Real Estate Show What's Going on with Insurance So Oregon

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Real Estate Show with Megan McPherson, Farmers Insurance

Alice Lema: [00:00:00] Hey everybody. Welcome back to the real estate show. I'm Alice Lema. I'm a broker here in beautiful Southern Oregon with John L. Scott real estate. So happy to have you back on the show this week, we're gonna be talking to Megan McPherson of Farmer's Insurance in part about the new state of Oregon fire laws that were passed, well passed and then rolled out and rolled back in.

But you know we still need to dissect this. We need to talk about what the state of Oregon is trying to accomplish with these laws. They're making, trying to make some changes in what kind of materials we use on our siding, our plant life, our roofing, where we're located, how that all plays into the insurance industry.

So Megan McPherson of Farmer's Insurance was so gracious to agree to jump on the show with us today and talk about a lot of that, even though it's kind of rolled back because of public outcry basically. And not a lot of details. We still wanna take that opportunity, this opportunity and get prepared, right? [00:01:00] Because there's nothing like being proactive while the state of Oregon is thinking about things. . So, but before we get to that interview with Megan McPherson of Farmer's Insurance, I wanna touch briefly on some recent stats that our local Rogue Valley Association of Realtors published this week.

And they have a fabulous website. If you've never seen it jump on our local RVA website. You can get all this data yourself, but some of it's jaw dropping. So I just wanna bring it to your attention that our residential inventory in Jackson county went up 84% from this time last year, to this time, this year, 84% of Increase in residential housing inventory in Jackson county and Josephine county similar numbers, Josephine county is up 68% year over year for residential inventory. And that's not commercial or anything else, but you know, those of us that are out in the field all week, every week, we kind of had a sense of this, but it's nice to see, see it validated in writing.

But hold onto your hats, cuz there's more. The prices for Jackson county in the last year, it [00:02:00] went. 10%. But in the last five years, Jackson county prices went up 52% and those are existing homes not new construction. Josephine county has even more jaw dropping numbers. Josephine county prices are up 8% year to year. So similar to Jackson county, but the big one is Josephine county. The five year mark is up 65% for existing for existing homes, not new construction. So if you bought a house five years ago in Josephine county, you are up 65%. So check out RVA's website. It has a lot more detail, but I just, I just had to tell you it's, it's just shocking. So there you go. In the meantime, we're gonna jump into our interview with Megan McPherson of farmer's insurance. Do not go away. It's gonna be a great show.

Well, Hey, Southern Oregon. Welcome back to the real estate show. So glad you could join us today. I'm Alice Lema. I'm a broker in John Scott real estate here in Southern Oregon. And today we get to talk to one of my [00:03:00] favorite people. Megan McPherson from Farmers Insurance.

Hi Megan.

Megan McPherson: Good morning. Hello.

Alice Lema: So happy we could have you back. There's a lot going on in the insurance world. Not only lately, but just kind of in general. So we're always so happy when you can come on and kind of remind our listeners of what is important in the land of insurance.

Megan McPherson: Absolutely. Well, thanks for having me back. There's a lot going on right now.

Alice Lema: So yeah, so I'm not sure where to start. You know, the fire thing is kind of on everybody's mind, but it also sounds like it's up in the air. Do you wanna maybe speak to that a little bit before we dive into everything else?

Megan McPherson: Yeah, absolutely. So that is true. The wildfire risk maps that went out several weeks ago those have now been redacted and working to figure out how best to proceed with the bill that was passed that will inevitably end up affecting everyone when it comes to insurance when it comes to what you have to do with your properties. But there's really [00:04:00] so many unknowns. That at this time, it's really hard for any of us to speak to what's going to happen. And what that will really look like down the road. Insurance as a whole, as it is now is, is rated based on a myriad of factors. Specifically with homeowners insurance, fireline scoring protection class are some of those items that are already being used. So 10 years ago, protection class is really all that you heard about and it's what matters.

