Real Estate Show with Megan McPherson Farmers Insurance

Real Estate Show with Megan McPherson Farmers Insurance

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[00:00:00] Alice Lema: Well, good morning. Southern Oregon, welcome back to the real estate show. I'm Ellis Lima. I'm a broker here in Southern Oregon with John L. Scott real estate. And I am your host for the day. So we have so much to talk about on the show today. One of the first things wanted to mention is we're winding down January, coming off a really busy year here in Southern Oregon, really busy housing market, which is not our norm.

[00:00:26] We usually kind of get a little quiet during the week. But not this year. So it really begs to ask what's it going to be like this spring? Well, I think it's going to be busy. Phone's been ringing off the hook, lots and lots of listings coming on the market. Lots of buyers figuring out that if they're going to pull the trigger better to do it at 3.3 then 4.3 or whatever the rates are going to go to. We never know what the feds are going to do for sure, but that's kind of where we're at. So a lot of activity we're predicting a pretty busy 2022 housing market here in Southern Oregon. But more stabilizing in the prices, not so much the accelerated market we'd have the last couple of years and also.

[00:01:08] Inflation is starting to impact a lot of us. Not only with the gasoline and the food, but some of the other services that we're used to paying for are going up as much as 30 and 50% a shot. And that will affect people when they go out to buy houses because they're going to want to make sure they have money leftover after the mortgage payment, you know, to feed the kids.

[00:01:32] So it's going to be a real interesting year. We're not sure what's going to happen with the inflation, but you know, we talk about it every week. It's part of our. Financial and real estate conversation that we have here on the real estate show each week. And that's why we have a weekly show is kind of keep you tuned in to the micro changes and what's coming down the pike so that you can be prepared and make some good decisions.

[00:01:56] You know, for your life today, speaking of making good decisions for your life, we have a fabulous interview with Megan MacPherson of farmers insurance. Now she's very data-driven. She likes the tech technical aspect and she's very detail oriented. And, you know, I learned quite a bit with this interview with her.

[00:02:15] There's quite a lot of changes in the industry world since the fires and it's not just our Almeda fire, it's all the fires around us in California, Washington, Idaho, that are changing our homeowner policy. So if you live in town, we're going to talk a little bit about what's going on in condos and townhouses and just regular insurance policies.

[00:02:38] If you live in the rural district, we're going to talk about fires. We're going to talk about flood and what it's like right now to try to get an insurance policy or change your policy if you live in the fires zone. So stay tuned. It's a great interview. We'll be right back with Megan McPherson of farmers.

[00:02:57] Well, good morning again, folks. Welcome back to the real estate show. I'm Alyse Lima broker John L. Scott here in lovely Southern Oregon. And today I am so excited to introduce an interview. Megan McPherson of farmers insurance. Hi Megan.

[00:03:12] Megan MPherson: Good morning. Thank you for having me.

[00:03:15] Alice Lema: Well, you know I just love talking to you and you have so many interesting ideas and facts and tidbits to help people. I just really wanted you to come on the show and share that with everybody.

[00:03:27] Megan MPherson: I really appreciate it.

[00:03:29] Alice Lema: So one of the things that got us talking was just the the fire changes like the aftermath of the fire and. You know, I don't think folks realize what's changed, especially in some of the rural properties. Do you mind weighing in on that kind of bring us up to speed.

[00:03:46] Megan MPherson: It's made a lot of changes. So even just a couple of years ago cost to rebuild for a kind of a standard basic home was it at a certain dollar amount. And since the Almeda fires, since Obenchain fire, really even including COVID a little bit in there, that cost to rebuild custom materials, costs of labor all of that has gone up substantially.

[00:04:06] So segue that into the rural properties that has made them that much riskier. Because now you've got properties that are further out, which already take a little bit more to rebuild. They take a little bit longer to get to, and then you add in all of those other things. And it's really made this made insurance industries as a whole reevaluate what properties they want to write business in and what properties they just don't want to write business in anymore.

[00:04:30] So periodically protection classes are re-evaluated and rescored so there's protection class and there's fire lines scores for protection class is typically how far you are from a fire. Is it a paid fire fire station? Is it a volunteer fire station? So all of those come into play when you're looking at protection cost.

[00:04:48] And then you take Fire line score. So that fire land score is really an evaluation of if this property catches fire, how steep is it? You know, how steep is that slope? If there's a firefighter standing right there, are they going to be able to put out the fire or is it just too steep for them to be able to be even do anything.?

[00:05:06] It's a big deal. And so we're used to looking really more at protection costs. But over the last couple of years, the companies as a whole insurance industry, as a whole has had to look more at that Fireline piece. So both of those things get factored in when you're looking from a company standpoint at insuring a home.

