Listen to what Ron Philleo has to say.
File Transcription
00:00
You are listening to The Robo Show, only on WXRW 104.1, Milwaukee’s Riverwest Radio.
00:08
It’s The Robo Show.
00:15
It’s The Robo Show.
00:20
Hey, welcome to The Robo Show.
00:22
I’m your host, Mark Robonum, and you’re listening to WXRW FM 104.1.
00:30
Riverwestradio.com, streaming live.
00:32
And today we’re talking about something every one of us pays for.
00:36
Most of us don’t completely understand, and everybody gets very interested in what they own when they have a claim.
00:44
So we’re talking about insurance.
00:46
So, it’s going to be a good one.
00:49
Auto insurance, homeowners, renters, condo insurance, business insurance, workers’ comp, employment practice liability, condo insurance, and renters insurance are three things we’re going to focus on today.
01:01
And here’s the funny thing about insurance is nobody really gets excited about buying it.
01:06
But the minute something happens, a car accident, a fire, a water loss, a lawsuit, or somebody gets hurt at work, suddenly the policy becomes your best friend.
01:16
It’s the most important document you own.
01:19
And insurance is changing.
01:20
Electric vehicles are changing the cost of auto insurance.
01:24
Cars are loaded with cameras, radar, sensors, and computers.
01:30
We didn’t have that 20 years ago.
01:32
You know, insurance companies are consolidating.
01:35
We’re not going to talk about that today.
01:37
But worker count costs are also moving in a different direction.
01:40
But they’re the policies that people routinely misunderstand are renters, condos, and one of the many business owners I’ve never even heard of, EPLI, Employment Practices Liability Insurance.
01:54
So today we’re going to pull back the curtain.
01:57
Why can an electric vehicle cost more to insure than a gas-powered vehicle?
02:01
It’s something we’re going to discuss.
02:03
Are all the driver-assisted systems actually going to lower your insurance?
02:06
We’re not going to talk about why the insurance companies and agencies are consolidating today because that’s a whole other thing.
02:14
In fact, this is going to be one of a three-part series with Ron on insurance.
02:18
So if you have questions regarding insurance specifically, you can email them to me at mark at rowbottom.com, and I’ll get them answered on the next show.
02:28
So what does this all mean for you?
02:31
Why should a renter have insurance when they don’t own the building?
02:33
Why are so many condo owners poorly insured?
02:37
Why are businesses buying EPLI?
02:41
I don’t know.
02:42
Perhaps the biggest question everybody wants answered is why does it cost so damn much to repair a car these days?
02:48
So my guest today knows this business from the inside.
02:52
He owns an independent insurance agency for 33 years here in Brookfield.
02:57
Please welcome Ron Filio of the Filio Agency.
03:00
Ron, welcome to the Robo Show.
03:02
Hey, thanks, Mark.
03:03
Thanks for having me.
03:04
That intro walk-on music was kind of catchy.
03:08
Yeah, that’s the work of my producer, Joe.
03:10
Oh, I thought that was you singing.
03:12
No.
03:13
A lot of people don’t know you’re a great singer.
03:15
Oh, please.
03:16
This is not a karaoke show.
03:18
Well, let’s start with one of the biggest misconceptions.
03:21
People hear an electric vehicle and think fewer moving parts, less maintenance, new technology,
03:27
maybe insurance should be cheaper.
03:28
But that’s not what we’re seeing.
03:31
So let’s start with the basic question.
03:33
Why can an electric vehicle cost more to insure than a comparable gas-powered vehicle?
03:39
Yeah, that’s a great question.
03:40
And we hear that a lot because there’s a lot of safety features in there.
03:44
But there’s a lot of other things going on with electric cars that people don’t understand.
03:48
And on average, and again, it’s an average.
03:50
It’s not going to be, you know, for every situation.
03:52
But on average, electric cars are costing about 42% more to insure than a regular gas vehicle.
03:58
Is it the battery?
04:02
Well, that’s one of them.
04:03
You brought up moving parts.
04:04
That’s great because people go, well, they’re a lot cheaper to maintain because there’s a lot less moving parts.
04:09
And that’s true.
