Latest / Own More Doors / #41 Wildfire Wake-Up: What Property Owners Must Know About Insurance Right Now (Cody Charnell & B2 Insurance)

Transcript

#41 Wildfire Wake-Up: What Property Owners Must Know About Insurance Right Now (Cody Charnell & B2 Insurance) · Own More Doors

0:00
SPEAKER_00: Hey everyone, I'm Cody Charnell.
0:01
SPEAKER_00: I'm a multifamily real estate broker here.
0:04
SPEAKER_00: And we're based in Long Beach.
0:05
SPEAKER_00: So if you've been watching the news recently, you've seen there's a ton of fires all over LA.
0:11
SPEAKER_00: It's pretty incredible what's going on.
0:14
SPEAKER_00: And I've been getting questions from clients.
0:16
SPEAKER_00: You know, now that there's fires in our backyard here, some of our clients have even been impacted.
0:22
SPEAKER_00: Um, insurance has been a hot topic.
0:24
SPEAKER_00: So today I'm joined by Chris Acasa and Keith Brewer from B2 Insurance.
0:29
SPEAKER_00: They're based in Redondo Beach.
0:31
SPEAKER_00: They have a ton of clients who've been impacted by these fires.
0:34
SPEAKER_00: And I know you guys have been super busy lately dealing with this.
0:38
SPEAKER_00: So thank you so much for coming in.
0:40
SPEAKER_00: Um, I'm sure you're gonna have a lot of valuable information for everybody.
0:44
SPEAKER_01: Thanks for having us.
0:45
SPEAKER_00: Absolutely.
0:46
SPEAKER_00: Thank you.
0:47
SPEAKER_00: Awesome.
0:47
SPEAKER_00: Um, can you tell us what's what's the workload been like?
0:51
SPEAKER_01: Um, you know, it's another phone call or 10 every morning, as far as not only people that have been impacted directly by the fires and the Palisades and Altadena and other areas, but the clients in the surrounding areas wondering hey, I'm buying a home.
1:12
SPEAKER_01: Am I gonna be affected by the moratorium?
1:14
SPEAKER_01: There's a moratorium in Los Angeles where a lot of carriers just aren't riding until the fires are completely out, which the weather's starting to turn now, and we're having a little help with that.
1:25
SPEAKER_01: But there's the fires are still the empers are still out there, so there's still a moratorium.
1:30
SPEAKER_02: Right.
1:30
SPEAKER_02: And even current clients call in, do I have proper coverage?
1:35
SPEAKER_02: So reviewing current policies, right?
1:38
SPEAKER_02: Coverage, extended replacement costs, you know, all this stuff.
1:42
SPEAKER_02: You know, am I insured properly?
1:44
SPEAKER_02: So we're getting a ton of that as well.
1:46
SPEAKER_02: People trying to relocate to different locations for renters' insurance policies, you know, as well that they need.
1:53
SPEAKER_02: Some companies aren't doing that right now, too.
1:55
SPEAKER_02: So it's just it's all over the place.
1:57
SPEAKER_02: Text, emails, calls, whatever.
2:00
SPEAKER_00: Got it.
2:01
SPEAKER_00: Okay.
2:02
SPEAKER_00: You touched on a lot of good stuff there.
2:04
SPEAKER_00: Um, let's start with just what advice are you guys giving people who have been directly impacted?
2:11
SPEAKER_00: Like if someone's lost a home or a business, like what are the the first steps that they should take?
2:17
SPEAKER_01: I would say I mean, hopefully you had some inventory of your property, you know, video or receipts, go collect your receipts, go through your bank statements and get a nice detail.
2:30
SPEAKER_01: If you could put on a spreadsheet of all your valuables, that would probably be the first thing.
2:36
SPEAKER_02: Yeah, and even you can video, you know, surrounding you know, a video of your property, and uh you know, you can send that via email, right?
2:47
SPEAKER_02: If you lose your phone or whatever, email that to yourself.
2:50
SPEAKER_02: Um you have that information, which is great, photos, all that stuff, you know, that's huge.
2:55
SPEAKER_02: And that's gonna help the claims adjuster in the event of a total loss as well to speed up that process.
3:01
SPEAKER_01: And then also, so you're not in the dark review your policy for what you're covered.
3:07
SPEAKER_01: If you're a homeowner or multifamily unit owner for that dwelling coverage amount, maybe you're only insured for$250 a square foot when you should be insured for$400 a square foot.
3:19
SPEAKER_01: Um, a lot of these carriers do offer extended replacement costs of 25% or an extra 50% on top of that.
3:26
SPEAKER_01: But the carriers want you to be insured to value.
3:30
SPEAKER_01: So, you know, some of these policies are 20 years old.
3:35
SPEAKER_01: So the clients and the agents should be talking with each other to make sure you're insured for the right amount to it's land value is not included.
3:44
SPEAKER_01: We're just talking about rebuilding the structure.
3:47
SPEAKER_01: If there's a fire loss, a water loss, what is that number to rebuild?
3:52
SPEAKER_01: And in insurance, we have replacement cost estimators, which are fine and dandy, but those numbers are coming out super low, they're not even close.
4:01
SPEAKER_02: Yeah, they're not always accurate at all.
4:03
SPEAKER_02: Not close.
4:04
SPEAKER_01: So it's up to us.
4:06
SPEAKER_01: We can give you a number, but it's up to you as a client.
4:10
SPEAKER_01: I mean, you know, if you have a property in Manhattan Beach, even an apartment building, you got to be insured for four to five hundred dollars a square foot.
