKER_00: Um, does that matter to the insurance company, whether there's permits involved or not?
• 14:08
  SPEAKER_00: I mean, I don't know that that's a question.
• 14:09
  SPEAKER_00: I think they ask, well, were they done?
• 14:12
  SPEAKER_01: And and for the most part, the permits they don't really ask for.
• 14:15
  SPEAKER_01: They can use that as a proof of updates, um, but they just want a licensed electrician out there.
• 14:20
  SPEAKER_01: Somebody that's licensed, because if you're licensed, that means you have insurance yourself.
• 14:23
  SPEAKER_01: Um, and that means they are going to be covered if anything does were to happen and they have their own insurance policies.
• 14:29
  SPEAKER_01: Say if some they mis uh installed at an electrical panel and it caused a fire or something like that.
• 14:34
  SPEAKER_01: Uh, and then now there's a big loss on the property.
• 14:37
  SPEAKER_01: At least that contractor, licensed contractor, had insurance of their own, so they can go back and kind of they can solicit money from their insurance company basically rather paying out of your own insurance company.
• 14:46
  SPEAKER_01: Um, so that's usually the biggest thing right there is uh just having those um replaced.
• 14:54
  SPEAKER_00: Um Zach, so I just on my eight-unit building, I when when I was buying it, I knew the the roof was older and I was hoping that I would get a few years out of it.
• 15:05
  SPEAKER_00: And then the first rain, the tenant complained that water came in, so I'm like, okay, I'm gonna replace the roof.
• 15:09
  SPEAKER_00: And I did, and I made sure to pull permits, and I did it for two reasons.
• 15:13
  SPEAKER_00: One is yes, I wanted to get a better insurance quote, which now I have, so that's great.
• 15:18
  SPEAKER_00: Um and then two is you know, we never know when where where the market's at, and and I may want to sell in a few years.
• 15:29
  SPEAKER_00: Um, you know, I want to make sure that I tell you know, those are the questions that I get asked uh when we when we list a property.
• 15:35
  SPEAKER_00: Yes, people care about income and expenses, but they really want to know uh tell me about tell me about the roof, tell me about the electrical, the plumbing, and the foundation, and what type of heating do we have.
• 15:43
  SPEAKER_00: Those are the questions we get from the buyers all the time.
• 15:45
  SPEAKER_00: Now we get them even more now because it's impacting the insurance, it's impacting the insurance quote, right?
• 15:52
  SPEAKER_00: And so um talk to us about the importance of I guess those major systems and I guess talk about heating because a lot of apartment buildings that we sell have wall units that the tenants specifically refuse to turn on the pilot light on, they just don't want it on.
• 16:10
  SPEAKER_00: Um some people are afraid of the pilot light to being on and they they just don't use it.
• 16:16
  SPEAKER_00: Sometimes people put a they just cover it, they they cover the wall heaters.
• 16:21
  SPEAKER_00: So when you're talking about the type of heating, like what should an owner be looking for when it comes to that?
• 16:27
  SPEAKER_01: Um the heating just needs to be a just a working system, honestly, as long as it's within the past 15, 20 years.
• 16:33
  SPEAKER_01: Um mostly that's just for the comfort of the uh the tenants there because a lot of claims have been habitability claims over the past couple years.
• 16:40
  SPEAKER_01: Uh and these tenants are claiming that the property is ininhabitable, and you know, not having proper working heating in a pro in a place can definitely cause those issues.
• 16:49
  SPEAKER_01: If it's a cold winter and somehow they are freezing their butts off in there, and so now they don't have a heating system that works, uh, that can be one of the issues, and that a tenant could try to sue for that, and it just becomes a big whole big ordeal.
• 17:00
  SPEAKER_01: And the insurance companies have just been tired of seeing those claims.
• 17:03
  SPEAKER_01: I mean, they're starting to put habitability exclusions on most of their policies now.
• 17:06
  SPEAKER_01: I only know like one or two companies that are even offering that coverage.
• 17:09
  SPEAKER_00: Okay.
• 17:10
  SPEAKER_00: Okay, so you're saying that most of our when we get quoted an insur an uh an insurance quote, it's not including that habitability issue, which quite frankly, most of the owners aren't even worried about that.
• 17:23
  SPEAKER_01: Yeah.