04:10
However, one of those non-moving parts is about a $20,000 battery.
04:15
Yeah.
04:15
And those don’t move.
04:17
That’s a lithium battery.
04:18
Yeah.
04:19
They do have other issues, though.
04:20
And so with the moving parts, that helps reduce your maintenance cost.
04:24
But insurance companies aren’t really worried about how much it costs to change the oil on your car.
04:28
Right.
04:28
They’re worried about what it costs to fix this thing or replace this thing when it’s damaged.
04:33
And that’s where the differences happen.
04:35
Those batteries that we referred to a little bit earlier here, typically they’re housed on the bottom of the car.
04:43
Okay.
04:44
And so if you have an accident where you were pushed into a curb or something happened and the underside of the car is damaged, that can be a big problem.
04:54
And the accident can be relatively minor.
04:57
Yeah.
04:57
The upper part of the car might be fine.
04:59
But if that battery gets damaged, the problems with it, it can overheat.
05:04
It runs so many systems of braking systems, regenerative braking systems.
05:07
There’s tons of everything’s controlled by that thing.
05:09
And so if different parts of it are damaged or connections are damaged, that can render the car very dangerous at that point.
05:17
Also with fires, too, if it’s damaged.
05:18
And so what happens is with these batteries, it’s the battery might be fine.
05:25
Okay.
05:25
But the problem is it looks like it might be damaged.
05:28
Just to do the test and the diagnostic and to figure out if it’s okay is really expensive.
05:34
Really?
05:34
Yeah.
05:35
And then if it is damaged, well, the car’s totaled at that point for most cases.
05:39
Over the battery?
05:40
Just over the battery.
05:41
The rest of the car can look pretty good.
05:43
Wow.
05:44
But to take out that $20,000 battery and put one in with labor and everything else, you might be looking at $25,000.
05:50
Jeez.
05:50
And, you know, if the car’s worth $35,000 or $40,000 at that point, well, it’s kind of getting past the point of repairing it.
05:57
Are there fewer repair facilities for EV vehicles, though?
06:01
Yeah.
06:01
That is one of the problems.
06:03
It’s a new technology, right?
06:05
Yeah.
06:05
And so you’ve got everybody who knows how to fix gas-powered cars.
06:09
The problem with EVs is that there’s very limited places.
06:12
And when you have limited supply, the costs are going to be higher.
06:16
And so the fact that we don’t have a ton of technicians to work on these, the other fact that when they’re working on these, a lot of times they have to use protective gear.
06:23
Again, these batteries can be real serious things to deal with.
06:26
And so the prep work and the protective gear and all the other precautions they have to take versus working on a regular gas engine, again, those are going to add up on the cost.
06:36
Right.
06:37
Yeah.
06:37
So it sounds like this was one of my questions, but you already answered it.
06:44
You know, a relatively small accident can create a very expensive repair.
06:48
Yeah.
06:48
Yeah.
06:48
Okay.
06:49
How much does the calibration of cameras and sensors add to a repair bill?
06:53
That is a great question because that’s one of the things that people don’t realize, too.
06:57
And that’s actually not just an EV-specific thing, too.
07:01
Yeah.
07:01
When your car has all these cameras, there’s a guy in my business group, and he was explaining he does windshields.
07:08
And one of the biggest issues with auto accidents in general is, or even just something as simple as a rocket in your windshield, is the recalibration of all the cameras and all the sensors.
07:19
If those aren’t working right, particularly because most cars have some version of a self-drive mode, and there’s different levels of it.
07:26
But even just a basic one relies on all of that stuff.
07:29
Okay.
07:29
And so, but the EVs tend to rely on it even more.
07:33
They’re packed with technologies, and a lot of them have different levels of autonomous driving.
07:37
So, yeah, when you damage even just the smallest thing, a little bumper accident in the grocery store parking lot.
07:43
Yeah.
07:44
Back in the day when we were used to it, those would be a $300 little accident.
07:48
Right.
07:48
Now they’re $4,000 to $5,000, $6,000 sometimes.
07:50
Wow.
07:50
That’s crazy.
07:51
Yeah.