4:20
SPEAKER_01: A house, you're looking at eight to nine hundred dollars a square foot or even more, twelve hundred square foot.
4:26
SPEAKER_01: Wow.
4:27
SPEAKER_01: So people should be reviewing their policies.
4:30
SPEAKER_01: That's what they're there for.
4:31
SPEAKER_01: That's why the client gets a declaration page that lists your coverage.
4:35
SPEAKER_01: It's not just like put it in the round bin and throw it away.
4:39
SPEAKER_01: You need to review your policy as a client as well.
4:42
SPEAKER_00: I see.
4:43
SPEAKER_00: So the replacement cost estimators they come into play when you're getting the policy initially, right?
4:49
SPEAKER_00: So okay.
4:50
SPEAKER_00: Correct.
4:51
SPEAKER_00: So people just need to be really aware of what that number, that rebuild cost number is when they're either renewing or starting a new policy.
4:59
SPEAKER_00: Yes, and it's really basic.
5:00
SPEAKER_02: It's square footage, number of bathrooms, type of flooring, um, you know, type of roof that you have.
5:06
SPEAKER_02: You have an attached garage, detached garage, you know, etc.
5:10
SPEAKER_02: So it's pretty basic and it's always typically low.
5:14
SPEAKER_02: We always will offer coverage a bit higher than what it comes out to be.
5:18
SPEAKER_02: But um, yeah, it's always just reviewing that with the client, giving them more coverage if needed, obviously, and making sure that they're insured properly.
5:27
SPEAKER_01: The more coverage comes with a higher price.
5:30
SPEAKER_02: And clients don't like to pay that as well.
5:32
SPEAKER_02: So you can offer them, you know, here's a Ferrari, and here is a you know, Honda Civic.
5:40
SPEAKER_02: They'll try to find something, you know, in the in the medium, you know, and they don't want this and they don't want that.
5:45
SPEAKER_02: And some people just want the cheapest thing possible.
5:47
SPEAKER_02: But as long as you educate them and you send them multiple options, then it's their decision at the end of the day to make, you know.
5:54
SPEAKER_00: Got it, got it.
5:55
SPEAKER_00: Okay.
5:56
SPEAKER_00: Um, I wanted to go back to what you guys were saying about taking inventory.
6:01
SPEAKER_00: So when you're taking inventory of a property that's let's say you're getting evacuated, um, are do you do you also want to take inventory of improvements that you've made to the actual structure?
6:13
SPEAKER_00: So, okay, so it's not just personal belongings.
6:15
SPEAKER_00: Absolutely.
6:16
SPEAKER_02: Invoices from a contractor, you know, if you have that, you know, on file, typically the contractor can still give you that, you know, afterwards, but still anything that you can provide to show that you, you know, made improvements or whatever it may be added on square footage or whatever, and that's something that people should notify us as well to increase coverage.
6:35
SPEAKER_02: But a lot of times people don't.
6:38
SPEAKER_00: Yeah, yeah.
6:38
SPEAKER_00: I feel like insurance, you get it when you close on a building and then you forget about it.
6:42
SPEAKER_00: Yeah, you pay it every year and you set it and you forget it.
6:45
SPEAKER_00: Right, right.
6:45
SPEAKER_00: Okay.
6:46
SPEAKER_00: So yeah, I think big, big losses like this, big natural disasters really get people thinking about it.
6:53
SPEAKER_00: So if you haven't looked at your insurance policy in a while, make sure to reach out to your insurance broker.
6:58
SPEAKER_00: Um, if you don't have an insurance broker, these are your guys right here.
7:01
SPEAKER_00: So make sure you're paying attention to what's going on there because stuff like this can happen.
7:06
SPEAKER_01: Yeah, and in the insurance companies do have hearts right now.
7:12
SPEAKER_01: Like one of Chris's clients was one of the properties that got burned in the Pacific Palisades, and they got a check within seven days.
7:23
SPEAKER_02: Wow.
7:24
SPEAKER_02: Yeah.
7:25
SPEAKER_02: 160k check.
7:26
SPEAKER_02: Um, I just got it yesterday.
7:28
SPEAKER_02: I spoke to the client, and they're just trying to find a new property right now to live in, you know.
7:34
SPEAKER_02: But that time frame to get that money was pretty good, in my opinion.
7:38
SPEAKER_02: It's not a month, two months, whatever.
7:40
SPEAKER_02: It was a couple days, which is good.
7:42
SPEAKER_02: And the client seemed happy and everything's moving along smoothly, you know, which is what you want to hear, you know.
7:48
SPEAKER_00: Got it, got it.
7:49
SPEAKER_00: Um, one question that I got from a client recently was they heard something in the news where a lot of people up in the Palisades didn't have a fire, fire insurance policy.
7:59
SPEAKER_00: And my clients were like, wait a minute, we never got a fire insurance policy.
8:02
SPEAKER_00: And I think for a lot of people it's wrapped in with the home insurance, right?
8:06
SPEAKER_00: That is correct.
8:06
SPEAKER_00: Home insurance is fire insurance.
8:09
SPEAKER_00: It's correct.
8:10
SPEAKER_00: Got it.
8:10
SPEAKER_00: Okay.
8:11
SPEAKER_00: And if you live in an area that's like high fire risk, like the Palisades, um, do some carriers exclude fire?
8:17
SPEAKER_00: And then are people forced to go with the California Fair Plan?
8:21
SPEAKER_02: Some people will be forced to go with the California Fair Plan, but that's basic fire insurance.
