Hazard Insurance vs Liability Insurance in Albuquerque

Tego Venturi: Let’s just talk about hazard insurance versus liability insurance and that you always see those on every policy. So what’s the difference? What are those covers?

William Tobin: The hazard insurance covers the structure of the home itself. liability insurance goes with your home and that covers, in case you hurt somebody, again, doesn’t include vehicles or motorcycles. But if somebody slips on your property as the most common, gets hurt your pool, your dog bites them, the liability covers the other person.

Tego Venturi: Got it? What other type of let’s say coverage or riders are additional first off to find what a rider is for people.

William Tobin: That’s where you pay me more money for riders or

Tego Venturi: additional overcharged overcharge, is that what it is? Yeah, it’s

William Tobin: an Upshot. Now, the riders The most common is when homeowners policies, almost invariably have limits on jewelry, firearms, you know, artwork, things like that. So if you want a rider, it means you’re going to pay the insurance company more money to specifically insure an item that we limit. And again, jewelry i think is, you know, wedding rings all day long.

Tego Venturi: So what about personal property? Otherwise, let’s say you know, you’re you’re ordering your homeowner’s policy. Okay, so you got hazard insurance to cover this structure structure, you’ve got liability to cover in case somebody gets hurt and tries to sue you. Right, right.

William Tobin: What about all the other stuff? That’s, those are contents. And that’s the stuff that you keep in your home. So the way when I teach a class, I’ll explain it, if you turn your home upside down and shake it was thought like that? Yeah, it’s easy for me to understand.

Tego Venturi: So wrap your brain around that. Yeah,

Tego Venturi: let me just before we go ahead, go ahead. We say that in the real estate business, too, because we have you know, the the real property right, which right real estate, the building and the land and everything, and then you have personal property, right. And we say the same thing, same thing, if you turn the house upside down and shake it, that’s personal property, right? And the homeowner’s

William Tobin: policy will also cover that

Tego Venturi: got it. But you can have different limits on that. So you know, let’s say you have all this expensive, whatever, right? You right, you can do that. In that brings up another question that that I we always recommend and people should always do this is documenting the contents of your home. How do you recommend people do that? Easy on it’s really funny. We all know how many couches and TV sets we have. But when whenever there’s a loss by fire, and there were some in California were literally in Los Alamos as well. Right. It was brutal,

William Tobin: it leveled the house, there was nothing but ashes. It’s our clothing, our socks, our silverware stuff that we accumulate, nobody goes to target and buys $100,000 and outfits, their kids there, right. It’s done over time. Yeah. And so I recommend a video of those open all your drawers, you know, shoot all your socks, your clothes, your you know, things that we don’t think about. And for God’s sakes, don’t keep that in the kitchen cabinet above the stove. Yeah, right. Right. Keep

Tego Venturi: it Well, yeah. in the cloud, do it. Well do it in your phone. Right and keep it in the cloud. Exactly. I gotta tell you a story on that. So when I first house I owned up here in Rio Rancho. I did it. I did it with one of those big old VHS rigs. Yes, yes. Yeah. I

William Tobin: mean, that’s we’re dating ourselves.

Tego Venturi: But yeah, I mean, some people probably don’t even know what that is. Now. I think most of the listeners here know what that is. But yeah, I mean, now we just carry around. Yeah, use your iPhone. Yeah, you put it out in the cloud. And it’s there. So that’s good. So So documenting is good, smart. It’s something that that as of 2020, I think is obviously become to the forefront is working at home. Yes. And so a lot of people are working from home, maybe, you know, have built out a home office now. Maybe they’re doing kind of CO working spaces, you know, they’ve still got their office space, but they also have a home working space, which I have. How, what would you recommend to somebody that has that situation?

William Tobin: That’s an unbelievably appropriate question right. Now,

Tego Venturi: of course,

William Tobin: I know. Yeah, sure. But it is especially during COVID. Every homeowner’s policy will have limits on business properties, stuff you use for business. Okay, so to get back to your writers, you can get there really inexpensive, you know, you can get a rider for that to cover, quote, business property, because one of the things that homeowners policies exclude, are, quote, business properties, most of them will give you a little bit to ego. They’ll give you 1000 or $2,000. Some of the really good ones may give you 5000. That may or may not be enough.

