Kevin Mathews (00:00)
What about the role of claims history? How does that affect premiums?

Ryan Nuttall (00:04)
if you have a wildfire and it's considered a catastrophic event, oftentimes that won't impact your rates Water claims are probably the worst because even if you open a water claim and you close it and there is no payout because you say, okay, well, that's less than my deductible. I don't really want to deal with the claim.

Well now that claim actually still counts against you.

Kevin Mathews (00:26)
Unlock the secrets to smart homeownership and financial success with Home & Finance Insights. Whether you're a first-time buyer, seasoned homeowner, or real estate professional, this podcast delivers expert information on home financing, insurance, tax strategies, wealth building, and more. Hosted by a mortgage and real estate pro who's been in the game for decades, we interview top industry experts

to share actionable insights that help you protect, grow, and maximize your home investment.

Kevin Mathews (01:00)
welcome to Home and Finance Insights. I'm Kevin Matthews, your host. I'm a licensed mortgage broker with Empire Home Loans Inc. I've been involved in real estate sales, investing, property management, and home finance since 1985.

Today we'll talk with an expert about home insurance. We'll get answers to questions like why premiums are rising, what coverage we should have, and how claims work. We'll also discuss the impact of the recent wildfires in California and what insurance options are still available to homeowners and potential home buyers.

But first I need to address compliance requirements. My individual NMLS number is 234253 and Empire Home Loans Inc. NMLS number is 1839243. The information in this podcast is for educational purposes only and should not be considered financial advice.

My guest today is Ryan Nuttall, owner of Farmers Insurance in Cameron Park, California. I met Ryan at a small speaking engagement about a year ago, and I was very impressed with his knowledge and ability to share insights in a way I could understand. Hello, Ryan. Welcome to Home and Finance Insights.

Ryan Nuttall (02:13)
Thanks, Kevin, for having me.

Kevin Mathews (02:15)
So tell us about yourself. How did you get started in insurance?

Ryan Nuttall (02:21)
it goes back to my days in real estate. Actually, I was in real estate when I turned 19, got into flipping houses, started doing retail business where I was helping consumers buy and sell homes. In 2008, we all know the market got a little challenging, say the least. So I ended up out of necessity finding something that was ancillary to my real estate business. And I found myself in the insurance business.

opened up an insurance business next to my real estate business. That blossomed for seven years, eight years. We grew that into a large agency. I ended up selling that agency and I contracted back to Farmers to be a district manager where I was tasked with recruiting and developing new agents, helping them build businesses basically. So I had a recruiting department that I built. I bring them through a boot camp.

teach him how to be an insurance agent, then taught them how to be an insurance agency owner. Fast-tracked seven years after that, one of my agents decided to retire that I really well respected. He was tied to a lot of real estate agents. Kind of grew up with him, learned a lot from him, and when he retired, I decided to step back into building an agency, because after seven years of being at a district level, I feel like you start losing

what's really going on in the market. So becoming an agent again has put me back into a seat where I'm learning to be more relevant in the insurance industry It's been three years since I bought the agency. We've tripled in size. I have nine licensed staff and my job is to educate them to make sure they're experts in the field. So really love it. I'm basically a coach still.

Kevin Mathews (03:56)
You guys do a great job. All my clients have been really happy with your service. are you, ready to jump in? let's start with the basics because not everyone here owns a home or has needed home insurance. So what is home insurance and why is it necessary?

Ryan Nuttall (04:12)
I look at insurance in general, especially home insurance. I feel like it's such a foundational part of our economy. If we didn't have home insurance, banks couldn't loan on homes. Without home insurance,

we wouldn't have a real estate market,

home insurance is a pathway to home ownership, It really establishes roots for a family.

Kevin Mathews (04:35)
So what types of coverage exist in a home insurance policy?

Ryan Nuttall (04:40)
multiple perils. So perils are your fire, wind, and wind includes a tree falling on your house.

We have water claims. We have liability claims. Think about personal injury with social media, you post something on social media and offend somebody and you get sued, your home liability could step in with the right endorsement and take care of that lawsuit for defamation of character.

I've seen all kinds of different claims dog bites trampolines swimming pools, you know drownings things like that.

with theft insurance. Theft isn't just somebody coming into your home and stealing something, but it actually extends to your vehicle. If you have personal property in your vehicle and somebody breaks in and steals your $3,000 laptop, that's actually a home insurance policy that would cover that. If you lose the diamond in your ring, that's mysterious disappearance. That would be something that your home insurance could.

Kevin Mathews (05:11)
Yeah.

Ryan Nuttall (05:36)
Possibly offer a coverage for through a jewelry floater. So there's multiple coverages and multiple perils

on the home policy. Obviously, the dwelling coverage is the most important. That's if something happens and your home burns down. Also, your contents, your personal property, that's basically turning your house upside down, shaking it out, everything that falls out. That is your personal property. That's what is covered under your home policy. Oftentimes, you really look at a closet full of clothes, it's $5,000 to $10,000 worth of value. People don't realize how much personal property they really have. If you have a storage unit,

You need to make sure that it's extending to that storage unit. anything off site you have coverage for So yeah liability wind fire Hail water claims, so it does quite a bit

Kevin Mathews (06:14)
Yeah.

