Severe storms, leaking pipes and other unforeseen events pose a looming threat to most individuals’ biggest investment: their home and its contents. To learn more about how Homeowners & Dwelling Insurance can protect the places and items homeowners value most, Crain’s Content Studio spoke with Bill Gatewood, Corporate Senior Vice President, Burns & Wilcox, Detroit/Farmington Hills, Michigan.
What are the biggest risks facing homeowners today?
“Our goal should be to protect the lifestyle of our clients so that if they have a loss, the financial damage is not going to impact their ability to continue with the lifestyle they have built for themselves. Brokers should develop a pattern of asking very open-ended questions so they can really understand a client’s full picture and what needs to be covered. You have to dig deeper.” – Bill Gatewood
B.G.: Homeowners who live along the coastline should be checking into whether they have adequate coverage for hurricanes and wind-related losses. I would advise California homeowners in particular to consult their broker or agent about their earthquake and wildfire coverages. For homeowners in general, the biggest risk is non-weather-related water damage from leaking tub basins, broken pipes, dishwasher hoses breaking and the like. Wherever there is running water, there is potential for damage. In addition to the cost of repairing the damage, homeowners who have had these types of claims may find it difficult to obtain Homeowners Insurance. Other non-weather-related perils, such as electrical fires and roof leaks, are also common.
What should homeowners be aware of relative to these risks?
B.G.: Maintaining your home has always been important, but it is now more important than ever, especially for homeowners living in natural disaster catastrophe zones. Homeowners in these areas should do all they can to harden their homes against hurricanes, wildfires and earthquakes to minimize damage in the event of a catastrophe. Simple steps such as clearing brush from around their property, trimming back overhanging limbs and using non-combustible landscaping are very effective in protecting homes in wildfire-prone areas. There is also technology available to help mitigate water damage. For a relatively low cost, homeowners can install water monitoring devices that will send an alert to their smartphone when excess moisture and humidity are detected, helping to identify a slow leak before it turns into a large loss.
What kinds of insurance policies can help homeowners respond to these threats?
B.G.: Basic Homeowners & Dwelling Insurance will cover most losses. In California and any state with earthquake risks, Earthquake Insurance is needed. Flood Insurance offers coverage that is not available under a Homeowners & Dwelling Insurance policy. The best advice I can give a homeowner is to make sure that you have adequate coverage if something catastrophic were to happen and you lost your house and everything in it. For most homeowners, that represents the bulk of their assets and their greatest investment.
What limitations and exclusions should homeowners be aware of? Are there any supplemental coverages they should know about?
B.G.: Most Homeowners Insurance policies are going to have limitations for cover specialty items like fine art, a wine collection or antiques. You can purchase a Personal Article Floater policy to cover high-value jewelry, collections and other big-ticket items.
How has COVID-19 affected the Homeowners Insurance market?
B.G.: What we have seen is that there has been a large increase in the number of individuals working out of their homes, which creates a unique circumstance for Homeowners Insurance policies. If employees bring home equipment from their company, they should look into how or whether it is covered if it gets damaged, lost or stolen, and under whose policy. Real estate closings are being postponed in some places, and work on homes under construction has slowed down, both of which have some insurance implications. Most of this is very short-term. On the positive side, the severity of damage being claimed under Homeowners Insurance policies has started to dip a bit because so many individuals are home now.
How can brokers increase their success with Homeowners & Dwelling Insurance?
B.G.: Brokers who take the time to educate their clients on what they are purchasing are far more successful. For most individuals, Homeowners & Dwelling Insurance is confusing. There is some anxiety around purchasing insurance of any type. The brokers who make it a priority to answer client questions and explain products fully will ultimately have more long-term success because they take themselves out of being insurance salespeople and they turn themselves into risk advisors.
What features of Homeowners & Dwelling are specific to Burns & Wilcox?
B.G.: Last year, we partnered with a company called Wildfire Defense Systems out of Bozeman, Montana. They are the largest wildfire suppression company in the United States and they essentially act as a watchdog for the insurance companies that they partner with. When a home is threatened, they dispatch a crew to go out and ensure that the property is as defended as possible when a wildfire moves through the area. At the moment, we are the only wholesaler that offers that service to our agents and their clients.
What questions should brokers be asking clients relative to Homeowners & Dwelling Insurance?
B.G.: Ask clients about their lifestyle—understanding their hobbies and things that they like to do reveals potential insurance exposures that need to be covered. Too often, there is just a focus on insuring the house itself. Our goal should be to protect the lifestyle of our clients so that if they have a loss, the financial damage is not going to impact their ability to continue with the lifestyle they have built for themselves. Brokers should develop a pattern of asking very open-ended questions so they can really understand a client’s full picture and what needs to be covered. You have to dig deeper.
HOMEOWNERS & DWELLING INSURANCE
WHY YOUR CLIENTS MIGHT NEED IT: For most homeowners, their house and the items in it represent their single biggest financial investment.
PROTECTS AGAINST: The most common exposures, such as water damage, electrical fires and roof leaks, as well as severe weather-related damage.
EXPERT OPINION: “The best advice I can give a homeowner is to make sure that you have adequate coverage if something catastrophic were to happen and you lost your house and everything in it,” said Bill Gatewood, Corporate Senior Vice President, Burns & Wilcox, Detroit/Farmington Hills, Michigan.
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