07:51
So, are insurance companies still figuring out how to properly price EV rates?
07:57
You know, that’s one of the reasons, too, that I think they’re real cautious on.
08:00
And if they’re going to make an error on insuring something, they’re going to charge you more, not less.
08:04
They don’t want to be on the losing side of that battle.
08:06
And so, that’s a good question because there’s not as much data out there.
08:10
And insurance is all driven by prior law statistics.
08:13
And there’s just not as much data on the electric cars as there is on the gas-powered ones.
08:18
So, are we going to see EV insurance become cheaper as the technology becomes more common?
08:25
Or is this just the new norm?
08:27
No, I think the gap will narrow.
08:29
The gap is narrow.
08:30
Remember, EVs, when they first came out, too, just the gap to buy an EV, it was much bigger.
08:34
Now the gap is the average EV is getting close to about $60,000 on the average.
08:39
And the average price of a new car is about $50,000.
08:41
Yeah.
08:41
So, those gaps are narrowing.
08:43
And you’ll see as more technology comes up, people learn how to work on these.
08:47
Because that gap will narrow.
08:49
The data will narrow.
08:50
Or the data will become more prevalent.
08:52
So, they’ll be able to price these things accordingly.
08:55
The one interesting thing about EVs is that they actually have less accidents.
08:59
Really?
09:00
Yeah.
09:00
Okay.
09:00
People aren’t aware of that.
09:01
But the data shows that they actually – and that’s probably because who’s buying these?
09:05
Yeah.
09:05
Right?
09:06
It’s probably suburban people that aren’t going on long trips.
09:08
It’s a second car, usually, that they’re not relying on all the time.
09:11
So, it’s not being driven, maybe, as much.
09:13
But it’s probably mature adults that are driving these.
09:16
Right.
09:16
And so, the law statistics on these are less.
09:18
Right.
09:19
The thing is, when they do have an accident, they’re just costing a whole lot more to repair.
09:22
Well, we do know for a fact that Waymos are 10 times more safe than other drivers on the road.
09:29
Yeah.
09:29
I mean, there’s been some drivers I’ve been with that I’d rather trust a computer with than some of those drivers.
09:35
You said we weren’t going to talk about family.
09:37
Oh, so, let’s talk about the driver-assisted cars.
09:43
Are they driving insurance rates down a little bit?
09:46
I mean, you just said that they’re – I think that because the EVs have so many features in terms of the lanes and, you know, the self-driving.
09:55
And, I mean, I’ve been in some of these high-end Teslas that you can put in an address.
10:01
It’ll pretty much drive you there.
10:03
You know, so are the rates going down because it is safer?
10:07
You know, because that’s the gap you’re talking about that’s closing.
10:10
Yeah.
10:11
I’m guessing.
10:12
Well, that’s – I think the autonomous driving is a separate deal.
10:16
The reason I think the gap was closing on the repairs – and it’s still significantly higher for EVs,
10:21
but it’s just that the technology is becoming more prevalent and people are learning how to work on these.
10:25
But as far as the autonomous goes, there’s so many different levels of autonomous driving.
10:33
And right now, most cars are at level two, which is, hey, it’ll do cruise control, adaptive cruise control.
10:39
It will do lane management.
10:43
Level five, which isn’t even authorized to be in the U.S. right now, it’s not even legal, is completely –
10:51
there’s no – you’re not touching steering wheels.
10:53
The car could be built without a steering wheel like they’re doing.
10:55
Whoa.
10:56
In – what Tesla’s doing with some of their robo-taxi things.
11:00
But level four right now is the max, which is kind of like what you’re referring to with the Teslas.
11:05
And the question is, will that drive down insurance rates?
11:11
The problem with that technology is it’s not really 100% there.
11:15
If it’s snowing out –
11:16
Right.
11:17
If it’s raining out, construction issues, those can be problems.
11:23
And so the question is, we’re not seeing insurance companies taking any chances on lowering those.
11:28
Because I think the interesting question is, as those develop, who’s going to be responsible for an accident when you have a self-driving car?
11:36
Yeah.
11:36
Is it the owner of the car?