• 17:23
  SPEAKER_01: No, most of them haven't been dealing with concerned about that, but it definitely has become a bigger issue over the past few years.
• 17:29
  SPEAKER_01: I mean, they've there's been so many claims, like I said, that they these companies are starting to exclude it before that.
• 17:35
  SPEAKER_01: A lot of these uh owners are now thinking of just like making sure the property is up to date and it's in good shape so that way they can at least fill the tenant space, but they forget that sometimes like the inside of it, the unit where the heating is, and sometimes the like there if there's mold or anything inside there and bugs or whatnot, then making making it uninhabitable.
• 17:52
  SPEAKER_01: Uh these tenants can be upset, and if you don't take care of it in a proper time, they will like go pick up a lawyer and start trying to sue.
• 17:59
  SPEAKER_01: And once one tenant starts doing it, sometimes they'll just try to get the whole building, and now you have the whole building suing the owners, and just becomes a huge ordeal.
• 18:07
  SPEAKER_01: I mean, we saw a claim go up to like$300,000, uh just it's which six figures on a policy that you're paying five grand for, basically.
• 18:15
  SPEAKER_01: And it was just the insurance company, once that claim happened the next year, they non-renewed it and got off of it, and now you're going to another insurance insurance company with this huge claim on your lost runs, and you're going to be paying$10,000, maybe even$15,000 for that same property.
• 18:28
  SPEAKER_00: Okay.
• 18:29
  SPEAKER_00: Okay.
• 18:30
  SPEAKER_00: It might be time to sell the building.
• 18:32
  SPEAKER_00: Yeah.
• 18:33
  SPEAKER_00: Okay.
• 18:33
  SPEAKER_00: But the important thing is um, do you recommend that someone have that be part of their insurance?
• 18:40
  SPEAKER_01: If you can get insurance, the habitability insurance included, yes, I would highly recommend that because it's just an extra layer.
• 18:46
  SPEAKER_01: It's usually not that expensive if because if the company's going to offer it, it's usually just included in the policy jacket.
• 18:51
  SPEAKER_01: So it's already on the policy form and it's not really in an extra charge for it, but it's just making or finding a company that will offer that coverage.
• 18:58
  SPEAKER_00: Do you guys I'm with the because you guys are insurance broker, do your companies offer that?
• 19:05
  SPEAKER_01: So we have two right now that are offering it.
• 19:07
  SPEAKER_01: Uh, one of them is Honeycomb.
• 19:09
  SPEAKER_01: Uh, they have a couple different programs though.
• 19:10
  SPEAKER_01: They have an admitted program and a non-admitted program.
• 19:12
  SPEAKER_01: The admitted program is the only one that will offer the habitability.
• 19:16
  SPEAKER_01: Um, and if you're with the non-admitted program after the first year, though, you could get into the admitted program and have that coverage added on, which is a huge plus for us.
• 19:24
  SPEAKER_01: So that's what I've been trying to do with most of my clients as of late.
• 19:27
  SPEAKER_01: Um, and then nationwide currently offers it, but they're very picky about the buildings that they're gonna be riding in California.
• 19:34
  SPEAKER_01: And then on top of that, is I believe they're actually adding an exclusion effect of 9-1.
• 19:38
  SPEAKER_01: So September 1st, that's gonna be going by the wayside for any policies that are written.
• 19:42
  SPEAKER_00: Interesting.
• 19:43
  SPEAKER_00: One thing I I noticed with uh with the insurance renewal that I got, they just gave me the price, and it was a little lower, a couple hundred dollars lower, not anything big.
• 19:54
  SPEAKER_00: But they didn't ask me, like, hey, by the way, in the last 12 months, have you done any uh major upgrades?
• 19:59
  SPEAKER_00: I just thought that was interesting.
• 20:00
  SPEAKER_00: That um what did they want to know?
• 20:03
  SPEAKER_01: Yeah, they should.
• 20:05
  SPEAKER_01: Uh that's usually a huge plus.
• 20:06
  SPEAKER_01: I mean, especially if you're paying with rates that are a little bit higher than normal and you're with a non-admitted company, it's always better to like get those that information that way you can at least send it out to market.
• 20:16
  SPEAKER_01: Because a lot of these insurance agents, once they ride it, they ride it and forget it basically.