How close are you to the nearest fire department? How close are you to that nearest fire station? Where's your hydrants at. 5, 5, 6 years ago fireline score became a bigger part of what was used when it came to rating for homeowners insurance, and really it's the steepness of your property. How likely are you to have your home saved?

Even if the fire department is five minutes down the road, That's been something that has already changed in the insurance world when it comes to rating for your homeowner's insurance, as well as eligibility and will a carrier [00:05:00] even write your home. I'm sure many of us have run across homes just in the last couple of years where they might be grandfathered in with a standard, big name company.

But the new owners may not be offered the policy. They may be told that's no longer an area that we'll write in. And all of that has to do with those wildfire factors.

Alice Lema: Well, we'll have to track what's going on in Oregon carefully. Because they don't have a clear direction yet. But I think that was actually good. I was kind of relieved that they withdrew some of that. But it brought up some interesting questions about materials and what if you're gonna live out in the rural district, you know, what kind of a roof should you have that was, you know, less combustible. I guess that would be the, the word. So how does the insurance company decide what good materials look like?

Megan McPherson: You know, there are some items that we specifically do want to see or specifically don't want to see, any sort of wood, true wood shake or shingle. History says that just goes up like that's [00:06:00] fire. So there are some of those items that absolutely do not go over. If your house is a true wood shake shingle, no one will want to insure it. You know, composition, roofs, metal roofs, those have always been known to be good.

And are certainly the metal roofs are fantastic. And when it comes to, what's going to be required down the road with the new wildfire bill that was put out, some of those materials may end up on a good and bad list just depending on who really has the final say. And if you make an upgrade to your home, we now want to see this kind of material.

The insurance industries won't really be the one to say this specific material has to be on your home or not, but we will be responding to, we as the insurance companies as a whole will be responding to what gets determined in the end. You know, are you still in a high risk? Are you still in a extreme risk?

You know, the insurance companies themselves, when it comes to rebuild, we do certainly look at the kind of materials that are used wood siding, opposed [00:07:00] to maybe that cement fiber siding. You know, what's non combustible and then some of it has to do with, are you directly in town? And are you close to that fire department. Is your fire line score really, really low. So it's gonna be really easy to put out a fire if you have one or are you in the middle of nowhere, which is most of our dreams, but does that make you more at high risk if a fire were to happen?

Alice Lema: Yeah. Interesting. Well, it's gonna be fascinating to see how they iron all that out. I'm so glad they're taking their time. Now we're talking about the state of Oregon recent attempt to regulate your fire score. I guess, I don't even really know what to talk about, how to call it. And then I thought it was interesting that the insurance companies didn't or industry did not get a heads up much.

Megan McPherson: Mm-hmm no really none at all. And the way that it was rolled out and the way that it was done, we all are kind of learning about it at the same time. There's a lot of pieces to it that the bill itself has been passed, but the actual execution of it is getting handled and [00:08:00] created as they go. So the insurance industry will be responding based on that.

I do not believe that anyone's policies have been canceled or non-renewed due to this bill being passed yet. My understanding from everything I can find is that hasn't happened yet. But down the road, if properties are placed in high risk or they are placed in extreme risk, the insurance industries will certainly have to, in all honesty, use those ratings in consideration when it comes to underwriting. And may down the road, certainly have to respond according to how properties are, are segmented.

Alice Lema: Well, at least there'll be some time taken to to iron, all that out. You know? We love our state of Oregon, but they do this, they, they pass laws. They've done this in the real estate world. They've done it now in the fire world. And then, you know, they've passed this legislation, a lot of times there's not even forms for like two years, I am exaggerating, but yeah, so we, we kind, we chuckle [00:09:00] a little bit, but I am so glad they're taking their time.

Well, let's talk about just insurance in general. People don't always understand all the elements that are taken into consideration in a human and and their lifestyle. So let's talk about what it takes to to qualify for the best rates in Insurance.

Megan McPherson: Absolutely. So there's a handful of factors that are looked at for almost any policy you're applying to. We're really gonna talk about auto and home. I think that's the most simple to start with, but a huge rating factor in the state of Oregon is credit. And that is, it's a really big factor, whether it's your credit rating, your credit rating, and it's whether it's good credit, bad credit or no credit .