Yeah, it really does. Yeah. I hadn't thought about the storage unit thing and I, I have a storage unit and I, I don't know if my policy covers that. So I'm going to have to check that. are there any common misconceptions that homeowners have about insurance? best example I've heard is that everybody thinks that everything is covered. Is that what you run into a lot or?

Ryan Nuttall (06:29)
Yeah.

Yeah, know when I was back to when I was a district manager and I'd sit on these big fire claims, we did have a situation where somebody had 10 ATVs, probably close to $100,000 in ATVs, and they thought that was covered in their personal property. So anything with a title on it and a VIN number typically needs to have its own insurance policy. It's not considered personal property.

However, tractors are a little different. They don't have titles and so you have to make sure that's on your home policy And then does it extend when it's off property? So if you take it to your neighbor's house to help them with something is there coverage for that? So yeah, there's there's a lot of things I've seen where we didn't have coverage because people didn't understand what the difference between personal property was and What is something you need to insure on a on a you know a specialty product?

Kevin Mathews (07:08)
Okay.

All right.

that's good to know.

Ryan Nuttall (07:34)
That's usually a big

one. I find that people often ask, this ATV or my golf cart? Golf carts don't have titles, so that would actually be personal property. now if you live in a golf neighborhood and you're driving down the road, do you have liability on that? So you have to make sure that's endorsed.

Kevin Mathews (07:52)
Wow.

I used to have a truck camper that I would, keep off of the truck when I wasn't using it. that doesn't have title cause it only, it's attached to the truck when in use. that would fall into that category too.

Ryan Nuttall (08:05)
That

would actually be an upgrade on your truck because there's actually coverages that for add-ons for, you know, tires and wheels, you know, upgrades, things like that. There's usually an automatic thousand dollars. And then if you need more, then you can increase that.

Kevin Mathews (08:10)
you

you can cover as little and as much as you want really just depends on what you want to pay for it. most of the people I talked to, they want to know what affects the premiums going up.

Ryan Nuttall (08:24)
Yeah, absolutely.

Yeah, so we

this is actually a good time to ask that question because there's been some new rate making rules that have changed in California that do impact homeowners costs. So.

First of all, the determination of what your house is going to be insured for, we use what is called a replacement cost estimator, RCE. So basically when we do a quote, we have to build out your home in a system and it will give us back a number that says this is what replacement cost is on your home. A lot of times when the real estate market's depressed, you're insuring it for more than what you can replace it for because you can go buy another home for less than it would cost to actually build that home.

When the market's really strong, a lot of times you'll insure it for less than what the market value is because we are replacing the home on the land. We're not insuring the land, we're actually just rebuilding the home. if you look at the Bay Area versus, know, El Dorado County, you're gonna see almost the same.

Reconstruction cost estimate come out for a home that may cost three times as much down in the Bay Area just because that land is more expensive But we're ensuring the home to be rebuilt on that property and since the land doesn't burn we will have some cost to remedy the land to get it prepared to build on because you have when house burns you have all that debris that needs to be removed and Oftentimes cleanup that has to happen But for the most part the replacement cost estimate is going to come out for what it costs the insurance

Kevin Mathews (09:35)
Mm-hmm.

Ryan Nuttall (10:00)
company to rebuild your home whether it's 250, 300, 400, 500 a foot. So it will change in that regard because labor is a little more expensive in the Bay Area than it is up here. So that will bump the replacement cost estimator and but that does have an impact on rates. The two biggest factors on

Kevin Mathews (10:13)
Right.

Ryan Nuttall (10:21)
Rates is is there a fire hydrant within a thousand feet and is there a fire department within five miles? If you have both of those typically it's anywhere from 20 to 50 percent less in cost If you're missing one of those It will be almost 20 to 30 percent 40 percent some cases 50 percent more to ensure that property so those two have big impacts on the cost of insurance

Theft, like crime areas will have a higher rating, especially for auto insurance too, because we figure there's going be more burglaries and break-ins and theft.

Kevin Mathews (10:49)
Mm-hmm.

do they do this by zip code

Ryan Nuttall (10:58)
So every company does use different fire maps. They use different saturation methods. They use different ways of calculating what the risk cost is going to be associated with. yeah, for the most part, every carrier does it differently. So it's really hard to blanket one statement to cover what everybody does.

Kevin Mathews (11:18)
What about the role of claims history? How does that affect the premiums?

Ryan Nuttall (11:22)
good question. there's a difference between frequency and severity. So a severe claim would be,

if you have a wildfire and it's considered a catastrophic event, oftentimes that won't impact your rates or your eligibility. Water claims are probably the worst because even if you open a water claim and you close it and there is no payout because you say, okay, well, that's less than my deductible. I don't really want to deal with the claim.

close the claim. Well now that claim actually still counts against you. And so we always are very cautious to at least explain how water claims work because if somebody asks us about opening a claim, we have to actually refer them to the claims department to open a claim. can't coach people into opening or not opening a claim. So we have to educate them on the front end and just let them know, hey, if you have three or more water claims, oftentimes you can't even find a carrier that will write that policy. One or more is

Kevin Mathews (12:17)
So,

Ryan Nuttall (12:18)
going

going to cause your rates to be higher.