8:26
SPEAKER_02: Um, also covers for vandalism as well.
8:29
SPEAKER_02: Um, it but the limitations on it is total insurable value is three million bucks.
8:34
SPEAKER_02: And so you get another supplemental policy.
8:37
SPEAKER_02: It's called a difference in conditions policy, which covers you for water damage and liability, medical payments, etc.
8:44
SPEAKER_02: So both of those policies combined will equal to one homeowner's insurance policy.
8:49
SPEAKER_02: But all those properties up there, five million, six million, ten million, fifteen million, you're underinsured if you're going up the California Fair Plan.
8:58
SPEAKER_02: It's not good coverage.
8:59
SPEAKER_02: Um, you know, but some people don't want to pay for a real policy up there.
9:04
SPEAKER_02: You know, I had a client who has a 5,000 square foot property, high-end materials, and getting non-renewed by a specific company.
9:13
SPEAKER_02: We got them quotes and, you know, they were paying for a policy that was probably 12 grand a year for$5 million worth of coverage, which is nothing if you look at it, just for replacement cost of the property.
9:26
SPEAKER_02: And we got them quotes, you know, with another company, and it's$45K.
9:30
SPEAKER_00: Wow.
9:31
SPEAKER_02: Much more expensive, right?
9:33
SPEAKER_02: But in a brush area, which is near that location, and that client declined to go with that policy because it's so expensive.
9:41
SPEAKER_02: So they took the risk of going with the California Fair Plan, but their property burns down, they're paying, you know, two, three, four million out of pocket for their personal property coverage, along with the building itself, just because they didn't want to pay for that, you know, and it's so expensive too.
9:57
SPEAKER_02: But I mean, realistically, none of those standard companies want to take on that risk.
10:02
SPEAKER_00: Wow.
10:03
SPEAKER_00: Okay.
10:03
SPEAKER_00: And is can you explain a little bit about what the California Fair Plan is, just so people know what it is if they're not familiar?
10:12
SPEAKER_01: Yeah, so it's it's a government-run agency that if you can't get insurance on the open market, typically you go to the California Fair Plan.
10:20
SPEAKER_01: If you're in a brush area, Malibu, you know, some other Agora Hills places in Laguna.
10:28
SPEAKER_02: Big bear, mammoth, I mean any high-risk area.
10:32
SPEAKER_02: Yeah.
10:32
SPEAKER_01: So so you go there, and and so now they're inundated, and they don't have the support staff to typically service all these policies that they've had.
10:44
SPEAKER_01: Um, and a lot of this is due to COVID.
10:48
SPEAKER_01: Um, insurance carriers were put on hold for as far as being able to raise their rates during COVID.
10:56
SPEAKER_01: Everyone's at home, no one's everyone's working at home.
10:59
SPEAKER_01: But when people went back to work, and so it's all a trickle-down effect.
11:04
SPEAKER_01: Your home, your auto insurance, if there's a lot of losses on homes, the insurance carriers have to make it back with auto insurance or somewhere else.
11:13
SPEAKER_01: If you're not able to raise rates either on the home or the auto insurance, then you're gonna lose money.
11:19
SPEAKER_01: And insurance companies typically before COVID made money.
11:23
SPEAKER_00: Right.
11:24
SPEAKER_01: And now, I mean, you know, a lot of people say, Oh, poor me, the insurance companies always make money.
11:29
SPEAKER_01: They don't always make money, they've been losing money since COVID.
11:33
SPEAKER_01: And now you put on natural disasters.
11:35
SPEAKER_01: We've had the fire back in 2022 was a big fire as well in Los Angeles area, Agora Hills, that area that you know, this a few carriers were heavily insured in the a few carriers insured all the homes in those areas, and now they're they they and so we were going through a term last year where we're getting a lot of non-renewals from carriers.
12:03
SPEAKER_01: And because they were losing money and they didn't want to be in the high uh fire areas, Pacific Palisades and you know, Malibu and those types of areas.
12:15
SPEAKER_01: Well, so they put out those non-renewals, and then now we just had this fire.
12:19
SPEAKER_01: Well, they were only able to get off on 25% of those properties.
12:23
SPEAKER_01: So they're still on, so I, you know, now they're stuck on those properties that we I mean, we just lost Palisades.
12:31
SPEAKER_01: So they were on 50% of those properties.
12:34
SPEAKER_01: And I mean, that loss ratio is gonna be massive, and I don't as far as the future rates are never gonna go down now.
12:44
SPEAKER_01: I mean, we've already seen 25% rate increases, 50% rate increases, and after this, they're they're only gonna go higher.
12:53
SPEAKER_01: And I mean, and it's not only California, it's Florida, Texas that's had you know crazy rains and hurricanes.
13:04
SPEAKER_01: Um, but everyone across the country is gonna be affected by California and Florida and rates going up because if State Farm says, hey, we need to raise rates 50%, or else we're not gonna come back to California and even insure, and all the other carriers have to raise rates as well, and they all follow suit to be profitable.
13:24
SPEAKER_01: They have to be profitable, or else they can't just do business in in California.
13:27
SPEAKER_01: Yeah.
13:28
SPEAKER_01: So we're seeing an interesting thing right now, especially with these last fires.
13:32
SPEAKER_01: And uh my heart goes out to everyone that had any kind of loss, property loss.
13:38
SPEAKER_01: Um, it's just a tough situation right now, and we'll see what happens in the future, but guaranteed rates are not going back down as they as they were in the past.
13:47
SPEAKER_01: Gotcha.
13:48
SPEAKER_00: Yeah.