And, and that is just so that's been, that's been something since the early two thousands that has been a big part of rating here in Oregon is pretty much automatically done behind the scenes when you apply for an insurance policy. And it plays a part in your rating, higher credit scores, you're going to be tiered differently with most companies and get a better tiering factor.

A lower credit score or really even no [00:10:00] credit score. So our world's gone to so many items being credit rated that no credit score can sometimes be looked at as a negative, even so than maybe using a little bit of credit. So that's just something to be aware of. You know, when you're coming, when you're looking at a house, the location of the home itself.

So your zip code can make a difference on your rates for auto and home insurance. So when insurance companies are creating rates, they are looking at a myriad of factors behind the scenes. And when it's looked at, at, at zip code and location, they're looking at you know, the fire items that we just discussed. They're looking at thefts in that area. They're looking at overall losses in that area. Is that area more prone to, they're looking at crime rating. Yeah. So, and we see that a lot more on the auto side. I think that's that's something that we see happen more often, where if someone moves and their auto rate can change a little bit based on the new zip code that they're in. And sometimes it's even within the same town, but Medford has multiple zip codes. Grants pass has multiple zip codes. So [00:11:00] depending on that zip code, and then behind the scenes, when those reports are run, they'll actually show crime rates, you know, losses based on theft losses based on accidents. All of those items become a part of rating.

Alice Lema: Wow. Wow. Who would've thought that a credit rate. So what do 18 year olds and 20 year olds that are just buying their first car is that, you know, we, everybody jokingly says they have the highest insurance rates in the world. So is that part of it?

Megan McPherson: It's part of it. Yeah. So especially on the auto side, they're looking at years of driving experience. Age is a part of that. They're looking at prior insurance history. All of those are part of your rating and prior insurance history can apply to really anyone. So how long have you been with your prior carrier? What were your prior underlying liability rates, and the vehicles that you drive? So you know, it used to be thought that the older vehicles, the cheaper vehicles, those should be the easier to [00:12:00] ensure they should be the cheap ones to ensure. But there's so many factors when you're looking at the auto insurance side, you're looking at liability. So if you hit someone, how much damage can you do to their vehicle?

See if you get hit. How injured can you be based on the vehicle that you are driving? So they're like looking at, you know, how likely is your vehicle to do a lot of damage to the other party. But the other side of that is how much damage can be done to you if you get hit by someone else. And then when we look at cost to repair, is your vehicle one that's pretty inexpensive to repair or is it one that's going to be really, really costly to repair?

You know, some of the older vehicles, they're more true metal. Today you get in a small fender bender with a brand new car, the safety features on the cars are just phenomenal. Now, but you get into a fender bender you're not just replacing the fender. You're now replacing the fender seven sensors and two little electrical boxes. So the cost to repair right. [00:13:00] There's just a lot more to repair in the newer vehicles that have all of those great safety features. So those all play a part in your premium based on the vehicle that you're driving.

Alice Lema: Interesting. So when you have young adults in your household, a lot of us put our kids on our policy. Is that something that you recommend or not so much?

Megan McPherson: No. Absolutely. If they live with you, they should be listed on your policy. Most likely they're driving one of your vehicles. So you definitely want to make sure that they have the same liability limits and protect that you do and that you want to carry to protect yourself because if they get into that accident, it's most likely going to come back on you. So, absolutely.

Alice Lema: So what if they don't live with you? What if they're at school away at college.

Megan McPherson: Mm-hmm so that is somewhat, somewhat company dependent on how that's handled. Talk with your agent and, and find out specifically how that should be handled, but make sure that your agent is aware of that scenario, because there are certainly differences that can be made. You know, a lot of companies, you can mark them as student [00:14:00] away with, or without a vehicle. So they've still got that coverage. They're still under your household, but there can be a rating difference made in there with most companies.

