UPDATING DUE TO UPGRADING
Stay on top of clients’ lifestyle changes that would require additional homeowners coverage
By Christopher W. Cook
“Some people hit the bottle.
Some people hit the books.
Some people storm the Capitol,
some second-guess parenthood.”
Quarantine. There have been mixed reactions to the mandatory stay-at-home orders issued during the early months of the COVID-19 pandemic. Rock band Blink 182 had some additional choice words about the situation in their single, “Quarantine,” released this past August—words that cannot be repeated in this publication.
While many have viewed quarantining as a negative experience, whether because of weight gain, boredom or going crazy from being around their kids 24/7, there have been some positives from spending so much time at home. This year has been a good one for crossing off home improvement projects that have sat on never-ending to-do lists.
At the Cook household, we spruced up (not with spruces) the landscaping in the front yard, though the back yard will have to wait till next spring. We rearranged our storage situation, hung curtains, assembled bookshelves and did other little things around the house. But what if your clients tackled larger home improvement projects this year, projects that would require a review of their homeowners policy? This might be a good time to set up a Zoom meeting and discuss the possibility of making some updates.
“Anytime somebody makes an upgrade or does any remodeling to their home, when it changes the value of the home by more than 5% to 10% they should call their insurance agent to update their homeowners policy,” says Jim Hyatt, senior vice president of personal lines at Arbella Insurance Group. “This could be upgrading an old kitchen with a granite countertop and all stainless steel appliances or building an addition where square footage is increased, for example, from 2,800 to 3,400 square feet. It’s also important to note that if a customer is gutting the house and moving out, they’ll need to tell their agent, especially if a builder has equipment on site.”
Additional protection for the house-hold is another reason for clients to invest in an update.
“This includes purchasing a generator, adding home security, putting in smart thermostats or setting up water sensors in a basement,” Hyatt says. “Homeowners should tell their agent because they could receive a discount or a credit on their policy.
“Separately, if a homeowner adds solar panels on their roof, it’s important to check with their agent. In most cases, a customer leases the solar panels from the solar company, so any loss would likely fall under the company’s, depending on the lease. Sometimes, though, people purchase the solar panels themselves, so that becomes the responsibility of the homeowner if there is a loss such as a tree falling and hitting the roof.”
A post in CoverHound’s (see the May 2016 issue of Rough Notes) Learning Center shared additional reasons for updating one’s homeowners policy:
- Adding outdoor entertainment. Installing a swimming pool, trampoline or tree house may increase the risk of injuries occurring on the property. Insureds should check with their agent to see if these risks will be covered; an increase in liability protection will likely be recommended.
- Moving in or out. Maybe your clients welcomed a new baby, their older kids are moving out, they are taking care of their elderly parents in the home, or got a divorce. It’s import-ant to keep up to date with who is residing in the property to reflect who is covered under the policy.
- Obtaining valuables. Whether jewelry, artwork or a rare antique, an endorsement may need to be added to the policy to protect items of high value.
- Getting a dog. With the number of homeowners claims resulting from dog bites, bringing a new pet into the house may require additional limits. Double check with your client on the specific breed of animal because restrictions may apply.
- Starting a home business. While a business insurance policy may eventually be needed, an endorsement to the homeowners policy may cover business equipment and operations in the beginning.
Another post in the Learning Center states that “anyone residing in your home long term should be included in the listing of your policy. Don’t worry about how to play the system to get the best deal, as most premiums are altered only a little for additional members—and the coverage they will provide could be very welcome when disaster strikes.”
Conversing with clients
Your clients might have one of these major changes occur at any time; after all, many of them may have spent an excessive amount of time at home and hit up that home project list. How can you make sure you are kept up to date with your clients’ lifestyles?
“Many carriers like Arbella send renewal questionnaires to customers that ask questions like: ‘Have you done any remodeling?’” says Hyatt. “We then send the responses to agents so they are aware.
“In addition to the renewal question-naires, we recommend that anytime the agent is on the phone with a client they haven’t connected with in a while, they should ask the client if there have been any changes to the home,” he adds. “By simply asking during a check-in, you’ll be able to get a quick answer and can remind the customer of the importance of keeping the agent in the loop. Customers generally appreciate a good risk management discussion, and that’s the value agents bring.”
Maintaining client relationships and knowing about remodeling projects ahead of time can also be beneficial.
“In the northeast, most renovations happen in spring, summer and early fall, so it’s a good idea to check in during those seasons,” Hyatt says. “Use email newsletters and social media to reach out and address topics of home remodeling.
“We find that agents can be extremely helpful in walking customers through the process and can answer questions such as, ‘How do I pick a contractor?’ and ‘What should I be concerned about with my insurance?’ This will reinforce good will with the customer and bolster relationships.”
Hyatt also encourages agents to repurpose content provided by their carriers on social media and share it directly with their customers.
“At all costs, you want to avoid having someone not having enough coverage if there is a loss,” Hyatt says. “In addition, you want to be sure you remain competitive, so if there are discounts you can offer through certain upgrades, you’ll want to keep on top of that before the customer finds a new agent or carrier. People buy from an agent because they seek risk management advice, so it’s important to cultivate meaningful relationships with customers.”
For more information:
Arbella Insurance Group