13:49
SPEAKER_00: Um, on the topic of rates going up, um, someone else I was talking to mentioned the reinsurance market, and that's one way that you know these big losses get spread out across the country.
14:01
SPEAKER_00: Can you talk a little bit about just what reinsurance is for people who don't know?
14:06
SPEAKER_01: Yeah, so any carrier in California or any carrier in the in the world, there's always reinsurance.
14:15
SPEAKER_01: And for you to even be able to operate, you have to have a reinsurance carrier out there.
14:23
SPEAKER_01: Um, now with these losses, I would assume that the the reinsurance carriers are tightening up as well.
14:32
SPEAKER_01: So not only do you have the the regular carriers that are having to tighten up their guidelines, and that's another thing, that's another topic.
14:40
SPEAKER_01: Like all these carriers now are tightening their guidelines.
14:44
SPEAKER_01: They don't want to take anything built prior to 1970, and they want all updates.
14:50
SPEAKER_01: So we're gonna see.
14:51
SPEAKER_01: I I mean, I'm just going off on a tangent right now, but there's four major things that have to be updated that carriers want, or even the California fair plan.
15:00
SPEAKER_01: Your roof has to be updated in the last 30 years, plumbing has to be updated, electrical panels is the biggest thing right now.
15:07
SPEAKER_01: If you have Federal Pacific Stab Lock Zinsco or Challenger panels, they have to be replaced.
15:13
SPEAKER_01: And people are used to just like, you know, as multifamily apartment uh owners, oh yeah, like like used to just the norm.
15:21
SPEAKER_01: I don't want to update these things.
15:23
SPEAKER_01: Well, now it's been 30 years, you have to update these things, or you can't get insurance.
15:27
SPEAKER_01: And that's just gonna be how it is.
15:29
SPEAKER_01: But yes, so going back to reinsurance, yes, every insurance company, State Farm, Mercury, Travelers, they're all have a reinsurance carrier for big losses that get spread around, and you can't do business unless you have a reinsurer that can help you cover those massive losses.
15:47
SPEAKER_00: Got it.
15:48
SPEAKER_00: So the reinsurers are basically buying some of the risk on these policies.
15:52
SPEAKER_00: And when there is a big loss, like they're getting hit too.
15:56
SPEAKER_00: Yes.
15:56
SPEAKER_00: Gotcha, gotcha.
15:57
SPEAKER_00: Yeah, and just to echo what you were saying, insurance has been so tough for multifamily recently.
16:03
SPEAKER_00: Um, it seems like every deal we're having to negotiate main panel replacements, subpanel replacements.
16:10
SPEAKER_00: I have one deal right now where the entire building is knob and tube wiring.
16:15
SPEAKER_00: And so we're trying to work with the insurance company to get more time after closing to replace it, basically.
16:22
SPEAKER_00: But I mean, that's a$160,000 upgrade between wiring all the subpanels, replacing the main panels, and there's tenants in this building, they want it done in 60 days.
16:31
SPEAKER_00: So it's like, oh, it's just it's pretty brutal.
16:34
SPEAKER_00: Yeah.
16:35
SPEAKER_00: And um, just to give listeners some perspective on cost for insurance, a couple of years ago, I was doing like six hundred dollars per unit per year as just an estimate for what an insurance policy might cost on a multifamily building.
16:50
SPEAKER_00: Now I'm doing a thousand twelve hundred.
16:53
SPEAKER_00: So it's it has basically doubled.
16:55
SPEAKER_02: And um, sometimes it's even more than those estimates, just depending on you know how old the building is and yeah, depending on the age of the building and the updates, location, all that stuff, x factors into it.
17:07
SPEAKER_02: Um, it's just it's a tough market.
17:10
SPEAKER_01: But we're we're for multifamily, we're in a new world now.
17:14
SPEAKER_01: If you are not updating your building, you're not willing to update your you're not gonna have insurance, has to be updated.
17:22
SPEAKER_01: Electrical panel plumbing, galvanized plumbing, very few carriers are taking galvanized plumbing.
17:28
SPEAKER_01: You have to have copper or a copper equivalent these days.
17:33
SPEAKER_01: Electrical panels have to be.
17:34
SPEAKER_01: I mean, that's that's not cheap, right?
17:37
SPEAKER_01: Um, but you know, they've they've gone 30 years without updating, they should have put some money away, and now they have to update.
17:46
SPEAKER_01: That's that's how it's gonna have to be.
17:48
SPEAKER_02: Yeah, and the the carriers want you to see, you know, pride of ownership in the property.
17:53
SPEAKER_02: They don't want to insure a property that's gonna fall down or have potential claims, and there's a lot of these non-renewals going out for these properties because they're not in good condition, right?
18:03
SPEAKER_02: And something is gonna happen and there aren't any updates to the property.
18:08
SPEAKER_02: So there's reasoning behind why they're getting non-renewed as well, and that clients will get ample amount of time to find coverage, you know, elsewhere.
18:18
SPEAKER_02: That makes it for high-value properties or even older buildings around here, whatever it may be.
18:22
SPEAKER_02: So clients are getting a good, you know, five, six months, you know, or so to find coverage elsewhere or to make those upgrades within that time as well.
18:32
SPEAKER_01: Also, all the carriers are now using AI technology and polling permits.
18:39
SPEAKER_01: They're using Google images.
18:41
SPEAKER_01: And so if Google went and took an image of your roof two years ago and there's a big water spot on your roof, you may have updated it.