Tego Venturi: So if you have, you know, I know a lot of people will now that when they itemize on their taxes, they’ll pull out all their office equipment and services. expense, right? I mean, obviously, in the real estate business, we all we’ve all been doing that for years. But a lot of my people that haven’t ever, you know, work the way realtors do are now experiencing this. And so now they’re, they’re pulling out their computer, they’re pulling out their printer, their desks, their furniture, their whatever they’re using as their office equipment, right? Yep. In claiming it as a business expense. So that means if they’ve done that, they probably won’t get covered on that

William Tobin: They will have limited coverage unless they add. We call it you know, business property on and off premises. A lot of times you’re especially as a realtor. Yeah, some of y’all live out of your cars from the best I can tell.

Tego Venturi: You may not it didn’t even I didn’t even see that bus coming. Hey, you work with a lot of realtors and lenders here in Albuquerque. So be careful there. No, I do. Yeah. And that brings up really, let’s I want to transition to this other conversation is around when somebody’s buying a home, there’s this piece where we have a contingency, right? Home goes under contract, they have this period to do all their due diligence, right? One of the things that that homebuyers have the option to do and need to do is check into insurance and they have an option to you know, get quotes, figure out what it’s going to cost, all that stuff and actually have, the buyer actually has the opportunity to either back out of the deal if they feel like something comes up. So when somebody is gone under contract on a home and they want to get, you know, quotes and figure it out, should they just start calling around and get a couple different quotes? I mean, I know that you want them to just call well Thoma dad for farmers and Sharon to Albuquerque, but yes,

William Tobin: but I think honestly, it is, you know, wouldn’t be honest, if I didn’t say get a couple quotes. Yeah. I mean, if you’re gonna have a contract or you know, do a job for you, normally, you’ll get a couple bids. Yeah. I we hear this all the time to keep them honest. Yeah. My philosophy is given the best bid you can right out of the box. And that’s my best. But yeah, I think it’s prudent. Yeah. And it’s not just price to ego. It’s also coverage. Some companies will have coverages that, that you may want, and they may not offer it. And so okay, the policies, even though they’re all close, there’s some nuances that can be pretty serious.

Tego Venturi: If somebody just calls in and says, I need an insurance policy, or homeowner’s policy, or we call it we call it hazard insurance, or we call it homeowner’s policy. It’s kind of all the same, but

William Tobin: I think the mortgage companies like to call it hazard and yeah,

Tego Venturi: We call it homeowners homeowners policy, because that includes the liability. Yes. But every mortgage company if something has some limitations, or some requirements on what they what coverage you need to get, right,

William Tobin: Yes, they usually want the, the amount of the loan covered, or is not unusual. Yeah. They don’t require much more sometimes they require flood insurance, which is expensive in New Mexico.

Tego Venturi: Let’s go down that road, actually. Yeah, if you got a second I do. So you know, people might not think about it that you know, New Mexico, there’s places where we need flood insurance.

William Tobin: Yes, it’s the flat it’s unlike in the Midwest, where the rivers, you know, overflow. We’d love some more water in the Rio Grande. Why but why hotter? Yeah, but it is flash flooding, which happens in Albuquerque, Phoenix and the desert Vegas, the desert communities. If the mortgage company requires flood. It’s usually not cheap. Yep. And that is required. And that would be because homeowners don’t cover flood. That’s the problem. We cover if a pipe You know, we’ve had cold weather. Yeah, so pipe burst, sudden and accidental pipe burst, covered one this morning. Yeah. Those are fine. most homeowners policies are going to cover that for you. None of them cover flood.

Tego Venturi: And I want to go down that road the difference between what homeowners covers versus what home warranties cover because that question comes up a lot. But But on this whole thing of flood insurance. That’s one of the reasons we have this whole contingency period, because as a homebuyer, you want to know that. And sometimes, maybe the seller doesn’t know or maybe, you know, they haven’t looked at the FEMA map in 10 years, and they don’t know change. And the FEMA maps changed. So the FEMA maps or the maps was explained what the FEMA map is

William Tobin: Basically, that’s what the mortgage companies use. You know, that’s the Federal Emergency Management. And the FEMA maps define whether you’re in a flood zone and the type of flood zone so flood insurance is not the same. You can be it’s interesting to you go you can be on I’ve seen this in Albuquerque acres, were part of your properties in a flood zone, but the house isn’t. Yeah, and sometimes that’s An interesting argument with a mortgage company. Yeah, there’s other ones were very common where one house on the block is in a flood zone and down the street. They’re not.