Alice Lema: Well, that's interesting. So if you're living in a dorm in school, do you need renters insurance? I. we're gonna, we're gonna talk more about that in the next segment, but I, I just got crossed my mind.

Megan McPherson: Yes. There's a lot of coverage that needed when they're away at a dorm.

Alice Lema: More, more than ever. Now that I think about it. yep. There's a lot that can happen in dorms. Oh my gosh. Yeah. Yeah. Well, we're talking to Megan McPherson of farmer's insurance. She's bringing us up to speed a little bit about the new legislation so in the process of being implemented for fire in the state of Oregon. And also just general household, kiddos. What else we should talk about boats. Absolutely. We should talk about absolutely. Yeah. We talked a little bit about cars.

We are gonna have to take a quick break and then we'll be back to talk more with [00:15:00] Megan McPherson of Farmer's Insurance. We're brought to you by Guy Giles of Churchill Mortgage, the Rogue Valley Association of Realtors and our local John L. Scott, Ashland and Medford, we say, thank you to you all. That's why we can bring you this show every week. So don't touch that dial, Megan and I will be right back.

Well, welcome back everybody to the real estate show. Alice Lema here. I'm a broker at John Scott. We're talking to Megan McPherson from farmer's insurance. Thanks for coming back on the show, Megan.

Megan McPherson: Absolutely. Thanks so much for having me back.

Alice Lema: So during the break, we were touching a little bit back into the homeowner insurance discussion. Why don't we pick back up on there because not everybody understands the different types of policies you can get and what a difference it makes.

Megan McPherson: Yeah, absolutely I'd be happy to. So on homeowners insurance policies there's really two different kind of policies you can get there's replacement cost policy, and then there's an actual cash value policy, most standard, big name companies we're [00:16:00] gonna sell a replacement cost policy, but there are differences. It is possible that you could still end up with an actual cash value policy.

For the most part it's dependent on the condition of your house, possibly the location of your house. So replacement cost, we're really looking at, we, you know, most companies will, will use a cost estimator program and we'll put in the details of your home. So we'll put in, do you have granite countertops or do you have solid surface countertops? Do you have tile and hardwood floors or do you have carpet and vinyl floors and those items really make a difference on how much does the insurance company think it's going to cost to rebuild? They all play a key role in it, you know, do you have a pretty standard cookie cutter home or do you have a really, really upgraded custom home and we need to account for those factors.

So all of those items go into that cost estimator to really figure out what does the company think it would truly cost to rebuild the home. And there's a big difference between market value, what Zillow says my home's gonna sell for [00:17:00] and what the insurance company thinks it will actually cost to rebuild your home. Because we're not looking from the insurance company's standpoint at land value.

We're really not even looked at how much you're taxed on or what Zillow says. The house itself would go for. We're looking at, we think it's going to take this much money, dollar per square foot to rebuild that home.

Alice Lema: So it's all about construction, then.

Megan McPherson: All, all about construction. The, the purpose of insurance is to make you whole, again. Obviously if your house burns down, we can never bring back the memories. We can never get back some of those special items that truly can never be replaced. But we're looking at rebuilding the house itself, the structure itself, back to as similar as possible before that fire happened. So those are all items that are used to factor in that replacement cost. And then based on the condition of the house based on the location, then we look at, are you getting true replacement costs?

So the company says it's gonna take $250,000 to replace your home. Do you have a replacement policy where it's going to pay out 250,000 [00:18:00] or do you have actual cash value? Actual cash value is depreciated. So they are going to depreciate based on age, based on condition. Some of it can be based on current market value.

Alice Lema: So you, so you're talking about getting the money for a quote used house versus getting money for a new one. Is that what you're saying?

Megan McPherson: Exactly the house that you had. So it can make a really big difference where this can come into play more, more for that standard house that you never think would have actual cash value would be if it's in a location where due to some fire ratings, due to recent changes in the insurance industry, where we're willing to write a policy at it really can matter more if you have to go to more of kind of a substandard company or just a less known company. That's a lot of times where you'll see the option of replacement costs or actual cash value, and you will typically pay more for replacement cost, but it's because if your house burns down, you're getting a whole house, not a portion of a house.