18:50
SPEAKER_01: But if the Google image or the report that the insurance, you'll automatically get a block bind, which is a big red flag, that don't go further unless you could give us a receipt within the last two years that you've updated your roof.
19:04
SPEAKER_01: And so this is happening now that all the carriers are using AI and Google to pull permits and and and images.
19:14
SPEAKER_01: And so it just goes in their system, and we all we do is type in the address and the location and the name, and then we go like a few more steps, all of a sudden it's either a green light or a red light.
19:27
SPEAKER_01: And if you haven't done these updates, you're getting the red light and we can't move forward.
19:31
SPEAKER_00: Oh man, busted by AI.
19:33
SPEAKER_00: Yeah.
19:35
SPEAKER_00: Um, okay.
19:36
SPEAKER_00: Well, yeah, insurance is tough.
19:38
SPEAKER_00: Um, luckily, you guys have been able to help us navigate it with I think you've done dozens of policies for our clients now.
19:45
SPEAKER_00: So if you are struggling to get insurance, definitely again reach out to these guys.
19:51
SPEAKER_00: Um, one other thing I wanted to ask.
19:53
SPEAKER_00: Actually, there's a client who asked me this.
19:56
SPEAKER_00: Um, you know, for people who have been displaced by the fires, how does the temporary housing work?
20:03
SPEAKER_00: Like, is there a standard length of time that someone is entitled to get compensation from an insurance company to go rent a place?
20:12
SPEAKER_00: Um and what other parameters get worked in there?
20:16
SPEAKER_00: Like, does it have to be a certain distance from the property that they lost?
20:20
SPEAKER_00: Um, similar bedroom bathroom count, like what goes into that?
20:25
SPEAKER_01: It's usually like for like.
20:27
SPEAKER_01: So if it's a apartment building and the and well, bar building owners get loss of use, so their tenants should have every tenant multifamily, the tenants should have their own renter's policy, and every property uh owner, landlord should make sure their tenants have their own policy for loss of use to go move somewhere else.
20:53
SPEAKER_01: Um but yes, so I mean, but if you're a homeowner, it's like for like.
20:59
SPEAKER_01: So if you have a 5,000 square foot house, you're gonna go be able to move into a 5,000 square foot house.
21:05
SPEAKER_01: I had a client that was four blocks up from the ocean, and the only thing in their area, because they had to find something in their area, was right on the strand.
21:16
SPEAKER_01: So the insurance company paid$20,000 a month to let them live on the strand in a similar square footage house.
21:23
SPEAKER_02: Wow.
21:24
SPEAKER_02: So yeah.
21:25
SPEAKER_02: And there's usually a limitation for most companies, and it's 50%, you know, of whatever that coverage A, which is the dwelling limit, right?
21:34
SPEAKER_02: 50%, sometimes 30%, depends on the carrier and the coverage.
21:37
SPEAKER_02: So you have a million replacement cost to rebuild a property at a million bucks, you're gonna get 500k, you know, for that year to live at a different location.
21:46
SPEAKER_02: Um, and they can pay for that basically while you're while your property's being rebuilt or repaired or whatever it is.
21:52
SPEAKER_02: Um, and then if it extends, then they'll need to extend it and you'll get you know additional money that following year, whatever, to live at that.
22:00
SPEAKER_02: Location while your property is being rebuilt or repaired.
22:02
SPEAKER_01: But you usually the business income is about 12 months.
22:06
SPEAKER_01: So everyone should review their policies, especially on multi-family unit buildings.
22:12
SPEAKER_01: You could extend that limit of loss of use to 360 days.
22:19
SPEAKER_01: So people should be reviewing their policies to see if they only have coverage for 12 months.
22:24
SPEAKER_01: I mean, if there's a fire, palisades, I mean, there's chemicals they have to clean.
22:28
SPEAKER_01: No one can even get up there.
22:30
SPEAKER_01: No contractors can get up.
22:31
SPEAKER_01: This is going to be three years to re four years to rebuild the palisades.
22:36
SPEAKER_01: So these people that were living up there are going to have to rent.
22:40
SPEAKER_01: I mean, a lot of them are coming to the South.
22:42
SPEAKER_01: I mean, maybe you've seen some people down in Long Beach that are coming trying to get rentals.
22:46
SPEAKER_00: Yeah, um, most of the properties that that we deal with are not like for like for a Palisades house.
22:53
SPEAKER_00: So I I haven't run into anybody yet, but I'm sure some other brokers in Long Beach are who deal with like luxury houses and single family homes are dealing with that right now.
23:02
SPEAKER_02: Yeah, I mean I I've had a client purchase a property, rush, close, closed it, got a policy, palisades five days before the fire, complete complete loss.
23:14
SPEAKER_00: Oh my gosh.
23:15
SPEAKER_02: Yeah, it was crazy.
23:17
SPEAKER_00: Wow.
23:18
SPEAKER_00: And and so for someone like that, are they still on the hook for their monthly mortgage payment taxes?
23:24
SPEAKER_02: Absolutely.
23:24
SPEAKER_02: Yeah, you made an agreement with the bank, you owe that loan, you're paying that.
23:29
SPEAKER_02: The insurance company's only responsible to pay for you to live at a different location, so you're gonna be paying that mortgage for sure.
23:35
SPEAKER_02: There's no way around that.
23:36
SPEAKER_02: Yeah.
23:37
SPEAKER_00: Wow, that's rough.
23:39
SPEAKER_00: Um, and you mentioned one of your clients got paid out in seven days.
23:44
SPEAKER_00: Um, I'm assuming that was only a portion of what their total payout is gonna be.