Kevin Mathews (12:20)
if somebody has a water claim, and they call you then you are obligated then to report that. that

Ryan Nuttall (12:27)
Technically, I'm supposed to just say contact the claims department. I can't really get into claims. maybe reach out to a plumber, have them come out, or have one of the companies that works with.

water damage or smoke damage or fire damage, have them come out and look at it and then decide with their advice, is this worth opening a claim for? Is this at the threshold of your deductible? So I oftentimes recommend them just having somebody look at it before they open a claim, but I always give them the information for the claims department. Let them know, hey, if you have any issues or questions, call me, but I'll probably have to refer you back to the claims department. In California, we have what's called the Fair Claim Practice Act. And so

Kevin Mathews (12:49)
Got it.

Ryan Nuttall (13:09)
Department of Insurance regulates claims handling and how we handle those. So if you send an email to a claims department, they're going to open a claim. If you contact an insurance agent and say, know, what should I do? We're going to say, well, you should call claims and get that started. But maybe before you do, look at it, have somebody look at it

Kevin Mathews (13:28)
let's just say somebody has a $5,000 deductible and they, their water claim might be 6,000 or $7,000 total. it may not be a good idea for them to call the claims because they're, they're going to probably pay, that difference up in premiums over the next few years, I would assume. Right. Okay.

Ryan Nuttall (13:43)
Absolutely, yeah. Some companies have

claims free discounts, so if you lose that discount, it's sometimes 25, 30%, and it's three to five years to get it back. So you can see how quickly the $2,000 coverage that you might receive is gonna unwind, and you're gonna end up giving that back to the carrier.

Kevin Mathews (14:03)
Exactly. Okay. Got it. what about things like home improvements or upgrades? How does that affect premiums?

Ryan Nuttall (14:09)
oftentimes it's solar panels. Everybody's getting into solar, so they need to make sure they call their agent, hey, we've added solar panels. Is it on the house? Is it attached or is it detached? Because it's treated a little differently. Home improvements, make sure it's permitted because if it's not permitted, the carrier can't replace that square footage because they're going to go back to what the county records say as far as square footage goes. And that's what they're going to base the replacement of that damage on. So I've had people that

Kevin Mathews (14:22)
Okay.

Ryan Nuttall (14:36)
have had 500 square feet add-ons that don't have coverage because it's not included in the building permit.

Kevin Mathews (14:44)
we see a lot of that with the homes where, especially up here where, there's, you know, most people have some land and, they'll add on, without permits and but it can, it can come back to, to hurt you later. So I see.

Ryan Nuttall (14:45)
Yeah.

or converting

a detached garage to an ADU. So that's happening a lot now because of cost of rentals. So those things you want to talk about because when you add a stove and a kitchen, that changes the risk. And so sometimes you can add it on to your existing policy. Sometimes you have to write a new policy. Occupancy type could change the way you write that policy because some carriers will do non-owner occupied. Some will do owner occupied. Some will do both. Some will be short-term rental.

Kevin Mathews (15:03)
Right?

Ryan Nuttall (15:25)
Some will be long-term rental so that changes the carrier options too. So a little bit to think about with that I will say you know back to claims when you're talking about, you know Rehabilitation on a home. So if you're putting a new roof on and let's say, know two years later You have a big rainstorm and there's some water damage If it's a workmanship issue, that's actually not covered

Kevin Mathews (15:44)
Mm-hmm.

Ryan Nuttall (15:47)
So you want to make sure that when you're getting things done in your home that there's some kind of guarantee from the builder. Just because if there is a workmanship issue, I had this happen to a client down in Granite Bay. They did put on a new roof. The wind and the rain was going sideways and some of the stuff, the way it was done wasn't done correctly, had quite a bit of damage.

and wanted to file a claim. We went through the conversation about, you know, is it workmanship? Because I've seen workmanship be declined and it's a water claim. So again, it's going to impact their claims history, their what I call a clue history. And so luckily she went back to the roofer and he was able to take care of the problem

Kevin Mathews (16:27)
still on claims a little bit. I've heard that, if you have things like dry rot or mold or termites that's not covered because it's not a, how should I say this? It's a long-term thing that's been going on versus a sudden event. am I understanding that right?

Ryan Nuttall (16:45)
Yeah, so perils are what you have to apply it to. So what are the perils? So typically a home policy covers fire, wind, hail, water, theft. So infestation is not a covered peril. And it's actually a maintenance issue because

Technically you're supposed to remove the dry rot, replace it, repair it. Just think of an insurance company, a carrier is not providing a warranty, they're providing a policy that is for certain specific perils.

And a lot of times it's based on what banks require And what that policy is meant to do it's meant to be you know a sudden act right so tree falls on your house There's no preventing that unless you knew that tree was you know needed to be removed the carrier still can't get out of paying that claim just because you didn't take care of that tree that tree fell And it was because of the wind but when it comes to infestation Happens in autos to auto insurance we have you know rats that go into a car that's been sitting away

and they eat all the wires, that's not covered. That's actually a rodent issue that's excluded specifically on auto policy.

Kevin Mathews (17:51)
So, what steps can homeowners take to prevent costly claims? I mean, we've already talked about a little bit about it, talking to your agent first, make sure you understand your coverage, but are there any other tips that, we should know?