So , [00:19:00] that's, that's really the best way to describe it. Do you want your whole house or do you want a portion of your house. And then on most standard companies in most standard policies you'll have extended replacement cost. So our cost estimator says it's gonna take $250,000 to rebuild your house, but then built into that policy there's going to be a built in extended replacement cost, meaning it's a percentage of whatever we have your house insured for. So if you have a 50% extended replacement cost endorse. You have up to an additional 50% of that $250,000 to rebuild your home if necessary, the insurance company will never just cut you a check for the additional 50% of your 250,000.

But if it's necessary, most policies include that extended replacement cost if you choose to buy it. That will allow for your policy to pay a little bit more than you have it insured for if necessary. I never want anyone to bank on that amount. [00:20:00] So we never want to under insure your home and in the back of our minds, just think we've got that extended replacement.

It'll be fine. I never want to have people bank on that. But it's important to have that there because just like we've seen over the last couple of years, the economy, the market, labor shortages, those all affect our costs to rebuild. So what I would've thought a house cost five years ago to rebuild, that number is increased dramatically today because of events that have happened over the last couple of years, you know, here locally.

So many of us were affected by the Almeda fires, Obenchain fires. Some people are still being affected by those. That has played a really, really large role in what it costs to rebuild the house today. Because we're looking at so many homes, so many areas that need to be rebuilt that automatically increases the cost of labor, cost of supplies due to our economy have gone up. Those all play a role in how much it's going to cost to rebuild that home. [00:21:00]

Alice Lema: So, is that what that extended percentage is for? Is it for the unexpected market?

Megan McPherson: It really is. It really is. We should have you insured to value is what I always say. We should have you insured to whatever we, realistically, based on our cost estimator, based on the builders, think it would cost today and then have that extended in case we end up with some inflation, in case we end up with something major that causes those costs to be higher.

Alice Lema: So you brought up the Almeda fire. And I remember hearing then some people, they may not have had that because the Corona supply chain problems drove up lumber at the time we had the fire and rebuilding was not possible for some people with the amount of insurance they had. And that was a, a real, real hard thing to watch.

Megan McPherson: There were a lot of people who that's the exact scenario and, you know, none of, most people don't want to just go [00:22:00] read their insurance policy every few weeks. Right it's exciting, but we should though. Huh. But you know, I tell people, review your policy once a year because things change. If you do a kitchen upgrade and you've gone from, you know, a, a solid surface counter to a tile counter, and you've gone from a vinyl floor to, you know, a nice tile floor, those are factors that could make a really big difference when it comes time to rebuild if you had to due to a loss.

Alice Lema: I don't know anybody who remodels, who tells their insurance person.

Megan McPherson: Very few and they really, so, you know, rule of thumb if you do a remodel, that's over $10,000, you should be telling your agents about it. Now I will say this depending on the company and depending on the cost estimator program that they use, some changes we can get super, super detailed on and other changes, not so much.

So sometimes there are some changes you won't really see reflected in that cost estimator. But it's always good to reach out to your agent. Make sure they're aware of that, [00:23:00] make sure you still have enough in there.

Alice Lema: That is so funny. It's important. what a mind blow. Yeah. Put it on your remodeling list folks. Call your insurance agent, remodel call agent . Well, actually, you know, I'm wondering, especially if you're in one of the higher risk fire zones, maybe we should call you first. I mean, if it's just a remodel, a true kitchen remodel, but what if you're, but what if you're like redoing your siding? Like you're adding a master suite and you're gonna redo your siding. I think I would wanna talk to big additions first.

Megan McPherson: Yep. Big additions you really should. And really depend on the value that you intend to do, you know, A small remodel, you'll say small kitchen remodel, for instance, isn't that big of a deal. But if you are, you're adding on a couple of rooms, you've got really, really big projects going on your policy may even need to be endorsed for kind of a small course of construction. So those are important times to call your agent.