23:48
SPEAKER_02: So for him, that was a specific, they got a third of their personal property coverage, which is TVs, couches, chairs, furniture, clothing.
23:57
SPEAKER_02: And that was 160K.
24:00
SPEAKER_02: Um, so they got a third of that up front, right?
24:04
SPEAKER_02: And then whatever else they need, you know, as far as when they're fine, they find a property that they like and they're gonna rent, then they can issue that information to the claims adjuster, and they can get reimbursed for um, you know, whatever that monthly payment is to live at that location as well.
24:22
SPEAKER_00: Gotcha.
24:22
SPEAKER_00: Okay.
24:23
SPEAKER_00: And then I guess they'll work through the process with their adjuster and whatever it's determined their their property was worth when it was burned down.
24:32
SPEAKER_00: The the additional payments come later.
24:35
SPEAKER_00: And do you know roughly how long it might take to get those?
24:39
SPEAKER_02: I mean, they gotta contractors get all that stuff out there.
24:43
SPEAKER_02: You know, it's gonna be a long process, I would imagine.
24:46
SPEAKER_02: I mean, I think first and foremost is what they did for them personal property coverage because all their stuff was in the property that burned down.
24:54
SPEAKER_02: Next will come the loss of use coverage, you know, for the rental and then construction cost, all that stuff.
25:00
SPEAKER_02: I mean, I don't I don't even know how long that's gonna take, obviously.
25:03
SPEAKER_00: Got it.
25:03
SPEAKER_00: So they're actually having to get like plans, building bids, and everything before they can get that payout.
25:09
SPEAKER_00: Absolutely.
25:10
SPEAKER_00: Okay, so if somebody didn't want to rebuild and they just wanted to sell a lot and walk away, didn't want to be in a fire zone anymore.
25:17
SPEAKER_00: Is that an option for people?
25:20
SPEAKER_01: So I was speaking to a lawyer that specific specifically deals with insurance claims.
25:27
SPEAKER_01: And we were kind of going back and forth, but insurance is to rebuild your structure.
25:37
SPEAKER_01: So you can't rebuild in the Palisades.
25:40
SPEAKER_01: Can you rebuild in another area?
25:42
SPEAKER_01: Yes, but the the insurance money is uh specifically used, supposed to be used to rebuild, and you can't you're not supposed to be able to just get paid out and do what you want with that money.
25:54
SPEAKER_01: It's supposed to be rebuild a structure.
25:56
SPEAKER_01: And if it's if you can't, because it's a Pacific Palisades, and this is a natural disaster.
26:01
SPEAKER_01: So the insurance carriers know this.
26:04
SPEAKER_01: Um, and so the same limitations you would have if there was no natural disaster if it was just your home that caught on fire, don't quite apply now.
26:15
SPEAKER_01: There's different rules, and insurance carriers are being more lenient because it was a natural disaster.
26:22
SPEAKER_01: So um, but yeah, I mean, really, it is to replace your property.
26:28
SPEAKER_01: You're supposed to use the money to rebuild, and that's you know, that's that's what the money's supposed to be for.
26:35
SPEAKER_00: Got it.
26:36
SPEAKER_00: Okay, so gonna be probably a few years before people see like the full extent of their payouts, like once all the permits are pulled and plans and everything else is done.
26:48
SPEAKER_02: Yeah, it's a long process, especially uh within that area, obviously.
26:53
SPEAKER_01: And the palisades, so there's uh what is it?
26:57
SPEAKER_01: Uh on the coast, ocean.
26:59
SPEAKER_01: Um uh I guess, anyways, these guys are lightning, like you know, the people that issue permits, the cities for the palisades, they're all foregoing OSHA and uh and all these other regulations.
27:15
SPEAKER_01: Oh, right, the Coastal Commission.
27:16
SPEAKER_01: Coastal Commission.
27:17
SPEAKER_00: Yeah, yeah, yeah.
27:18
SPEAKER_00: Yeah, I heard I guess maybe it was the governor who put a a stop on that, so you can basically bypass Coastal Commission to speed things up.
27:27
SPEAKER_00: So some good news.
27:29
SPEAKER_00: Um and one other question I had was about adjusters.
27:34
SPEAKER_00: So I heard somebody talking about hiring a a private insurance adjuster.
27:39
SPEAKER_00: Um, you know, why would somebody do that?
27:42
SPEAKER_00: And what is there any benefit to doing that?
27:44
SPEAKER_01: Yeah, we were gonna have this conversation early, earlier, uh private or public adjuster.
27:52
SPEAKER_01: And I would I would I would go against that because it could delay the claim.
27:59
SPEAKER_01: Um, you should want to work with the adjuster from the carrier.
28:03
SPEAKER_01: And yeah, you know, then insurance companies are trying to minimize their losses, and but you want the most for your property that you lost as well.
28:14
SPEAKER_01: Um, instead of going with a public adjuster or private adjuster, either one, um, I would say go with a lawyer that specializes in property claims um to help you navigate your your coverage and your policy and help you with the the claims adjuster.
28:35
SPEAKER_01: But I I think in this circumstance, I think the carriers are going to want to help any client out in a natural disaster like this as much as they can.
28:50
SPEAKER_01: And you know, one carrier is Mercury, they're born and raised in California, they want to stay in California.
28:56
SPEAKER_01: All these other carriers left California.
28:58
SPEAKER_01: Mercury's still here.
28:59
SPEAKER_01: That's one of our bigger writers that we write with.
29:03
SPEAKER_01: And you know, they're they're offering renters' policies to people that had lost their homes and they want to help out.