Ryan Nuttall (18:03)
if you're purchasing a

home, highly recommend a home inspection. Figure out what is right with the property and what is wrong with the property. Because oftentimes we get excited to buy a home and we don't do that. We don't spend that $400 or $500 or $600 for a home inspection. So as a new homeowner, definitely it's not going to

It's not going to change your mind about buying a home, but it's definitely something you need to figure out what the deferred maintenance is on the home. And then when it comes to water heaters, oftentimes we find water heaters rust out and people don't know that they're rusting out. And then all of a sudden the water heater just kind of implodes and everything. The water just goes everywhere.

That's actually not a covered item either because it's really not a sudden burst of water It's actually just a maintenance issue imagine a water heater that's up in the attic and it goes out And flood your downstairs. it comes through the ceiling it causes all kinds of damage then you have to worry about mold issues because you just lost a hundred gallons of water that are sitting that was sitting up in your attic you have an option to put the water heater outside

in a garage that's typically safer. Also making sure that you're maintaining the little P trap on your heating and air conditioning unit because that will back up. You'll start getting water condensation. Then you start getting into mold and mold is not fun to deal with. So things like that. Just maintaining your property. the deferred maintenance isn't going to be something that typically an insurance company is going to take care of for you.

Kevin Mathews (19:16)
Mm-hmm.

on one of the quotes that that, you provided for me recently for a client of mine, there was a sensor program that you guys have is how does that work?

Ryan Nuttall (19:38)
Yeah, so homes are getting older. Pipes in the house are getting older. Insurance companies are now either starting to limit water loss coverage or they're requiring a mitigation device. So we use we typically recommend Moen Flow. It's an automatic

leak detection device that shuts your water off in the event that it detects a water leak, which is great. They're about $700 and then they're about $700 to install. But on vacation, we oftentimes see people leave for a week or 10 days and that's typically when we have a water claim. And if it starts upstairs, it gets really ugly downstairs. So this device, it goes on the main line coming into the home, it's hooked up to WiFi.

what it'll do is anytime it detects a leak, will shut off the main, and then you just go hit the button and it'll turn it back on. we've installed probably over 6,000 in California in the last year just from

putting that into our underwriting process. Now you do have an option to go with a deductible for water if you don't want to put a mitigation device in there, but I have found people are actually appreciating it. There's other devices too that are coming out that some carriers require. One is called Ting, and it'll actually do the same thing with your electricity. It'll actually detect a spark in your wall, and it'll shut the main...

Kevin Mathews (20:52)
Wow.

Ryan Nuttall (20:53)
breaker off so you don't have to worry about a fire in the wall. So as houses are getting older, they're trying to figure out things that they can do to try to mitigate the risk exposure, which will hopefully flatten insurance rates or we won't see the big rate hikes we've seen.

Kevin Mathews (21:05)
Yeah.

Yeah, that makes sense. let's say somebody does have a claim. how should a homeowner properly document their belongings? how are they going to prove that they have this personal property?

Ryan Nuttall (21:21)
what I recommend is keep a video of your inventory. Just do a quick video of everything that you have in your home and it'll be on your phone, it'll be on your cloud.

Email it to your insurance agent if you want it off record or email it to your if you want it in their documents or email it to yourself. Oftentimes I tell people, know, if you just take the video, email it to yourself. You always have it somewhere in case you lose your phone. But I find that if it's in the phone, typically it's pretty easy. Now, adjusters are trained to see what remnants are on the ground and they don't really take inventory on personal property unless it's things that are a little suspect or

specialized

Kevin Mathews (21:59)
Okay. But yeah, just video is the best way to record. It just sounds like so that.

Ryan Nuttall (22:02)
Videos great

for adjusters. Yeah, because they don't want to necessarily say no to paying your claim But they have to find reasons to say yes a lot of times. So if you're asking for something that

Kevin Mathews (22:06)
Okay, per.

Ryan Nuttall (22:14)
you know, again, back to the Fair Claims Settlement Practice Act, they have to treat everybody equally. If they pay something that they pay for one person and not the other, it opens up a claims audit and it opens up a potential class action lawsuit. So that's why carriers have to document everything they do in claims and make sure it's justified what they do.

Kevin Mathews (22:36)
Great. let's talk about first time home buyers. Cause typically, these are people that, they probably used a lot of their savings for the down payment and closing costs and they want to be covered, but if something happens, they may not have the money to pay a high deductible.

So what, should they look for in a policy?

Ryan Nuttall (22:55)
first figure out what deductible options are for each peril. Like I said, you could have a split water deductible. So you could have a higher deductible for water and a lower for fire. You can play around with the deductibles a little bit to save money. But again, back to what you were saying, once you're a first time home buyer and you're exhausting your savings, you don't want to have a huge deductible that you can't pay in the event of a loss. So definitely balancing that out.

You can tailor some policies a little bit more. Some policies are pretty much fixed on the way they're structured. But I would definitely as a first time home buyer, when you're going to look at properties, get insurance quotes first. Save yourself time because in this market with the limited carriers we have, especially in high fire severity areas, which starts in El Dorado County.