Alice Lema: So that brings up another [00:24:00] question is do you need special insurance during construction? You do.

Megan McPherson: You absolutely do. Yeah. So if it's brand brand new construction there's several different ways to handle it. If it's a new home, you know, your current home, but you're making additions to it. If it's a fairly large remodel, there are absolutely some extra coverages that should be added on.

Alice Lema: Like, like what would that look like?

Megan McPherson: Typically course of construction endorsement is what you would add on. And really that's going to allow for there to be some coverage for the materials that are stored at your house, but they're not attached to your house yet.

So items that are attached to your house, you know, you've got cabinets, you've got countertops. Those all become a part of the cost of the dwelling. Once they're attached to the walls, they're attached to the counters, but if you've just got all of the stuff laying outside by the side of your house, which is what people do , which is what people do that's not covered as part of the dwelling. You know, and there's some fine hairs here. There are different coverages. Some of those items could fall under, but [00:25:00] best case and really to be safest, reach out to your agent.

If you're going to be doing that big project and find out what your specific policy covers, when it comes to remodels, some policies and companies are really, really broad. And this may not be even an issue for you. Some companies you absolutely need to make sure to make some change.

Alice Lema: Wow. Wow. I'm just thinking of some friends that had large, large fence projects and they probably had $8,000 worth of wood in their yard

Megan McPherson: . Yeah. Yeah. So, and there are some different, you know, some of it can be dependent on, are you doing the work, is a contractor, doing the work? Are they supplying the material every day? Are you leaving the material at your house? So there's a lot of differences. There's no one size fits all on this specific topic, but that's where I'd really, really advise listeners. Go talk to your agent. Tell them what you're doing, walk them through the scenario and they can tell you based on your policy and your coverages, if you need to do anything at that time.

Alice Lema: And this is why it's so good to [00:26:00] talk to you, Megan, we're talking to Megan McPherson of farmer's insurance. We, we went down a little bit of a, a tangent, but but it's something I bet a lot of people didn't know that if you are doing remodeling, you're doing something on your property that you're gonna wanna talk to your agent, cuz you're gonna probably need extra insurance. If not during then definitely when you're done.

Megan McPherson: Absolutely.

Alice Lema: So, I guess a lot of people just think the, the contractor has insurance. Mm-hmm I bet that's what they think.

Megan McPherson: That's a lot of times what people think, and that may be the case sometimes. But if you think that double check that, there's always nothing wrong with asking your contractor to provide their proof of insurance and to ask them those questions, am I covering the material or are you covering these?

Alice Lema: Yeah. Cause I wonder if they thought about that depends on the company. Yeah. They forget, they forget stuff. So what happens if one of the workers gets hurt at your house while they're working?

Megan McPherson: Oh, that, that leads us down to a long, long rabbit hole, dependent on [00:27:00] a lot of items.

Alice Lema: But is that like your homeowner's policy is that the contractor's workmans comp?

Megan McPherson: It's really dependent on, did you hire them handyman style and they don't have any workers comp or are they a construction company that carries workers comp on their employees?

Alice Lema: Yeah, but you know, we're supposed to hire licensed, bonded everybody.

Megan McPherson: Yes. Yes. And, and that is, that is how it should be handled.

Alice Lema: It is what it is, what we're supposed to do. And it's what we encourage you all to do.

Megan McPherson: Yes. I would always encourage, hire a licensed bonded contractor. Yeah. And it's really easy to look that up. You can actually look that up yourself. Online, online. And then we don't really have this weird question because not knowing if they're licensed, not knowing if they're insured, that really makes the difference. So that's gonna answer your question.

Alice Lema: Hit, hit 'em up early in the process, so you're not worried later. That's good advice.

Megan McPherson: Go double check yourself online, make sure that they're licensed to make sure that they're insured. Yeah. Yeah.

Alice Lema: And every once in a while, sometimes those [00:28:00] guys forget to renew their license. They're great contractors. Absolutely. They just forgot. They don't have a big staff. They're just good, good.