11:38
Is it the software company?
11:39
Is it the manufacturer?
11:41
These, I think, are going to be really interesting questions.
11:43
Yeah.
11:44
Yeah.
11:44
And that will be litigated.
11:46
Oh, yeah.
11:47
Yeah.
11:47
That will go on for a long time.
11:49
You know, you look at something as interesting as, let’s say you have a fully driving, self-driving car, and it has an accident while you weren’t driving it.
11:57
Well, we’re going to have all this data to see what happened, and all the cameras and everything, and all the data.
12:02
The question is, what if you didn’t update the software when you were supposed to?
12:06
Are you liable now?
12:08
Is the software company liable?
12:09
Is the manufacturer liable?
12:10
Right.
12:10
You’re liable.
12:12
Well, who knows, right?
12:13
I mean, but think of something as simple as that.
12:15
Like, do you ever miss a software update on your phone?
12:18
Never.
12:19
I know you.
12:19
You would never miss one.
12:22
But think about something as simple as that, and then are you all of a sudden now fully liable?
12:26
Yeah.
12:26
Well, it’s crazy, though.
12:28
Cars now, they have automatic emergency braking.
12:30
They’ve got plane departure prevention, blind spot monitoring.
12:34
They’ve had that for a while, but adaptive cruise control, collision warning, parking cameras.
12:39
The cameras are a big thing.
12:41
I mean, replacing a bumper these days can be really expensive.
12:45
Oh, yeah.
12:45
I mean, just the smallest little thing.
12:47
It’s crazy how expensive it is.
12:49
Yeah.
12:49
So, you know, here’s what I’m thinking.
12:51
I mean, if cars become safer, shouldn’t insurance become cheaper?
12:55
Well, the safer part is interesting.
12:58
If accidents go down, so there’s always two things that are driving insurance.
13:02
It’s frequency and severity, right?
13:04
Yeah.
13:04
And so, if frequency comes down, that would be, you know, less accidents, right?
13:08
Yeah.
13:08
Severity is going up because when there is one, instead of $300 bumper, it’s a $5,000 bumper.
13:14
So, insurance won’t come down on that fact at all.
13:17
It might even out a little bit.
13:18
You know, the frequency amount might help if the cars are safer and having less collisions.
13:22
But if they’re so expensive to fix and replace, I don’t know if we’re going to see a big reduction there.
13:27
You’re talking about the difference between fewer crashes and cheaper crashes.
13:31
Yeah.
13:32
And the crashes aren’t getting cheaper at all, but they might be fewer.
13:36
And, you know, I know you’re hoping that your auto rates are going to go down, but I wouldn’t plan on it anytime soon.
13:41
What does it take to recalibrate a windshield?
13:44
Oh, yeah.
13:45
Yeah, that’s interesting because, like I said, there’s a guy in my business group, so I’ve learned all about this.
13:48
And just being in the industry, we see it all the time.
13:51
So, the windshield is one thing.
13:53
The windshields have gotten very expensive.
13:54
Anybody that has to replace one lately knows that they’re very expensive.
13:57
But part of that whole process is the calibration.
14:00
It can take several hours to recalibrate everything.
14:04
Wow.
14:04
And a lot of that stuff is right up there behind your rearview mirror.
14:07
And to recalibrate it, there’s no standard either.
14:12
There’s not one from, you know, Nissan.
14:14
It’s completely different than Toyota and Mercedes and Hyundai.
14:17
And they’re all different.
14:18
And I’ve been told that even if there’s lights in your shop and there’s a little glare coming off of your windshield or off of your hood, that the calibration system won’t work.
14:28
So, everybody’s got their own.
14:30
And so, that drives up the cost, too, because you have to have all this different equipment for every kind of car.
14:34
But the calibration’s a big thing because if it’s not right, the car’s not – none of those adaptive systems, like you were mentioning before, are going to work.
14:41
Yeah.
14:42
Well, you know, could we eventually have fewer accidents and less expensive accidents?
14:49
Yeah.
14:50
I doubt that’s going to happen with the way the cars are going with the prices of cars and to replace them.