29:11
SPEAKER_01: And so, you know, more other people are saying, well, you just had a loss, you can't get a renters policy.
29:16
SPEAKER_01: Mercury's saying yes.
29:17
SPEAKER_01: Um, so yeah, natural disaster like this is a little different.
29:22
SPEAKER_01: And uh, but I would I would probably, if you were uh a homeowner or multi-unit um tenant owner, I I would stay away from the public adjusters.
29:35
SPEAKER_01: Um it they're gonna probably delay your claim.
29:40
SPEAKER_01: They're gonna fight for the top dollar.
29:42
SPEAKER_01: Yeah, that's nice, but I think you could do better off if you just negotiated with your adjuster from the insurance carrier, and you could be better off, way better off than hiring one of these people.
29:56
SPEAKER_01: Gotcha.
29:57
SPEAKER_00: Okay, so there could be some benefit by going with a lawyer who specializes in insurance claims, but the cost is higher.
30:06
SPEAKER_00: The time to complete, you know, those negotiations is stretched out significantly, it sounds like.
30:12
SPEAKER_00: So I guess for people listening who might be considering that, just those are the things that it should be weighing, right?
30:17
SPEAKER_00: Yes, definitely.
30:19
SPEAKER_00: Um, okay.
30:20
SPEAKER_00: And you know, this has been one of several big natural disasters in the US over the last few years.
30:28
SPEAKER_00: If you guys were to look back at like, you know, Hurricane Helene, which was last year, even even bigger losses for insurance carriers.
30:36
SPEAKER_00: Um, did you see or or what did you see as a result of something like that?
30:40
SPEAKER_00: And what can we expect, you know, with um what can we expect to see in California with some of these insurance carriers?
30:49
SPEAKER_00: Like, I know a lot of people were forced to go with excess and surplus lines.
30:53
SPEAKER_00: Um, some of those, actually, I think maybe all of those carriers are not admitted, right?
30:58
SPEAKER_00: So maybe are we gonna see like bankruptcies of some insurance companies?
31:03
SPEAKER_00: I think we'll probably see ballooning costs to rebuild.
31:06
SPEAKER_00: Um, do you think we'll see government intervention?
31:08
SPEAKER_00: Like, what what are the things you're looking out for?
31:10
SPEAKER_01: Yeah, so I mean the premiums, unfortunately, if you're in Malibu or Laguna and but specifically Palisades, premiums are gonna be triple.
31:21
SPEAKER_01: I mean, when you were paying$10,000,$12,000 with a certain carrier, now you're looking at$60,000 to$100,000 in premium.
31:30
SPEAKER_01: Can some of these people afford it?
31:33
SPEAKER_01: Probably with the bigger homes, but the people with the smaller homes may not be able to afford that.
31:38
SPEAKER_01: And we'll have to see if the government's going to come in and say, hey, we're gonna fund the insurance companies so that they don't have to raise their rates, but it's a business.
31:52
SPEAKER_01: Insurance companies are a business, they have to be profitable.
31:56
SPEAKER_01: And if the only way to be profitable is to raise their rates, then that's gonna be but going back to surplus lines, you mentioned that earlier.
32:04
SPEAKER_01: And so there's there's two types of carriers there's admitted carriers and non-admitted carriers, and admitted carriers are backed by the state of California, that's your state farms, travelers, Mercury, Allstate.
32:18
SPEAKER_01: So if they go insolvent and they can't pay your claim, then the state will pick that up.
32:26
SPEAKER_01: But that being said, we as brokers will know way before if that's going to happen.
32:33
SPEAKER_01: If a carrier is going for it, so it's highly scrutinized to be A-rated carrier with AM best.
32:39
SPEAKER_01: Your financials have to be very good, like billions of dollars in financials.
32:46
SPEAKER_01: But if you so happen to be you lost so much in claims that you're now a B-rated carrier, we don't work with B-rated carriers.
32:56
SPEAKER_01: So we automatically switch you to an A-rated carrier if you're a B-rated carrier.
33:01
SPEAKER_01: But that might have to be with a surplus lines carrier, not an admitted carrier.
33:06
SPEAKER_01: But it's not that bad of a thing to go with surplus lines, Lloyd's of London, the biggest carrier in the in the world, Scottsdale, Lexington, these are all non-admitted carriers.
33:19
SPEAKER_01: But hey, their financial rating, they have so much money behind them, they're re-insured, that they have an A rating.
33:26
SPEAKER_01: That's really as a client, all you really should care about, non-admitted or admitted, is are they A-rated?
33:34
SPEAKER_01: Right.
33:35
SPEAKER_01: Okay.
33:35
SPEAKER_02: And Scottsdale is backed by nationwide, another company that we write a lot of policies with, Westchester Surplus.
33:41
SPEAKER_02: They're backed by Chubb, which is one of the top premier companies, you know.
33:45
SPEAKER_02: So as he said, if a company drops to B plus rating, we don't work with them.
33:50
SPEAKER_02: We'll switch our client to a different carrier.
33:52
SPEAKER_02: So you're always going to get an A-rated company, you know, working with us.
33:57
SPEAKER_00: Got it.
33:58
SPEAKER_00: Okay, cool.
33:59
SPEAKER_00: Um, something else that came up uh with a couple of escros that we have going right now is there's a moratorium on writing new policies, and I think it's just within a certain radius of actifiers, right?
34:13
SPEAKER_02: Depending on the carrier, yeah.
34:15
SPEAKER_02: Some carriers say 20 mile radius, some are saying 30 mile radius, depending on the the carrier.