Amador County, Placer County, basically the foothills. If you're looking at foothill properties, definitely get insurance quotes before you go look at them because the variations can be anywhere from 30 to 50 % difference for the same size, same replacement cost home.

Kevin Mathews (23:49)
Hmm.

Ryan Nuttall (24:02)
depending on the fire hydrant, fire department, fire line scorers. So definitely shop for insurance before you go fall in love with that home because that may, talking to your lender, you may find that falls outside your debt ratios and it might just not be a comfortable place to be trying to afford that payment with that insurance.

Kevin Mathews (24:19)
I help my clients shop for insurance when they're purchasing a home, as you know, and, if they don't have somebody already. just one recently that I emailed you actually, and, the client, is going with you for the insurance

We were surprised because they did not need Cal Fair plan. they went and shopped some other agencies and they were told that they had to get Cal Fair plan by another agent. How is that possible? Does that just mean that agent doesn't have insurance that'll cover that? So they just refer them to Cal Fair plan?

Ryan Nuttall (24:51)
Yeah, so the benefit of being a farmer's agent is I'm a captive agent, but I'm also a broker. So farmers gets first-round refusal. So we run everything through farmers. Farmers bases a lot of their underwriting decisions based on saturation. Do we have a lot of homes in that area insured? Are we getting overexposed for wildfire instance issues, things like that.

At the end of the day, I have farmers products, but then I also have the products of all the brokers. And so when you talk to a broker, if they don't have access to a captive product, you might not see all the options you have. So that's kind of the best scenario for me is that we do oftentimes.

Have a policy we can write. I just wrote one in downtown volcano Volcano is way up in Amador County. I just wrote a commercial building in Pine Grove with farmers But if farmers doesn't if farmers can't write the fire policy then we're often writing a fire farmers wrap around or difference in conditions and then we're adding the fair plan to that so

Kevin Mathews (25:41)
Yeah, Beth by Jackson. Yeah.

Okay.

Ryan Nuttall (25:56)
But also conditions, we have to be sensitive to conditions because farmers doesn't take everything. We have acceptable maintenance conditions that we have to adhere to. There are certain claims that situations that make it ineligible. So we just have to go to our brokerage options that we have when that happens.

Kevin Mathews (26:14)
Okay. they need to shop around. If they're told Cal Fair plan by one carrier, that may not be the case. if they do some research now, five or six carriers are telling them the same thing and they're well known names like farmers or all state or whatever. Um, then they're pretty sure that they do have to go to Cal Fair plan.

Ryan Nuttall (26:36)
Yeah, there's direct markets. like AAA is a direct market, meaning you buy directly from the company. USAA is a direct market. those are products that an agent or a broker doesn't have access to. Then there's the captive products, which is, you know, farmers and state farm and all state. That means we have product that brokers don't have access to. Then some companies like with state farm, you can't broker. With all state and farmers, you can broker. So it's, know, and then brokers

have their brokered products, which we have access to as well. yeah, definitely look at the direct carriers, look at a broker,

Kevin Mathews (27:06)
Okay. This sounds like the...

Got it. Okay. This sounds like lending. mean, there's so many different ways to get a loan. It's the same kind of thing. So many different companies. Yeah. I get it. Okay. So, most of us, we don't keep up with the cost to build a home. don't know what those numbers are or potential liability costs. If someone gets hurt on your property. So how do we know if we're underinsured or overinsured? Is there like a formula or a place we can look that up? How does it work?

Ryan Nuttall (27:13)
Yep. Exactly.

Yeah, so

I don't believe in over insurance, but I'm also insurance poor because I buy everything. I'm risk adverse, right? So I would worry more about being underinsured. Umbrella policies are great to match assets. So I'm in the financial service side too. So oftentimes I'm asking people about their assets. And when I look at their assets, if their liability doesn't meet their assets, we have a gap.

Kevin Mathews (27:44)
You

Yep. Yep.

you

Ryan Nuttall (28:05)
So liability is the big one. people, you know, I know we're talking about fire insurance, but with car insurance, I look at car policies and oftentimes I wouldn't back out of my driveway with the insurance that they're driving with for liability. The average liability claims are really high in auto insurance. A lot of times they exceed policy limits. But if you don't have enough liability insurance, you can't file bankruptcy against that claimant that's coming after you to take your stuff. They can actually garnish your wages.

Kevin Mathews (28:18)
Okay.

Ryan Nuttall (28:32)
they can file liens against you and they last for 30 years. so liability is the most important part of your household. So umbrella, auto, home liability, those all have to be in alignment. I've seen life insurance claims where somebody was in a car accident, they didn't make it out of the car accident, that life insurance on that person went to the other family because their auto insurance wasn't enough to cover that cost or that other person that was injured in the other vehicle.

Kevin Mathews (28:36)
Gosh.

Because I'm assuming then the person that died caused the accident then, or was it, found it fault? Okay.

Ryan Nuttall (29:03)
Yeah, exactly. And so the judge decided, hey,

well, you have this $300,000 life insurance policy.

in this estate, we're going to award that to the other family. I just had one that was a recent dog bite that was a $20 million claim.