14:54
The other thing, too, is you’ve got to remember, you know, part of your insurance cost is liability, and that’s for injuries.
15:00
Right.
15:01
And so, I don’t see medical bills going down either.
15:03
That’s a whole other show.
15:05
Yeah.
15:06
We could do a whole 30 minutes on that one.
15:08
Yeah.
15:09
Right.
15:10
All right.
15:11
Well, let’s talk a little bit about what I promised to talk about because we’ve already – we’re almost halfway through this show.
15:18
Oh, that’s exciting.
15:19
It’s going fast.
15:20
Yeah.
15:20
I know.
15:21
Oh, and – but I want to talk about renter’s insurance.
15:24
So, I’ve got a friend that manages 450 apartment units, and it’s, you know, it’s a transitional area.
15:33
The rents are, I don’t know, between $1,000 and $2,000.
15:37
But people cannot get in until they show proof of insurance with a renter’s insurance policy.
15:46
So, why are they doing that, Ron?
15:49
Well, part of that is very smart management as far as in theory, and I’ll get to the practicality of that in a little bit here.
16:00
In theory, that’s a great idea to require your tenants to carry renter’s insurance because the landlord – here’s the deal.
16:07
They’re not worried that you carry renter’s insurance because if your apartment has a fire and you have to buy a new couch and new clothing, they don’t care about that.
16:16
That’s your stuff.
16:17
Right.
16:17
What they care about is the building.
16:20
And if there’s a fire – let’s say you cause a fire.
16:24
Let’s say – and I’ll just use a crazy hypothetical example that we’ve seen a bunch of times.
16:29
It’s not that crazy.
16:30
Right.
16:31
Exactly.
16:31
And you come home, you’ve had a few drinks, you fire up that deep fryer, you put it on the stove with some oil, you’re going to make some french fries or some chicken wings or something like that.
16:43
And, you know, you have a few drinks, maybe you lose track of time, you might have fallen asleep.
16:47
Not that we’ve ever had these claims.
16:50
And you burn down the building.
16:53
So, now, this was completely your fault.
16:57
This had nothing to do with the landlord or his property, right?
16:59
Yep.
16:59
So, if you have liability insurance, the landlord now can recover his loss and his insurance company can recover their loss against you because you were negligent and your liability now pays the landlord and his insurance company.
17:12
That’s why they want that coverage.
17:13
When people get a renter’s policy and they’re in a, let’s say, 80 unit and they do the fryer thing and they burn the whole, you know, 30%, 40% of the building gets fried.
17:25
Yeah.
17:26
How much liability are they – is that policy covering?
17:30
You know what?
17:31
Usually, the landlords will ask for half a million.
17:34
Okay.
17:35
Sometimes they’ll ask for even $300,000.
17:37
Something’s better than nothing, I think, is the point.
17:39
Yeah.
17:39
And we’re usually not burning down whole buildings.
17:41
Right.
17:42
We’re usually, you know, overfilling a tub that leaked all over into someone else’s thing or was causing a small kitchen fire.
17:50
Or you might have even left some stuff out in the hallway and someone got injured because they tripped over it.
17:55
That’s a liability also.
17:56
So, it doesn’t just have to be damage to the building.
17:58
Well, what exactly does renter’s insurance cover?
18:01
That’s a good question because I think a lot of people think, well, I don’t really own much stuff, so I don’t need renter’s insurance.
18:08
It’s a huge misunderstanding.
18:11
The first thing is it covers your personal property.
18:13
And I’ll get to that and people are like, well, I don’t own a lot of stuff.
18:15
What’s my stuff worth?
18:16
It’s not what it’s worth.
18:17
It’s what it’s going to take to replace it.
18:19
Yeah, it’s replacement cost.
18:20
Exactly.
18:21
You know, you’ve got an old couch that’s maybe worth, you know, $200 if you sold it to somebody, right?
18:26
Yeah, but buying a new one.
18:27
Two grand.
18:28
Right.
18:28
You know, your TV, again, how much is a used TV worth?
18:31
$50.
18:32
I don’t know.
18:33
I’ve got three in my garage.
18:34
You need one?
18:35
I’ll give you $50 for all three.