• 20:19
  SPEAKER_01: They'll let it renew with the same company over and over.
• 20:22
  SPEAKER_01: And those companies could just take automatic rate increases.
• 20:24
  SPEAKER_01: What we try to do as our insurance agency is make sure that we remarket every year every policy.
• 20:29
  SPEAKER_01: So that way we know we have the best price out there with the best coverages, and make sure that our cover our clients are covered and that they're not getting overcharged for insurance that it could be a lot cheaper.
• 20:39
  SPEAKER_01: Like you said, uh you're paying almost eight grand and we got you a quote that was a few thousand dollars cheaper, which is huge.
• 20:44
  SPEAKER_00: Yep.
• 20:45
  SPEAKER_00: Yep.
• 20:45
  SPEAKER_00: No, I and I appreciate that.
• 20:48
  SPEAKER_00: Um so since 2023, we've seen this run-up with insurance costs, but but but we were being told that hey, once things settle down, insurance companies will come back and we could essentially see pricing coming down.
• 21:02
  SPEAKER_00: Talk to us about what you're seeing.
• 21:04
  SPEAKER_00: Is that gonna happen?
• 21:05
  SPEAKER_00: Is it already happening?
• 21:07
  SPEAKER_00: And and ultimately can can we expect as apartment owners that insurance costs will drop?
• 21:14
  SPEAKER_01: Um you can expect them to stabilize.
• 21:17
  SPEAKER_01: I don't know if they'll ever ever go back to what they were in like 2023 and before, because those prices were way too cheap for the premium and coverage that they were or the coverage that they were offering.
• 21:26
  SPEAKER_01: I mean, these buildings are going up in value almost every day, it seems like.
• 21:30
  SPEAKER_01: I mean, inflation with just the cost of construction is going up.
• 21:34
  SPEAKER_01: So the replacement cost on these buildings is going up.
• 21:36
  SPEAKER_01: I mean, what used to be$150 replacement cost per square foot is now like$225.
• 21:41
  SPEAKER_01: And that's like the industry standard and almost like the minimum.
• 21:44
  SPEAKER_01: I'm seeing companies that are saying, hey, no, this needs to be insured for$300 a square foot.
• 21:48
  SPEAKER_01: Um so premiums going down, you can probably expect competitive prices.
• 21:54
  SPEAKER_01: I don't think they'll be, like I said, back down to what they were of$3,000 a policy.
• 21:58
  SPEAKER_01: I would say five to eight thousand.
• 22:00
  SPEAKER_01: Will probably be the new norm.
• 22:01
  SPEAKER_01: And then like anywhere above like more than eight units, you'll probably be seeing anywhere of 10 to 12,000 if it's not updated.
• 22:09
  SPEAKER_01: And like those are ones, the properties that just haven't been well kept and they have to go with the non-admitted programs.
• 22:14
  SPEAKER_00: Do you agree with our$1,000 per year per unit?
• 22:18
  SPEAKER_00: Is that a safeguard, or is that like, hey, yeah, you're being conservative?
• 22:22
  SPEAKER_01: Um that's definitely a safeguard.
• 22:24
  SPEAKER_01: It just depends like how old the property is, if it's been updated.
• 22:27
  SPEAKER_01: Um, and then on top of that, is like there's kind of different markets for it too.
• 22:30
  SPEAKER_01: Like one to four units, you can classify as a residential or landlord policy.
• 22:34
  SPEAKER_01: Once you get into the five unit plus, though, that's when it has to be classified as commercial.
• 22:38
  SPEAKER_01: So there's different uh programs for each of these types of properties.
• 22:41
  SPEAKER_01: Like we have a specific program for those one to four units.
• 22:44
  SPEAKER_01: Um, and then we also have uh additional programs for everything that does five units and up.
• 22:49
  SPEAKER_01: So uh it's around that price, I'd say a thousand dollars is a safe bet for it, just to at least get your good uh estimate on it.
• 22:57
  SPEAKER_01: And then if you get something cheaper, great.
• 22:59
  SPEAKER_01: Um, if you don't, um it's probably gonna be around that thousand dollar mark.