Megan McPherson: And if, you know, if that's the case, then as long as they have renewed that policy and they've gotten that updated certificate, they can provide that new copy to you if they've gotten it.

Alice Lema: Cool. Well, we're talking to Megan McPherson of Farmer's Insurance. We're gonna be back after a quick word from our sponsors. More interesting things I bet you didn't know about your insurance life. Stay tuned.

Well, Hey, Southern Oregon. Welcome back to the Real Estate Show. We gonna be wrapping it up with Megan McPherson here from Farmer's Insurance. This broadcast will be repeated on Sunday at six o'clock so you can listen to it again.

Megan has a lot of not only good advice, but stuff we didn't know. Oh my gosh. I'm so glad you're back. Thank you, Megan.

Megan McPherson: Thanks for having me back. I appreciate it. So here we are

Alice Lema: kind of the middle summer getting close to back to school time, and we do have a lot of young adults going off into the world. [00:29:00] So what should parents and the young adults know about insurance?

Megan McPherson: Well, there's a couple of things. Let's start with auto insurance because that's the first one that comes to mind. When we talk about that, if you have that young adult that is flying the nest for the first time, they're moving out, they're getting that apartment of their. Did you just give them that car that they're taking with you with them? So if you bought them that first car, you're giving it to them to go into that new house. Whose name is on title? Are you still the registered owner or have you signed it over to them? If you are still the registered owner? You also, still have an insurable interest in that vehicle because it's still your name that owns it.

And more importantly, you could still be held liable if they get into an accident with that vehicle. So just like when they lived at home with you and they were driving that vehicle that, that you owned, they got into that accident, it fell under your insurance policy. It fell on your liability.

Once they leave the house and they've taken your vehicle with you, and if it's still titled in your name, you [00:30:00] still need to worry and care about that insurance policy that they have. So once they've moved out on their own, they need to get a policy of their own. They need it to be rated off of them and any other drivers in the household with them. And they also need it to be rated off of that new location that they're living at ,wherever that vehicle's kept at whatever that physical location is for.

But then you need to make sure that you mom and dad registered owner on that vehicle, are listed as the registered owner, because that will then protect you. If they get into that accident. It's their auto insurance policy that would cover the accident. But if your name's on title, you're still getting pulled into it.

I always say if it's a big enough accident, Anybody who's ever touched, it can be pulled into play. So there are some companies that will do this, not every company will. So I would say if you intend to stay registered owner on that vehicle and you intend to send your young adults off with it and just give them that vehicle, but you're gonna stay on title prior to taking it off your policy. And prior to them deciding what that new insurance [00:31:00] company is, that they go and get on their own, make sure that they will allow a registered owner, who's not living with them anymore, but who's just entitled to be added as additional insured. That will protect you.

And then I kind of take it one step further and I say, as expensive as it's going to be, because once you go off on your own and you're young and you're a brand new driver, your premiums are not going to be the greatest in the world, make sure that they carry the same liability limit that you do because, you need to be protected, just the same amount that you wanna be protected as you're driving down the road. As long as that, vehicle's still in your name, you need it to be carrying that same amount of liability coverage.

Alice Lema: Wow. Wow. That is a lot to digest. So if the kids are going and living somewhere else, mm-hmm what kind of dwelling insurance do they get or possessions, or what would that be?

Megan McPherson: Yeah. So there's a couple of factors. We're looking at their personal property, so their possessions. Right. And I think of that as anything that you take a house and you flip [00:32:00] it upside down, you shake it, whatever falls out, that's gonna be your personal property. So we're looking at all the jeans in the drawer, all the shoes in the closet, all the dishes that they may or may not have to go with the ramen, right.

Everything that falls out, that's gonna be that personal property. That's going to matter to them. Their personal liability, so a lot of young people don't think about or worry about personal liability. What is that? Somebody trips on my porch steps. I don't have anything to be taken. I don't need to worry about it.

There's a lot to worry about because you're young, you've got a future. You're going to start making wages. Garnishments are a real thing in the state of Oregon.

Alice Lema: So, oh, is that what happens?