I can give you a lot of claim stories and it's you know change in lifestyle, you know and so Liability is your biggest one if you think about auto and home insurance like let's say you're $50,000 short on rebuild or personal property

Kevin Mathews (29:21)
Wow. That bitch good.

Ryan Nuttall (29:34)
That's not going to change your life. That's going to hurt. But when it comes to liability, that's where it'll change your life. That's where you can lose everything. So and again, you can't file bankruptcy. I had a client whose son was in an accident and it was his fault.

Kevin Mathews (29:37)
Mm-hmm.

Ryan Nuttall (29:50)
He hit somebody, there was a lien on him. He could never buy a house until that lien was satisfied. He could never get a job without them garnishing his wages. It was bad. ended up committing suicide after he was 40 years old because he could never, and he was 19 when he got in his car accident. And it was because he could never get back on his feet. He never had a second chance. So it was really sad.

Kevin Mathews (30:00)
Gosh.

Yeah, that is. Yeah. so if somebody is concerned with what they need to do is talk to their agent and make sure that they're covered. Okay. Well, now let's, let's dig into the elephant in the room, the fire insurance and the Cal fair plan. obviously with the recent wildfires, in LA, the one in paradise, the ones near us, how has that impacted home insurance?

Ryan Nuttall (30:17)
Yeah, absolutely.

Kevin Mathews (30:34)
in California.

Ryan Nuttall (30:36)
first, the biggest thing is reinsurance. A lot of consumers don't understand what reinsurance is. And reinsurance has a huge role in cost of insurance, eligibility for insurance. The

The ability for carriers to come in and offer insurance so reinsurance is insurance for insurance companies It's a they're global companies. it's a pool of money that's being paid into these reinsurance carriers And these reinsurance carriers respond to catastrophic events like hurricanes wildfires But remember because they're global they're selling it to multiple countries multiple carriers

let's talk about Fair Plan because Fair Plan does have reinsurance. Farmers has reinsurance. All state has reinsurance. Every company buys. Yeah.

Kevin Mathews (31:18)
Can I stop you there real

quick? just, I want to make sure that everybody understands what fair plan is too.

Ryan Nuttall (31:24)
Okay, yes.

So the California Fair Plan is an association that was established in 68 and basically everybody that is an admitted carrier in California. there's admitted and non-admitted. Admitted are part of the association. They're regulated by Department of Insurance. They're the big names. They're the farmers, all state, State Farm, AAA, GEICO, Progressive. There's a lot of admitted carriers in California. But in order to be considered admitted, you have to be part of the association. The association is the California

California Fair Plan. And so what happens in the event that they can't provide home insurance to a client, Fair Plan is meant to be last resort. many states don't have Fair Plan. So we're actually very blessed to have Fair Plan because it would be very difficult to continue to maintain home insurance in California without it.

a fair plan policy, covers fire and wind. It doesn't cover water, doesn't cover liability, doesn't cover theft of personal property. That would be a separate policy that you purchase. We call it a difference in conditions or wrap around.

We've seen a lot of companies leave the state because the exposure for wildfire. So in the Palisades fire,

Fair plan had about five to six billion in losses and they had about eight hundred million in the bank. So obviously there's a disparage there, right? How are they gonna pay claims in the tune of five to six billion dollars when they only have eight hundred million in the bank? So a couple things that fair plan can do so fair plan did go to their reinsurance company and the reinsurance company I believe paid close to five billion of the losses

Kevin Mathews (32:49)
Mm-hmm.

Ryan Nuttall (32:59)
If you look at most major wildfire events in California, I would say it's very similar in most carrier situations where the reinsurance company came in and paid, say, 75 % of the loss. So the insurance companies are getting limited to 500 million or a billion or two billion. That becomes their deductible, let's call it. And then reinsurance steps in and picks up the rest. So Fair Plan had...

Kevin Mathews (33:21)
Mm-hmm.

Ryan Nuttall (33:26)
money from their reinsurance company that came in and paid a majority of it. They also had money in the bank. And then now as an association, what they do is they go and they assess all of the admitted carriers for the remaining amount. So I believe they assessed the carriers for about a billion dollars. And so

that assessment came back over to Fair Plan and that's how they continue to pay claims. They also got a line of credit, I believe, from the California Infrastructure Program or fund just for backup, but they ended up putting money back in the bank. paid claims. And so if you think about the situation Fair Plan's in, they're very strong as far as being able to pay claims because every insurance company out there

that's admitted in California is backing the fair plan or backing the association, member of the association, which is the fair plan, which is going to be your fire coverage. these fires, the way they're going to impact premium is they're not just going to impact the fair plan or the companies that got hit by the fires. They're going to impact every part of the industry, every carrier because carriers

had to pay these assessments, which are gonna obviously get trickled down to the consumer.

But at the end of the day, know, Fair Plan survived the palisades. It'll survive the summer fires, but that's what Fair Plan is. So that's a lot of information, but that's how reinsurance and insurance carriers operate together.

Kevin Mathews (34:45)
Got it.

So re reinsurances insurance policy for the insurance carriers, Yep. Okay.

Ryan Nuttall (34:55)
Yep. And then as far

as the new rules that have changed in California with regards to rate making, there was a time where carriers in California could not price insurance products, based on cost of reinsurance.