18:39
So, yeah, they’re not worth a whole lot, right?
18:41
But to go out and buy a new one and just think of everything, all your clothing.
18:45
You’re like, I don’t have any fancy clothes.
18:46
Go out and buy everything new.
18:47
And here’s the deal, too.
18:49
You’re not, you may have furnished your place with, hey, I got my couch on sale.
18:53
I got, you know, this coffee table for my grandma when, you know, she passed away.
18:57
And your house might be full of those things.
18:59
The thing is, if you have a fire, you’ve got to replace everything tomorrow.
19:02
Right.
19:03
You’re not sitting around going to rummage sales here and there for the next six months.
19:06
You’ve got to replace everything.
19:08
Yeah.
19:08
And so people undervalue what it costs.
19:10
Oh, I’ve been in that situation.
19:12
We lost a garage and two vehicles, you know, overnight and everything in that garage.
19:17
And the next day we wake up and our minivan’s gone and my car’s gone.
19:21
And we have no vehicle and we have five children.
19:23
Yeah.
19:23
You can’t shop around for a sale.
19:25
You’ve got to get a car.
19:26
Well, we had four at the time, but yeah, whatever.
19:29
Yeah.
19:30
So I’ve experienced that.
19:31
But does the landlord’s policy cover the tenant’s belongings?
19:36
That’s a great question because people will say, well, my landlord has insurance.
19:39
Yeah.
19:39
For his building, not for your stuff.
19:41
Yeah.
19:41
It has nothing to do with anything inside your unit.
19:44
And so, no, he doesn’t.
19:47
His policy has nothing to do with yours.
19:48
Yeah.
19:49
So what happens if your apartment becomes unlivable?
19:53
So that’s one of the great things.
19:54
So we talked about your personal property.
19:55
It’s all going to be replacement coverage.
19:56
So all the stuff inside there is going to get replaced, right?
19:58
And you’ve got to select enough coverage to make sure that happens.
20:01
The next thing is loss of use coverage is what you’re referring to or additional expenses.
20:07
And that covers, let’s say you do have a fire.
20:09
Well, let’s say it’s one of these things that you see on TV.
20:11
It’s, you know, it’s the middle of winter and an eight-family building goes up in flames, right?
20:16
And they bring out the Milwaukee County buses for you to sit in and wait.
20:20
And then your next stop is the Salvation Army for a shelter for the night.
20:24
Yeah.
20:25
Well, if you have insurance, we’re going to pay for you to live somewhere else temporarily
20:28
until your place is either repaired or until you find permanent housing again.
20:32
Oh, okay.
20:32
Yeah.
20:33
So you don’t have to live at the shelter at the Salvation Army.
20:35
You’re going to stay in a nice hotel.
20:37
And if it’s going to be longer, maybe they’ll put you up in some sort of accommodation
20:40
where it’s like a residence-in type thing where you get a little long-term accommodation
20:44
until your place is low.
20:46
But that’s one of the big benefits that people don’t realize.
20:48
How much does renter’s insurance generally cost?
20:51
And what is the cost based upon?
20:53
The cost is based upon, that’s a good question.
20:55
It might be where you’re living, what kind of building you’re living in,
20:57
does a building have sprinkler systems, all those kinds of things.
20:59
So it can be location-based.
21:01
Part of it’s going to be are you grouping it together with your auto insurance,
21:04
which I definitely recommend you get huge discounts on that.
21:06
Yeah.
21:07
And then the other thing will be it’s primarily based on how much coverage do you need
21:10
for your personal property.
21:12
So if you go, eh, I’m a college student, I just graduated,
21:16
I need $25,000 to replace all my stuff.
21:19
That’s great.
21:20
If you’re a family of four and you’re living in a four-bedroom townhouse,
21:23
you might need $100,000 worth of stuff.
21:25
So your policy is going to be significantly more than the $20,000 house.
21:29
So if you have renter’s insurance, and let’s say I’m a renter, I’m 25 years old,
21:33
I rent an apartment, I’m forced to buy this insurance, I have no idea what it’s for,
21:38
so I buy it.
