Some people dream of having a home in the country; a place to slow down, smell the air, and escape the busyness of life in the big city. Providing home insurance for someone’s dream in the Texas countryside can present some interesting challenges. Such was the case last week.
My friend, Valerie Parrish, a mortgage loan officer at Mid-America Mortgage, asked me to talk with a couple moving to Texas from a state on the east coast. They’re buying a home west of Fort Worth and wanted to ask some questions about home insurance in Texas as they prepare for closing. I discussed the home with the wife and we looked at pictures of it together on line while discussing her questions.
I was then asked to quote the insurance on their new home and I quickly ran into three interesting hurdles that had to be overcome including:
- Fire protection classification and brush fire exposure
- A very large guest house
- A wood burning stove
Fire Protection Exposure: Every fire department has a protection class code. The codes range from 1 to 10 with a 1 being the best PC code and a 10 the worst. Fort Worth and Dallas have a PC code of 2 while Highland Park has a PC code of 1. Homes in the country typically have a PC code of 8, 9, or 10. The factors that influence this include:
- Availability of water
- Distance to a fire station
- How quickly the fire department can get there
There are usually no fire hydrants near homes in the country. That means water has to be brought in, usually within the fire truck itself, although they may make use of a stock pond if it’s near enough. The distances from the fire house to the home may be 3 to 5 miles or even longer. This can slow response and increase the length of time a fire burns and the damage it causes.
Most fire departments in the country are volunteer fire departments. They have to arrive at the fire station or scene of the fire, get their equipment on, and then respond. The longer this takes the more damage a fire can cause to a home increasing the chances of a large claim or even a total loss.
When these factors exist, I talk with the underwriters of each company to confirm they’ll write a home in a certain protection class code area. With one of my carriers, we’ll review aerial photos from Google to determine if there’s a brush fire hazard based on surrounding vegetation and the level of visibility by neighbors.
Guest House: Many homes in the country will have extra buildings on the property such as barns, detached workshops and garages. Having a guest house on the property is not uncommon, but in this case, the guest house was almost the same size as the main house. The issue was how to best insure the guest house along with the main home.
All Texas home insurance policies include coverage for detached or separate structures which include swimming pools, fences, garden sheds, detached garages, and more. The level of coverage for detached structures is usually either 10% or 20%. Raising the coverage for a nice swimming pool or cabana is a common practice, but have almost equal coverage on the main and guest homes is not common.
This was the second point I discussed with each of the underwriters. I asked whether we could raise the amount of coverage on separate structures high enough to cover the guest house or would we need to write a separate policy for it. Since the guest home will probably become the permanent home for an immediate family member, the decision was to increase separate structure coverage to a value sufficient to replace the guest house.
Wood Burning Stove: Insurance companies have no problem writing a home with a wood burning fire place; however a few will increase the premium to account for that. Some companies will not write a home with a wood burning stove (similar to a cast iron pot belly stove) because of the increased risk for fire or someone getting burned by touching it, etc.
Since I had interior pictures of the home via Trulia.com I addressed this with each of the underwriters. One declined to write the home on the basis of wood burning stove combined with a brush fire potential; the others noted in their systems preliminary approval for the home.
Why would I go to the trouble of addressing all of this even before I quoted the couple’s new home? There are two key reasons I do this on any home where I believe it’s warranted:
- If there’s anything “unusual” about a home I want to confirm who will write a policy on it first and who won’t. It makes no sense to present someone with a home insurance quote only to have to retract it because of an underwriting decision prior to closing. Nor do I want to write the policy only to see it cancelled after closing when the home inspection is done.
- By addressing these points up front, I will be able to provide a prospective client a complete and accurate quote. It may be more expensive than someone else’s quote that doesn’t include coverage for these “items” but it will stand up when underwriting reviews it.
By the way, the couple will get a horse and probably a beef cow and I’ve already discussed the cow with the underwriters too!
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