Today I am talking with Wendy Pelczar Bagley of Optisure Risk Partners. She has been in the insurance business since 1984 and has done everything from the receptionist to Vice President. Currently, Wendy is an account executive and can do any kind of risk you can imagine. She can write an island location or a multi-million dollar home, construction policy, auto, etc.  She specializes in problem-solving.  Taking a difficult situation and making it work. 

Wendy: Insurance is one of those things. It is specific to “you”. Everyone complains about it until they need it. Then it is the best thing in the world. I strive to get the best coverage for the best rate for you.

Q: What do you tell first-time homeowners?

A: I ask a lot of questions. I would never recommend a $2500 or higher deductible to first-time home buyers. However, other carriers may offer that because it would lower the premium. But if they are new homeowners would they have that kind of money if something happened, probably not. So it may be a bit more expensive, however, the chance of their out-of-pocket expenses will be a lot less. I look at everything, the condition of the home, what dogs they have. Pit bulls and German Shepards are difficult risks to place these days. Some companies don’t have a dog list, and they are the ones that are paying the big dog bite fees. 

I look for a carrier that offers guaranteed replacement costs. So if your house burns to the ground, I’m not a contractor or an appraiser, I am not an estimator, I have no idea what it would cost to replace your home but I fill out what is called a Replacement Estimator and guess, then I put the guarantied on so if your house burns to the ground and I am off $100K, it doesn’t matter because your policy is going to pay to replace your house exactly as it stands. 

Q: A lot of companies ask, how much are your contents worth? How do you figure that out?

A: Automatically, a percentage of what you carry on the building, usually 70%. So if you have a $100K building, your contents are $70K. Now does that mean you are going to get a check for $70K if your house burns flat to the ground? No, probably not. The proof is always on the insured. You will have to come up with a contents list at that point.

Q: So, it is probably a good idea for homeowners to have a list of contents list. 

A: I suggest a video of each room and update it when you get new art or new purchases. Open all of your doors. It literally comes down to even what cleaning supplies you have, how many pairs of socks, everything. If you have a total loss, your Christmas decorations, or other holiday decorations. Everything. I hope that never happens, if it does, you will only get the replacement cost, if you replace them. If you don’t replace them, they will not cut a check for something you are not replacing. Keep the recording someplace else, give it to your neighbor or a friend. 

Q: What about artwork? You wouldn’t be able to replace the original artwork.

A: It’s very important to get an appraisal for high-priced items. If you don’t have an appraisal, the insurance company could give you money for an inexpensive print. You need to be able to prove what you have and its value. That is why you schedule jewelry and fine art. 

Q: Do you have to replace those items?

A: No, the insurance company will cut a check for those items.

Q: How do you schedule items?

A: You have an appraisal and we ask the insurance carrier to separate those items. It is called a floater, or a rider, an endorsement or some companies issue a separate policy depending on how much you have. One or two or ten items you have right on your homeowner’s policy, you’ve got a schedule of fine arts we may issue a separate policy and include your jewelry, paintings, Persian rug, it would include all of those things. We generally push for the agreed value, which means if you have a loss of any of those items, there is no question as to the value. That is the easy part. The hard part is that you have lost something that means a lot to you. 

Q: At what value should something be scheduled?

A: That is a personal choice. For me, I don’t schedule any of my jewelry unless it is valued at over $2500. But again, it is personal. 

Q: What can affect insurance rates?

A: Some things that make a difference in the homeowner ratings are how close you are to a fire station, and how close you are to a fire hydrant. And most of the companies now, and this amount is changing also, is if you have a house that is valued at over a million dollars, they are required to have an alarm system and the Ring or Nest are not acceptable.

Q: Why are they not accepting the Ring or the Nest? We have everything on our phones, so we would be notified if there is an issue.

A: They have a reason for everything they do. In this case, say you were someplace like the Dominican and didn’t have any cell coverage or you couldn’t get there. No one knows that the alarm is going off at your home. It’s great if you are sitting at work, that is fine, someone can get there. However, there are many instances that no one could get there and that is something that the insurance company wants to be certain of.

Q: When does someone start looking for homeowners insurance?

A: The minute that purchase and sales agreement is accepted, they should start looking. Rates are better if you quote ahead of time. The agent may need some time to look, there may be some things that need to be corrected with the home, and something may need to be painted or repaired. Some of these things may need to be corrected before the policy goes into effect. 

Q: Is the insurance on your second home different than on our primary home?

A:  No, not really. Sometimes the rates are different because it is sometimes not included in a bundle. (Home, auto combined). It would be a mono-line policy. It could be a little more expensive, not because there is more of a risk, it is just because it isn’t combined with other policies. 

Q: What about condos?

A: Condos are easy to insure, we also try to find a carrier for a condo that will waive or pay the master policy deductible if there is a loss. We always try to make sure there is enough building coverage, you could insure the building completely for replacement cost. Condo premiums are usually less than $500.

Q: What about a stand-alone condo vs. an attached condo?

A:  Attached condo would be an HO6 form which is basically some building costs and contents and a stand-alone condo can be written as a homeowners policy. You just don’t own the land it sits on. We just have to make sure we are covering some loss assessment coverage to make sure that we are covering the association pieces as well.

Q:  What else can you tell me about first-time homebuyers?

A: They need to start early, and make sure they have all their ducks in a row ahead of time. They need to work with their lender. Let’s say someone says I need a binder today but my closing isn’t until two months from now. I can’t do it, usually, we do a binder within 30 days of closing. And I like to do it about 10 days before closing because we all know the date they give you when you sign that paper is not going to be the day you are closing. We try not to duplicate things, by having to keep changing the closing date. We try to confirm the date because this is a legal and binding contract.

Q: What exactly do you mean by a binder?

A: A binder is legal proof of coverage. The insurance begins at 12:01 am on the day of closing. It doesn’t matter what time of day the closing is.

Q: So, the coverage starts at 12:01 am on the day of closing. Let’s say closing is at 10:00 am but at 9:00 am the house burns down, now what?

A: Well, that would probably be a big fight between the two insurance agencies. We have actually had a home burn down a day or two before the closing. Obviously, the paperwork didn’t go through but we had all the paperwork completed. If it happens on the same day, it would probably depend on what time of day it closes. I would make sure that the policy isn’t canceled until all the paperwork is completed. I would bet that it a fire happened on the same day and the closing hadn’t happened yet, it would be the seller’s insurance because technically it is still owned by the seller.

     I like to do the “what if” questions. Insurance is not exactly an exciting topic so if people want to email me with any questions, I would be happy to answer them.

    Insurance companies pay for smart people to do not-so-smart things. An example is during COVID homeowners started doing a lot of projects. A homeowner decides to tear down a wall, or two and do all the rewiring themselves. We have to look at what is covered and what is excluded. A homeowner doing their own electrical wiring is not excluded ……Insurance companies pay for smart people to do not-so-smart things!

It was a pleasure talking to Wendy today and unraveling insurance. I hope that we have answered some of your questions regarding insurance and also the entire mortgage process. If you have any questions please contact me and if I don’t have the answer, I will get it for you.