• 23:03
  SPEAKER_00: Zach, I know right now we're we're focusing heavily on multifamily, but um what other industries or businesses do you guys insure where you're like, hey, people don't know we do this, but we we do this and we're and we're very good at it.
• 23:18
  SPEAKER_01: Um yeah, I mean, um my father, Ralph, he started off on gas stations in the automotive industry.
• 23:23
  SPEAKER_01: So we do a bunch of gas stations in California.
• 23:26
  SPEAKER_01: We have a great exclusive program that only select agents in California have access to.
• 23:30
  SPEAKER_01: Uh automotive industry, like any auto repair shops, um, tire stores, we have good access or good markets for those ones as well.
• 23:38
  SPEAKER_01: Um restaurants, we have some great, great programs for restaurants.
• 23:41
  SPEAKER_01: A lot of these preferred carriers do want restaurants right now.
• 23:44
  SPEAKER_01: The premiums are taking hikes on those, so I know people are a little bit concerned about that as well.
• 23:48
  SPEAKER_01: Uh, and then just commercial property in general.
• 23:50
  SPEAKER_01: I mean, if it's a retail business and you just own the property and you're the landlord of it, we can ensure that, or if you do occupy the space.
• 23:56
  SPEAKER_01: Like I know you're purchasing an office building here in August, um, and that's a perfect prime example of it.
• 24:02
  SPEAKER_01: I mean, you're buying it as a landlord, but then you're gonna occupy it as with your separate business of real estate business.
• 24:07
  SPEAKER_01: And uh it's a great uh we have great markets for that because a lot of these companies are hungry for that type of business.
• 24:14
  SPEAKER_01: I mean, they like to see properties that are well kept and are fully occupied, and they have no problem insuring the actual building of it um on a business owner's form uh because these all these tenants usually have their own insurance as well for like the liability.
• 24:27
  SPEAKER_01: So they're not too concerned about that portion of it.
• 24:30
  SPEAKER_00: No, that's really good to know.
• 24:31
  SPEAKER_00: Um talk about talk about two things.
• 24:34
  SPEAKER_00: One, state fund or um what's it called?
• 24:37
  SPEAKER_00: Like Fair Plan?
• 24:38
  SPEAKER_00: Fair Plan.
• 24:39
  SPEAKER_00: Yeah, the California Fair Plan.
• 24:40
  SPEAKER_01: Uh yeah, the California Fair Plan, um, it's a last resort insurance, basically.
• 24:45
  SPEAKER_01: If you're in a high file wild high high wildfire score area, that's usually where you're gonna go.
• 24:50
  SPEAKER_01: Um it's basically if you can't find any insurance anywhere else, that's where you're gonna be quoted.
• 24:54
  SPEAKER_01: It's very basic coverages.
• 24:56
  SPEAKER_01: You're not gonna get as comprehensive as you would even with the non-admitted program.
• 24:59
  SPEAKER_01: Those come cover coverages with those companies are a lot better than a fair plan policy.
• 25:04
  SPEAKER_01: On top of that, is the rates are gonna be just about the same.
• 25:07
  SPEAKER_01: Um and it we try to avoid the fair plan as much as possible just because they've been getting overly saturated over the past few years, especially with these companies not riding in California.
• 25:16
  SPEAKER_01: Um, so they're definitely oversaturated.
• 25:19
  SPEAKER_01: And then on top of that, is if they do have claims, they're now taking money from insurance companies in California to pay out these claims because I mean there's so much insurable value through the fair plan that they don't have the actual reserves or funds to pay it out.
• 25:34
  SPEAKER_01: So now these insurance companies are also charging a fair plan fee um to help pay for those um pay reimbursements basically to these clients that the fair plan's taken from them.
• 25:44
  SPEAKER_00: So the California fair plan is mostly because you're in a uh a high wildfire area.
• 25:50
  SPEAKER_00: It's not so much that it's in poor condition.
• 25:52
  SPEAKER_01: Yeah, pretty much.
• 25:53
  SPEAKER_01: You can put you can get insurance for any property, even if it's in poor condition through almost any company.
• 25:58
  SPEAKER_01: It'll just be a lesser form because there's a basic form, broad form, and a special form.
• 26:03
  SPEAKER_01: Um special form is definitely the best.
• 26:05
  SPEAKER_01: It's basically if it's not excluded, it's included.