Megan McPherson: Yeah, garnished garnishment. So it's important to have liability from, from day one, when you go out into that apartment on your own. So depending on what that young adult is moving into, you know, if they're a student away for the fall term, they're going to stay in a dorm. And then mom and dad's address and residence is really still their primary home, depending on the [00:33:00] company. Mom and dad's homeowner's policy may just extend to that dorm.

It's possible. Talk to your agent if you're in that scenario. If young adult is just moving out into a first home of their own, a first apartment of their own, they need their own rent's insurance policy. They need their own liability protection. They need their own personal property protection.

They have that laptop stolen out of their vehicle. Yep. They file that renter's insurance claim. A positive to mom and dad is if it's under young adults, new rents policy, it doesn't affect your policy. So, but it's very dependent on, you know, what they're moving into and what their primary resident is considered.

Alice Lema: Yeah. So how does that work if they're going pretty far away or is it all the same? It doesn't really matter.

Megan McPherson: Company and policy dependent, but if they're going away to school, it doesn't typically matter. You know, they could be going to another state as long as the company knows about it. As long as the company knows about it, if mom and dad's policy is still their primary residence, their primary home, typically it's not a problem as long [00:34:00] as the company's aware of where you're going to. But if you have any questions, double check that with the company and policy that you're.

Alice Lema: So, and what about when they're ready to start buying their first home? What kind of insurance questions should they be asking?

Megan McPherson: A lot! So, you know, they really should, they should care about what's going to best protect me in this home. So when you're buying that first home, we all know you're looking at numbers where you're looking at the down payment, you're looking at the mortgage payment. You need to factor insurance in as a part of that payment though. And you need to make sure it's a policy that you are comfortable with.

So earlier in the show, we were talking about the difference of replacement cost and actual cash value. We were talking about extended replacement endorsements, you know, the policy with the 25% extended replacement might be $200 cheaper. Are you really comfortable if your house burns down tomorrow, that new house that you just bought, that you only have up to 25% additional if 250 is not enough to replace it anymore.

So [00:35:00] I really say obviously price matters, but look at what you're really being covered for and make sure that you understand the coverages endorse and endorsements that you have on the policy because no policy covers everything. No policy will ever cover everything. So know what you're paying for and know what's not included, you know, I'll tell a lot of my policy holders.

Sometimes the exclusions are more important than everything else, because those are the items you have to be aware aren't covered. And sometimes you can endorse for those items that aren't covered. Sometimes you can't, but you just need to be aware of.

Alice Lema: So what about people that own swimming pools? We don't talk much about that. What kind of in extra insurance coverage should you have?

Megan McPherson: You know, that typically will lead me into an umbrella insurance policy. So an umbrella insurance policy is totally separate from your home and auto insurance. It's an additional liability policy.

Alice Lema: A personal [00:36:00] one, right?

Megan McPherson: Personal, personal, yeah, personal liability policy. They're sold in $1 million increments. And they truly are an umbrella. They go over the top of your auto policy and they go over the top of your home policy. So if you have a swimming pool, ideally you've got fences around the property. You've got things in place to try to make it safer. But if something happens, your home policy would come into play first.

If that wasn't enough and you were held liable, that's where that additional $1 million liability policy could come over and it could help fill in that gap. And it applies on auto insurance as well. You get into that big accident, you go beyond whatever your policy, your umbrella comes into play if you've got one.

 I suggest I suggest anybody who owns a home have an umbrella insurance policy have that addition, you're more at risk. Yeah. You're more at risk. You've got more to lose.

Alice Lema: Wow. So gosh we're almost outta time. We could talk to you all day. Megan McPherson, Farmer's Insurance. How do people get ahold of you?

Megan McPherson: If they've got more questions, you can gimme a call [00:37:00] 541-776-0673. Or stop by my office. I'm off progress drive it's 1112 Progress Drive, Suite 1 0 3 in Medford.

Alice Lema: Awesome. Thank you so much, Megan. Have a beautiful weekend. Bye now.

Thank you. You as well.