34:22
SPEAKER_02: Um, it's really difficult to find any coverage right now for anything within that radius, you know, um, for any clients right now.
34:33
SPEAKER_02: It's nearly impossible.
34:35
SPEAKER_02: I found I found a homeowner's deal, I think, yesterday for a client.
34:39
SPEAKER_02: Brand new build 2018.
34:41
SPEAKER_02: I got one company with them, and about 10 other companies have a moratorium from writing any new policies.
34:46
SPEAKER_02: And it's not directly near Brush, it's probably about 20 miles from you know the fires.
34:52
SPEAKER_02: One company was basically taking that risk as of right now.
34:56
SPEAKER_02: So it's it's tough.
34:58
SPEAKER_01: It's tough.
34:59
SPEAKER_01: And I right this moratorium, they only last well.
35:04
SPEAKER_01: I mean, this is being longer, but I I would suspect that this will be maybe two weeks max, and we can start writing again.
35:13
SPEAKER_02: Yeah, some okay.
35:14
SPEAKER_02: Someone reached, I reached up to someone this morning and they said maybe the end of next week for a couple companies, and then one company was saying not until the fires are 100% contained.
35:24
SPEAKER_02: So it just depends.
35:25
SPEAKER_02: And it's gonna fluctuate, obviously, with every single company and the underwriting team and how they're looking at their current losses and everything like that.
35:33
SPEAKER_02: So we'll we'll see.
35:34
SPEAKER_00: Yeah.
35:35
SPEAKER_00: And is that um is that moratorium just for new policies, or if somebody has a renewal coming up, do they need to worry that they're gonna get dropped?
35:44
SPEAKER_02: Renew they're gonna be able to renew the policy.
35:46
SPEAKER_02: If you have a current policy in place, they they're gonna renew it.
35:49
SPEAKER_02: They have to by law do that.
35:52
SPEAKER_02: And uh, you know, it's just a new business deal.
35:55
SPEAKER_02: If it's a new property purchase, you know, or if someone's getting dropped maybe by a different carrier trying to find new coverage, um, they basically just have that hold on writing new policies right now.
36:05
SPEAKER_01: But some carriers had issued non-renewals a year ago, and those non-renewals are not valid only in the fire areas of Palisades Altadina.
36:20
SPEAKER_01: If you got a non-renewal and you're in Manhattan Beach or you're in Long Beach, that non-renewal still stands, and you'll that policy, so you can't bank on that.
36:31
SPEAKER_01: You have to find another policy if you did receive a non-renewal outside of fire area.
36:35
SPEAKER_00: Okay, so just fire areas.
36:37
SPEAKER_00: Yeah, gotcha.
36:39
SPEAKER_00: Um, all right, cool.
36:40
SPEAKER_00: Did you guys um have any closing thoughts, things that you just want to throw out there for people listening who you know might might be worried about insurance, might be in a fire area, um, might have been impacted by fires?
36:54
SPEAKER_00: I do.
36:55
SPEAKER_01: I I I mean, one of the biggest problems finding coverage for Chris and I at B2 Insurance are updates.
37:05
SPEAKER_01: So if you're planning on selling your property or purchasing a property, the updates have to be made.
37:14
SPEAKER_01: The roof has to be updated in 30 years, the plumbing has to be updated in the last 30 years, and if you have permits, even better.
37:21
SPEAKER_01: But and the number one thing right now is electrical panels, you know, Zensco, Challenger, fellow Pacific uh stablock, multifamily or single-family uh dwellings, these electrical panels have to be updated.
37:34
SPEAKER_01: We've written numerous policies where the client said, Yeah, it's it's been updated and they haven't been updated.
37:41
SPEAKER_01: We do it so the inspection doesn't come first, the inspection comes after we write a policy.
37:47
SPEAKER_01: So all good and dandy, you know, client tells us, yeah, everything's been upgraded, and then the inspection comes and oops, you have Federal Pacific stat block panels.
37:55
SPEAKER_01: Now we're canceling you.
37:56
SPEAKER_01: So that is the biggest thing right now.
37:58
SPEAKER_01: If you're a new buyer to make sure that property's been updated, or if you're trying to sell your property, you might as well update everything and maybe put a higher fee on your on your sale to make sure that these things are updated.
38:12
SPEAKER_01: Carriers just aren't going to take properties anymore that haven't been updated.
38:17
SPEAKER_01: So that's my number one thing.
38:18
SPEAKER_00: Absolutely.
38:19
SPEAKER_00: Got it, good to know.
38:21
SPEAKER_00: All right.
38:21
SPEAKER_00: Well, thank you guys again so much for coming in.
38:24
SPEAKER_00: I think this has been great information and had a great time to be delivering it.
38:29
SPEAKER_00: So um, if you got any value out of this podcast or video, be sure to like and subscribe.
38:35
SPEAKER_00: I'm Cody Charnell, I'm a multifamily real estate broker.
38:37
SPEAKER_00: If you're buying or selling real estate here in Long Beach or surrounding areas, I'd love to work with you.
38:42
SPEAKER_00: And then Chris and Keith, um, like I mentioned before, they're with B2 Insurance.
38:46
SPEAKER_00: They've done a ton of policies for our clients, they know their stuff.
38:49
SPEAKER_00: So be sure to reach out.
38:51
SPEAKER_00: And you guys, thank you so much.
38:52
SPEAKER_02: Thank you for having us.
38:53
SPEAKER_02: I appreciate it.
38:54
SPEAKER_00: Thanks so much.