21:39
And I have $3,000 worth of electronics, $2,000 worth of clothes, $2,000 bicycle,
21:46
and $5,000 worth of furniture, which I probably don’t have,
21:49
and a bunch of stuff I haven’t even thought about.
21:51
So my apartment burns down, now who’s paying for it?
21:54
Well, I’d like to address your priorities first,
21:56
that your clothing is worth the same amount as your bicycle.
21:59
I don’t know if you have too expensive of a bike or not very nice clothes,
22:03
but we’ll move on from there.
22:04
If I spent a little more on my bike wear clothing,
22:07
I’d probably get over that $2,000 mark.
22:10
You would.
22:10
You’d throw in a nice helmet, too.
22:12
No, but so your question was?
22:16
Yeah, I mean, if I have renter’s insurance, I got that stuff covered, I assume.
22:19
Absolutely, yeah.
22:20
Yep, and that’ll all be covered under basic personal property.
22:23
If you have things that go outside the norm,
22:25
like jewelry or gun collection or things like that,
22:28
we want to schedule those separately on the policy
22:30
because there’s limited coverage for line-end and stuff,
22:32
but the general stuff you just mentioned,
22:34
all going to be covered if you have a fire or something like that.
22:36
All right, we’re moving on because we’re going on to our third segment.
22:38
Yes, sir.
22:39
That’s condo insurance.
22:40
Oh, that’s exciting.
22:40
Yeah, so this is one of my favorite insurance topics
22:42
because condo insurance is very confusing.
22:46
So let me just give you a scenario.
22:47
You own your own unit.
22:48
The association owns certain common areas.
22:52
There’s an association master policy,
22:54
and then there’s your individual HO6 policy.
22:58
So who covers what?
23:00
Wisconsin OCI specifically warrants condo owners
23:03
to understand the division of responsibility
23:06
between the association and individual unit owners.
23:10
An HO6 policy is designed for the condo owners
23:13
and can cover personal property liability
23:15
and certain improvements, alterations, and fixtures within the unit.
23:20
Where do people get this wrong, Ron?
23:22
Well, you got a lot right there, actually.
23:24
That’s really good.
23:25
Yeah.
23:26
You even knew the form number.
23:27
That’s nice.
23:29
HO6.
23:30
That’s a nice touch.
23:31
I’m good with acronyms.
23:32
So I’m going to address a couple different things.
23:38
Actually, so just my background on condo insurance is we,
23:41
on our commercial division, we insure a lot of associations.
23:44
So we’re very, very familiar with condo associations,
23:46
the master policies and how all those work.
23:48
We also insure a lot of unit owners.
23:51
So we’re familiar with the interaction of how this all works.
23:53
So you’re asking the right guy on this.
23:55
I’m going to start out and say that when we get a client calling for a condo
24:01
insurance for a unit owner, 85% to 90% of the time when they come over to us,
24:08
their policy is written incorrectly.
24:10
It’s a shocking number.
24:11
Wow.
24:12
Yeah.
24:13
85% to 90%.
24:15
How could that be?
24:16
Right.
24:16
Agents don’t know what they’re doing.
24:18
Why is that?
24:20
They look at it as a renter’s policy.
24:22
They go, well, this person doesn’t own the building.
24:24
We don’t need to insure it.
24:26
Wrong.
24:27
You bought space in a building.
24:29
It is like a homeowner’s policy, not a renter’s.
24:32
So most of the agents are concerned about looking at the contents.
24:36
The contents are one portion that we’re going to get right.
24:38
Of course, we’ve got to get that right.
24:39
But most associations, if it was 1980 or newer,
24:44
the bylaws state that the unit owner is responsible from studs in,
24:48
and that’s the language.
24:49
What that means generally is the association would build the frame of the
24:53
building.
24:55
And the studs.
24:56
And then stop there.
24:57
That means you’re responsible for drywall, flooring, cabinetry,
25:01
lighting, plumbing fixtures.
25:02
So all in coverage.
25:04
Everything except for that exterior wall, essentially.
25:07
Studs in sounds a little light on coverage.
25:11
Yeah.
25:11
It’s kind of a sexy term, too.