Well, that's changing. They're actually able to charge based on their reinsurance costs, which makes sense. But they also used to have a cap on what they could increase their rates at in home, in auto, and pretty much everything else. And they're removing that cap. It was a 5.9 % rate cap every year that the carriers could...

Increase during each policy period they can raise their rates based on what they need so that they can stay healthy and Stay part of California market and so that's going to draw new companies into the market. Hopefully It's going to help reduce saturation which saturation is the biggest enemy of an insurance company. they don't want you know

25 % market share in one zip code because obviously when the fire comes through they're gonna have the most exposure and the idea of insurance is to spread risk and so by being able to Make some of these changes that are gonna bring in other carriers That's going to hopefully get the fair plan exposure down

fair plan has to get back down to where they have less than 15 percent market share in some areas It's up to 50 percent market share So they're trying to draw carriers and more carriers create more competition create lower rates

Kevin Mathews (36:21)
So by doing

Anything else that you should add about this?

Ryan Nuttall (36:24)
just technology in general has changed the game a lot too. It used to be an insurance agent could go take a picture of a home and say, Hey, look at this, Mr. Underwriter. know you're saying no, but look at what they've done. Look at the tree work they've done. Look at all that. it's not as friendly that way anymore. They're using more satellite imagery. The satellite images now can read how much moisture in your plants, how much fuel on your grounds. They're using predictive model now, which was allowed through some new rate making rules.

predictive model is going to tell carriers, do I have to worry about a fire in five years, 10 years, 20 years? They weren't allowed to do that before in California. Now they can do it. all this landscape is changing just the way insurance is being offered in areas. So just find an insurance agency that has knowledge, can help you navigate who's staying on top of legislation.

on top of carrier options because at the end of the day it's become way more complicated and it's no longer calling a 1-800 number and trying to get somebody in another state to understand what you're dealing with. You need an insurance agent to advocate for you. I used to think insurance agents were going to be replaced. I think they're more valuable than ever before,

Kevin Mathews (37:33)
Yeah. I know you need, you need that, in between person to, to help you through this. I get it. yeah, sure. Seems like it. So, strategies for homeowners that are in high risk fire areas. for example, my friend Bill wanted me to ask you this question.

Ryan Nuttall (37:36)
Yeah.

Definitely, it's complicated.

Kevin Mathews (37:51)
He lives in a high fire danger area with a home on five acres. And can he get any breaks if he, if he does make his home fire safe and has water storage with a pump, kind of thing. that, does that factor into it at all?

Ryan Nuttall (38:05)
So it used to. Now they want a fire hydrant that's publicly fed

It used to be if you had a river or a swimming pool, they would consider that a fire hydrant because they could pump it out. But because of recent events, now it's a fire hydrant and it has to be publicly supplied. I have one neighborhood that has gravity fed fire hydrants throughout.

the properties and there's probably 100 homes in there. They're certified. The fire marshal has said it's a good, produces a certain amount of pressure, which is eligible for a fire hydrant credit, but they don't get it because it's gravity fed. So with regards to just the future, I go to a lot of fire safe council meetings. They are probably the best grassroots effort to help homeowners.

get

the compliance for the defensible space. Defensible space is becoming a big subject. you go to the fire safe council websites, you can find that there's information about defensible space and fire hardening. So right now there's, they're working towards that zero clearance area where it's the zero to five foot of your home where there's no combustibles. And then five to 30 feet, there's a limited combustibles and then

Kevin Mathews (39:13)
Hmm.

Ryan Nuttall (39:16)
30 to 100 feet that is going to be a little bit less combustibles. But there's certain things you have to do to prepare your home for defensible space. And CAL FIRE is basically helping homeowners get their...

Defensible space done so they have a officer that will look at it fire safe councils are having volunteers trained to go through the process to prepare people For that fire inspection when you sell your home now in high fire severity areas AB 38 is the legislation that says you have to have defensible space at point of sale

Or the homeowner that takes the home can take the responsibility But they have anywhere from 6 months to 12 months to get that done depending on your county So just get involved with fire safe councils if you don't have one in your neighborhood You can go to the main County fire safe council and talk to them Sometimes there's money available for them to help you prop up the nonprofit. They help you with quarterly meetings I go to probably two a month and talk about the insurance market

And if you're a FireWise community, which typically is helped and done and created, supported by Fire Safe Council, there's a FireWise community discount, which is 15%. And then the home hardening is another discount and both the wraparound, the difference in conditions and the

the fair plan typically have discounts for both of those.

We're gonna have to do it as homeowners in the defensible space and home hardening. There was a video of a firefighter that didn't lose his home in Grizzly in the Caldor fire and his home was defensible space and fire hardened. He had all his game cameras set up. It showed all of his neighbors homes burning down. He went back, nothing touched his house and didn't touch his trees.

Kevin Mathews (41:07)
Okay. So you're saying do it organically, you know, and if you're in a neighborhood with high fire danger, then the neighbors ought to get together and try to develop their own fire safe, community.

Ryan Nuttall (41:18)
Yeah, they have chipping programs. have grants sometimes for some areas. There's a big Weber Creek project right now that is getting a lot of money from the federal government for defensible space and fire hardening. So just get involved because there's so much information and it's moving so fast and developing so fast. But legislation is not going to fix our problem. It's us fixing our problem, which is getting our properties where they need to be and using the science to apply to our properties and getting them

to where they're fire resistant.