• 26:08
  SPEAKER_01: Basic form is very basic coverage like wild or fire, lightning, um, riots, vandalism, all the like the very basic coverages, but it won't include theft or anything like that.
• 26:19
  SPEAKER_01: Special form, like I said, is the what we try to write most of our policies on.
• 26:23
  SPEAKER_01: So that way everything is uh covered and it's the most comprehensive coverage.
• 26:28
  SPEAKER_00: Um Zach, talk to us about sometimes people are their insurance is about to expire and they let it lapse before they have um secured someone else to insure their building.
• 26:42
  SPEAKER_00: What type of issues happen in that situation?
• 26:45
  SPEAKER_01: Um well, hopefully there's no claims in that period because you are not covered.
• 26:49
  SPEAKER_01: Um we can usually find insurance for that still too.
• 26:52
  SPEAKER_01: It most likely won't fit with an admitted or a preferred carrier.
• 26:56
  SPEAKER_01: Um, it's usually gonna go non-admitted, uh, and these companies will ask for a no-known loss letter, basically stating that from when your policy expired to when they're writing this policy that you had had no claims or no losses.
• 27:07
  SPEAKER_01: Uh, if you do, they still will not cover it.
• 27:09
  SPEAKER_01: But it'll basically they want that letter basically saying that you have no haven't had any claims, and the premiums are still not going to be cheap because you're still with the non-admitted program rather than having access to a preferred carrier if you were without a lapse of coverage.
• 27:23
  SPEAKER_00: So having so letting your property insurance lapse is a huge mistake.
• 27:27
  SPEAKER_01: Yeah, you never want your property insurance to lapse, or any insurance in general.
• 27:32
  SPEAKER_00: Got it.
• 27:33
  SPEAKER_00: We um every now and then, every now and then I'll sell a building and the and the buyer buys a cash, and I tell them at the beginning, I'm like, hey, uh, I know you're buying this cash, uh, start shopping insurances, uh, insurance companies because um it takes a long time to get it now.
• 27:48
  SPEAKER_00: And they're like, uh I don't have to have insurance.
• 27:52
  SPEAKER_01: Uh I hate that.
• 27:53
  SPEAKER_01: Okay.
• 27:54
  SPEAKER_01: Yeah, I know.
• 27:55
  SPEAKER_01: A lot of these people, like some of these people, like our older clients, are like, I've been paying insurance for 30 years and I haven't had a single claim.
• 28:01
  SPEAKER_01: I could have saved all this money.
• 28:03
  SPEAKER_01: I'm like, yeah, but if that one instance does happen and you have a total loss, now you're out all this money and you have to rebuild the whole building out of pocket.
• 28:10
  SPEAKER_01: That's a lot more expensive than what you would have saved over the insurance premiums over 30 years, especially what the premium prices were back in the early 2000s, late 90s.
• 28:19
  SPEAKER_01: It was dirt cheap back then.
• 28:20
  SPEAKER_01: Yeah.
• 28:21
  SPEAKER_01: Um, but yeah, no, definitely don't have it lapse.
• 28:23
  SPEAKER_01: You want to make sure you're fully covered.
• 28:25
  SPEAKER_01: Uh these people that are buying cash, yes, they don't need insurance because they don't have to supply it to the bank or anything or the loan uh for the loan, but I would highly recommend definitely getting insurance.
• 28:35
  SPEAKER_01: And like you said, it's definitely taking longer.
• 28:37
  SPEAKER_01: I mean, I used to be able to quote things out in five, ten minutes, it seemed like, and I'd be able to provide a quote same day.
• 28:42
  SPEAKER_01: Now I have to fill out a whole application, send it out to four or five different underwriters, make sure that they all have all the information they need, and then wait for them to get back to me with quotes or any additional questions.
• 28:51
  SPEAKER_01: And so that can take up to a week, just turnaround time.
• 28:54
  SPEAKER_01: On top of that, is they have other people that are submitting business to them too.
• 28:57
  SPEAKER_01: So they try to work in timeline order.
• 28:58
  SPEAKER_01: Like if you send something 60 days out, they'll work on stuff that's coming up in 30 days, just so that they because they know it's coming up earlier.
• 29:05
  SPEAKER_01: So timelines are just a little bit adjusted, and you gotta have to be prepared for that.