Tego Venturi: So we’ve those maps are very, we’ve seen some in the middle of the North East heights that North Albuquerque acres, but in the middle of the Northeast heights in a subdivision, yep. with, you know, we would consider, you know, track type homes production homes, and it’s in a flood zone and go, where did this come from? Right. Yeah. So So it’s one of those things that, you know, just because you’re not near the Rio Grande, or you’re not near any, you know, kind of bigger Royals, you still got to make sure. And of course, the most prominent places in the metro is South Los Lunas. South Valley. Is that true? Yes. Yes, Los Lunas below and they’ll have some, a lot of times they require flood insurance in Valencia County.

William Tobin: The interesting thing is farmers Now, a lot of folks don’t know this. We didn’t have a lot of choices before we would have to go through the National Flood plan. Yeah. Now, there’s flood insurance offered. It’s it’s more private. Yeah. And if you qualify for it’s literally a third of the price. Oh, interesting. Yeah. I mean, you know, you we did one the other day where the National Flood plan was, I think $2,000 they qualified for this modification. And it came in, I want to say it six or $700. The difference was they were able to make the deal because they didn’t the mortgage company didn’t have to.

Tego Venturi: So that was something you were able to add. We were a writer.

William Tobin: Yeah, we were able to give them a different flood policy. Yeah, got it. So there’s also something really quick called an elevation certificate where you get a surveyor. If you’re somebody feet above the base floodplain. Again, it is significantly cheaper. So with a good realtor and a good insurance company, there’s a lot of value that y’all add to a homeowner.

Tego Venturi: We see that out in Baskin contado in that neighborhood, because it’s right by the Rio Grande. But the homes have the pad sites that have been raised up quite a bit. Yeah.

William Tobin: And it moves you into you don’t even need flood. Yeah. Or it goes into a zone that it’s so cheap. But that’s the advantage to me. of using professionals.

Tego Venturi: Yeah, got it. Just one last thing on this whole insurance, doing your due diligence on it. Let’s talk about the CLU report.

William Tobin: Oh, god Okay,

Tego Venturi: The infamous CLU report. So what is it? What is CLU stand for? If it’s if you ever start doing any insurance, shopping and stuff? You’ll hear that term? What does it mean?

William Tobin: It means they kind of look into Yeah, it’s comprehensive and extensive Atlanta Comprehensive Loss Underwriting. Yeah. And they do two things. They see if you, the person, the buyer have had any homeowners type claims anywhere in the country. They also look and see if the home has had claims.

Tego Venturi: So it’s kind of like a credit report for you and that Yeah, and the home for insurance.

William Tobin: Yes. Yeah. And it affects the thought it affects the pricing Tego.

Tego Venturi: Oh, I know. I’ve seen it. Yeah, I’ve seen it. Yeah. You know, generally an average house, you say, Oh, yeah, it’ll probably be you know, anywhere six to $900 for policy insurance, and you see a $2,000 quote, and you’re like, Whoa, what’s going on here for a year?

William Tobin: Yeah, yeah. And listen, I bought houses before and I, at one time had a condo in Florida that got hit by a hurricane, right. And it messed up my clue report, because I put in a claim. And so I actually had to pay more money myself. So again, because you know about those type of things, right? A good realtor will know that you should do a clue. And so should the insurance agent, they should do a clue on both the home and the buyer so that the quotes accurate.

Tego Venturi: What happens if they don’t do that? Does that mean they all of a sudden after they do the quote, you come back and say oh, by the way, that price we quoted you is no good. Exactly.

William Tobin: Yeah. Yeah. And and that’s something that I’m not interested in doing. Yeah. Don’t give them bad news ahead of time. Yeah.

Tego Venturi: What do you can the public go and get a CLU reporter Is that something only available through insurance?

William Tobin: I actually, I don’t think I’ve been a member of the public. Yes, I actually don’t know.

Tego Venturi: Yeah, that’s a good question, too. I don’t know. I mean, I don’t know why you’d want to because you might as well work with the insurance agent anyways, you know, right through it.

William Tobin: I know to go with you. If you call my office and ask for a CLU report out, you know, now they do charge us but again, you know, any insurance agent that’s working with a realtor? Yeah, they should do it for free for them as a courtesy.

Tego Venturi: Well, there’s a lot of companies out there now providing these like, home fax, there’s one out there. I think it’s called home fax. It’s kind of like Carfax for some companies out there doing stuff like that. And I’m sure they’re pulling stuff like that from databases if there’s been any claims on home.