Kevin Mathews (41:49)
So would any of these things that you're talking about, would they have helped with the Palisades fire?

Ryan Nuttall (41:55)
So that was a different fire. the winds didn't allow the planes to get up. There was issues with obviously the water. There was so much demand on the system and the houses were so close together and the fire burned so quickly. It was almost near impossible.

because it was so condensed in such a small area with a lot of homes, this is more of the rural areas where you can actually see a fire scar burn around a home that has defensible space. And that's the idea is trying to get these rural communities. We're still gonna have things like palisades, but I mean, you look at it and there's what could you have done to prevent it? You can't control the weather.

you know, the demand on those fire hydrants were huge. So it's just, hard to say on that situation.

Kevin Mathews (42:39)
All right. Let's, let's talk about the claims process. when something happens, after damage occurs, what's the first thing that they should do?

Ryan Nuttall (42:48)
So contact your agent or claims department

get the claim opened, and also get ahold of a service master to get out there. One of these companies that do work with the insurance companies, there's several, there's ServPro Service Master. I use the word service master because I have a service master local that I use all the time. As soon as somebody calls me, I typically say, all right, what's the problem? All right, we need to get service master out there.

They'll just dispatch somebody out there to start start mitigating damages and then we get the claim opened and then from there We have to wait for a claims adjuster to get assigned If you have a 1-800 number you might get a phone call at some point if you have a claims Department that's local typically it's boots on the ground. They'll show up And just get the ball rolling obviously the next thing is where do I move like if I don't if I can't move it if I can't stay in my home What do I do? So you have

Loss of use which you can open up right away and that can start paying for your hotel or your VRBO or whatever it is that will help you get Reestablished somewhere if it's a big catastrophic event It could be a few days before you hear from a claims adjuster but they will typically start putting money in your account for clothes for food for shelter right away

If you have a good claims department, so claims is where the rubber meets the road.

Kevin Mathews (44:09)
Are there any common mistakes that delay or reduce claim payouts and such that people ought to be aware of?

Ryan Nuttall (44:17)
Just response, you know when you get the call make sure you call back Remember claims adjusters are typically handling a hundred claims at a time

the adjusters have texting options, email options, phone call options. The texting seems to get, a quicker response because they can handle multiple texts at a time versus being on the phone for an hour.

I see people pack to-go bags, like something that's ready to go if something were to happen.

Especially medications because it could be a while before you can get medications refilled at your front

Address that says we're vacated so you don't have to waste firefighters Time going to knock on your door to see if you're there Those are big things that help with the first responders and that's stuff that fire safe council really advocates is what do you do in an emergency? How do you communicate with the fire department so they can keep moving and working and doing things versus chasing you down and make sure you're out?

Kevin Mathews (45:07)
All right. Well, I think we're, we're going to wrap it up then. Is there any, anything else that you want to share with the audience or you know, you've covered a lot. Okay.

Ryan Nuttall (45:17)
I think we covered a lot. I love

I think you need in this environment, you need an advocate to help you navigate the conversations and just the products and making sure that...

you're not spending money where insurance isn't needed and you're spending money where insurance is needed because the idea of insurance is to transfer risk and you want to transfer the catastrophic risk and you want to take on the low end risk and that's where you can save money. We call those deductible savings plans and things that you can put that money back to work for you so you're not spending money where insurance is needed least.

Kevin Mathews (45:54)
Got it.

Thank you, Ryan, for the education. We've all learned a lot from this. I'm grateful that you took the time to be here.

we'll see you, see you next time. Thanks. Bye bye.

Ryan Nuttall (46:01)
Appreciate it, All right, sounds good.

Kevin Mathews (46:05)
Let's summarize what we just discussed. The right home insurance is essential for financial security. It's a safety net that can protect your assets.

understand your coverage for dwelling, contents and liability. Review your policy with your insurance agent before you suffer a loss. video your home contents and personal property. This will be invaluable in case you need it for a future claim. if you have a relatively minor loss such as water damage,

Research and ensure the repair cost is adequately covered before you call the claims department. Even if you withdraw the claim, the fact that you inquired about it can still count as a claim, which can increase your future premiums.

Prevent costly claims with new technology such as water leak and electrical fire sensors.

prevent wildfire exposure by implementing defensible space strategies and home hardening. Contact your local fire safe council for tips and guidance on becoming a fire wise community.

Recent deregulation may lead to more insurance companies in our marketplace, increasing competition, potentially stabilizing or lowering premiums.

If you're looking to purchase a home, get a home insurance quote prior to making the offer. The cost can vary greatly and it could affect qualifying.

shop your policy. You may not need the CalFair plan. Some insurance companies can offer lower priced alternatives to the CalFair plan that your current carrier may not have.

The concept of insurance is to transfer risk. You want to transfer catastrophic risk and take on the low end risk.

your insurance agent should be your advocate to help you navigate your coverages.

If you've enjoyed this interview with Ryan, please like this video and leave a comment or suggestions. Subscribe and never miss out on future episodes for valuable insights from industry experts. And thanks for watching.