• 29:10
  SPEAKER_00: What are the most important things?
• 29:11
  SPEAKER_00: If you're if you're currently an apartment owner, you're you're listening to this, like what are some of the biggest takeaways like uh that that you could give an apartment owner?
• 29:19
  SPEAKER_00: And it could be any, like anything that they should know from from your position.
• 29:24
  SPEAKER_01: Um, I would definitely make sure you're getting a couple quotes.
• 29:27
  SPEAKER_01: Uh two to three quotes is usually a good indicator of how many like or what the marketplace is like.
• 29:31
  SPEAKER_01: If you're just letting your policy automatically renew, uh chances are that poly you there's probably something cheaper out there because you're not paying attention to it.
• 29:39
  SPEAKER_01: Uh, you don't really have to do any of the work, you just have to ask your insurance agent or me to uh ask, hey, quote this out with every market you got and uh at least give you the best quote.
• 29:48
  SPEAKER_01: Because I mean, if with our agency, obviously we're gonna present the best quote that we get off when it's given to us.
• 29:55
  SPEAKER_01: But if we have a few different quotes, and I mean there's some of them are more competitive than others, I mean there's no reason to present the uncompetitive ones, but you can always ask about those and just say, hey, have you gotten any other quotes and uh let them elaborate on that and say, Hey, yeah, we got this from this company, this premium for this price, and just making sure that your agent's doing their due diligence on their end.
• 30:14
  SPEAKER_01: Um and then, like I said, updates are a huge factor in this.
• 30:17
  SPEAKER_01: If you have done updates, let your insurance agent know.
• 30:20
  SPEAKER_01: That way they can at least go back to their underwriters and say, hey, they've done updates here, or submit to a new company that they didn't before because you didn't have updates.
• 30:27
  SPEAKER_01: Right.
• 30:27
  SPEAKER_01: So those are definitely two of the biggest things I would say to do.
• 30:30
  SPEAKER_00: Okay.
• 30:31
  SPEAKER_00: Zach, um, if someone wants to get a hold of you, what's what's the best way?
• 30:34
  SPEAKER_00: Should I go to the website?
• 30:35
  SPEAKER_00: Should they email you?
• 30:36
  SPEAKER_00: Should they call you?
• 30:37
  SPEAKER_00: And how do you want to be contacted?
• 30:39
  SPEAKER_01: Um, yeah, you can go to our website, uh, inminsurance.com, or you can uh reach me on my cell phone or my uh our office phone, our office line is on the um the website as well.
• 30:50
  SPEAKER_01: There's a quote request page on there as well.
• 30:52
  SPEAKER_01: You can just basically go on there, ask for uh quote information.
• 30:55
  SPEAKER_01: You'll submit your email, your phone number, what type of business you have, um, where you're located at, and it'll send me an email directly saying, Hey, new person reached out for some business or wants an insurance quote, um, and I'll get back to you usually within 24 hours.
• 31:09
  SPEAKER_00: That's awesome.
• 31:10
  SPEAKER_00: So uh for everyone listening, so Zach's been insuring in our building since since I met him.
• 31:15
  SPEAKER_00: Um, and my renewal that I last did with somebody else, Zach was able to beat it, and so we're gonna go with him.
• 31:22
  SPEAKER_00: Uh, he's pricing out our new office building.
• 31:24
  SPEAKER_00: He's done the laundry mats, and so uh he's someone where I'm not just having him on as a guest.
• 31:29
  SPEAKER_00: He he is my first contact when um we need an insurance quote.
• 31:33
  SPEAKER_00: He's the first person that I refer my clients to.
• 31:35
  SPEAKER_00: So if you're listening to this, make sure to reach out to Zach.
• 31:38
  SPEAKER_00: Uh Zach, thank you, your the family, your dad, everyone so much.
• 31:41
  SPEAKER_00: We appreciate working with you guys.
• 31:43
  SPEAKER_00: And uh we'll as things change in the insurance industry, as we know it will, we'll have you back for more updates.
• 31:48
  SPEAKER_00: Thank you so much.
• 31:49
  SPEAKER_01: Awesome.
• 31:49
  SPEAKER_01: Thank you, Juan.
• 31:50
  SPEAKER_01: I appreciate being here.