25:13
Yeah.
25:13
Well, I guess.
25:15
If you’re a single woman looking for a stud.
25:17
Right.
25:17
Exactly.
25:18
Oh, boy.
25:18
No, but it’s, so it’s, that’s the way most associations are written.
25:22
Very few of them, the master policy will cover the interior.
25:25
And that’s a very good reason we could do a whole show on that as well.
25:27
Um, but the idea is, is that, um, you’re responsible for the entire unit.
25:32
So you are essentially building a home except the exterior walls.
25:36
Yeah.
25:36
And so we do our analysis on it and we come up with, we have different formulas on, based
25:41
on square footage and the features of your condo.
25:43
And we can come up with a replacement of what it’s going to cost to replace that interior.
25:47
Do you, let me ask you about condo owners.
25:50
I mean, do you think they, are they reading their association declarations?
25:55
Do they understand them?
25:56
That’s the first thing we usually ask for.
25:59
And I think this is the problem with, that’s why we see so many incorrect things.
26:02
We ask them, the, the new buyer of a condo, we say, can you send over your bylaws to us?
26:07
The association bylaws, because all claims are determined who’s paying what from the bylaws.
26:12
Okay.
26:13
We just actually recently had one this week and our adjuster said, we’re denying the claim.
26:18
And I said, you got to do better than that.
26:20
And a little more information.
26:21
He goes, well, the bylaws dictate that the, um, that the association is responsible.
26:25
However, they did have a clause in there that, um, if it’s under the deductible of the association,
26:31
then the unit owner is responsible.
26:33
Yeah.
26:34
Okay.
26:34
And in this case it is.
26:35
And the deductibles are going really high on condo association master policy.
26:39
Well, that’s one of my next questions is what happens if the association has a huge high deductible.
26:46
That is a great question because nobody’s addressing this.
26:50
And again, most agents don’t deal with the master policies we do at my agency.
26:54
So we understand the interaction.
26:56
So what happens is we’re seeing carriers over the last couple of years really take some big losses in habitational and condos.
27:05
A lot of them weather related, hail related, all those kinds of things, but they’ve been taking some big losses.
27:09
So rates are going way up.
27:10
And one of the ways to offset the losses for the insurance company and to help the rates for the, for the master policy is to bring a big deductible up.
27:19
And so when I talk big deductibles, I’m talking, some of these are over a hundred thousand dollars for an association.
27:26
It’s not uncommon at all to have a $25,000 deductible for the association.
27:30
Yeah.
27:30
So when, how does that relate to the unit owner?
27:35
I’ll give you a great example.
27:36
We have a loss in a common area and it’s not covered by the insurance or it’s under the deductible.
27:45
So what they do is they assess all the owners now and you can add this loss assessment coverage on your policy.
27:52
We’re typically recommending $25,000 to $50,000 now, because you might get hit with a big common area expense that the insurance isn’t covering.
27:59
But if it’s a covered type loss, you can use your loss assessment coverage from your personal unit owner policy to pay that bill that you’re going to get from the association.
28:09
So it’s called loss assessment coverage.
28:10
Really important.
28:11
Many agents don’t understand how it works.
28:13
We totally get the interaction on all that.
28:15
All right.
28:15
Well, Ron, I want to thank you for being on the Robo Show.
28:18
I’ve known Ron for 25 years.
28:21
I’ve worked with your insurance agency.
28:23
I know, I’ve known Jeannie.
28:25
I know a lot of your people.
28:26
You guys got great people and you got great service.
28:28
I’ve referred a lot of people to you.
28:31
You know, you want to give us your website and your phone number if anybody wants to reach out and has questions.
28:37
Sure.
28:38
Yeah, it’s philio.com.
28:40
It’s P-H-I-L-L-E-O.
28:43
And we’re in Brookfield, Wisconsin, independent broker.
28:46
We have over 80 carriers we represent.
28:48
So what that means is we can shop the whole marketplace and we work for the clients, not for any insurance company.
28:54
We have a great team.
28:55
I’m super proud of them.
28:57
Call up there.
28:57
You’ll love to talk to them.
28:58
Come to them.
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