[00:05:27] So Being that those two go so hand in hand, and that the insurance industry as a whole has reevaluated that. Many companies here in Oregon, who even a year ago, would have insured property out a little ways are getting much more restrictive on what types of homes they will insure further. What zip codes they will insure in.

[00:05:45] There are certain companies that dependent on the zip code you're in. You have to be at a Fireline score zero. If you're above a zero, there are a lot of standard companies who just won't write business in certain zip codes.

[00:05:56] Alice Lema: Oh my gosh are you telling us you why not be able to get insurance?

[00:05:59] Megan MPherson: Well, you may not be able to get a standard policy. So far, we can usually find an outside company that will do it, but they are more surplus. So surplus is going to be more expensive .And it's going to be more restrictive. So it's typically, standard is kind of your cookie cutter home. It's really easy to insure we're going to be able to give you really good limits. Really good coverages. Exactly like in typical cookie cutter subdivision.

[00:06:28] And then you take maybe that rural property, that's in a PC 10 and it's got a fire line score eight. We might be able to find you a policy, but it's going to be that surplus company. It's going to be a restrictive policy. It's going to be fairly expensive.

[00:06:42] We, you know, you may have a really nice five, six, $700,000 house, but depending on how far you're out and what segment you fall into, we may not be able to give you replacement costs on that house.

[00:06:54] Alice Lema: You're saying that might not even be an option.

[00:06:56] Megan MPherson: It might not even be an option. So you may have a really nice home, but it may be actual cash value is all the company will agree to insure you for there. There are more companies coming out in Oregon who are willing to write business in those areas. But they are definitely more, they're definitely more surplus. So it's, in my opinion, something that, you know, with the real estate industry and what you do, in my opinion, it's something that if a buyer is looking at a home in a certain area, it's worth talking to their agent and finding out what kind of policy they could get and just making sure that they are comfortable with whatever that option is.

[00:07:31] Alice Lema: Oh, I'm heartsick because so many people, their whole reason we're here is for the elbow room.

[00:07:39] Megan MPherson: Yep. And it's not to say that just because you're out a ways you can't go to get a good policy. But it's just another piece to look into because so much has changed over the last couple of years and it's pretty industry standard.

[00:07:50] So there are a lot of companies that have taken the stance. So for the most part, it's not one company has just decided we don't want to write business here. It's just really industry standard. Companies have found there, there's just far greater loss possibilities.

[00:08:05] Alice Lema: Well, and it's not just our fire. It was paradise. It was the Karr fire. It was the Obenchain it's like everybody how many years have we had really big fires, five?

[00:08:16] Megan MPherson: Year after year. And so for California,they've gotten to where a lot of their policies. Yeah, they've taken the same stance Oregon has, but they've even gotten to where California Fair plan is becoming a bigger deal down there, meaning it standard insurance companies won't even do it.

[00:08:31] It's the state's policy really that you have, you have the option of California fair plan and that's it. So it's not just Oregon, like you said. We're not to that level quite yet, but it's a concern.

[00:08:43] Alice Lema: Wow. Okay. So gosh, so many that brings up so many more questions. I don't know where to start. So let's start with people who already live out in the fire area. Is, are their rates going up, even though they haven't had a claim?

[00:08:59] Megan MPherson: Yeah. Most homeowners in the state of Oregon within the next couple of years, I feel like we'll start to see those. Every company has their own strategy. How they take rate and when they take rate so some companies, they may wait a year or two to really take much rate at all.

[00:09:13] Some companies are kind of steady Eddie. You're going to see two to 5% increase every year, just kind of built in. But with the fires, there are certainly more companies who are having to take rate increases, cause you, you know, companies are going to see an increase on their there. Yeah. Yeah. Clients are going to see an increase on their policies. And that's not even just the folks who are rural that's people in town as well. Because for me, well, from what we saw with our Almeda fires, I mean, we lost so many people in city. So as a whole in the state of Oregon, our rates are going up because we've seen so many large fires, but it does play, it does play a really big part.

[00:09:52] Alice Lema: So how do people get notified if you have an existing policy and you live in the rural districts, like how do they find out their rates are going up?

[00:10:03] Megan MPherson: So the company will mail, I mean, every company will send out their renewal notice of. And if they are going to see an increase, they will typically just say your policy is going up by this much percent. This is your dollar amount increase.

[00:10:16] Some companies, especially in the rural areas, and some companies are just quitting writing business there. So they may have written it there last year. This year, they won't, those clients would be sent out a notice saying we're no longer writing in your zip code or your area you'll need to find a policy elsewhere. That gets relayed to everybody via their insurer.

[00:10:35] Alice Lema: So they are bailing!

[00:10:38] Megan MPherson: Not everybody is.

[00:10:39] Alice Lema: But I'm just shocked that anybody is that's just. Wow.

[00:10:44] Megan MPherson: It's really dependent on the company dependent on, you know, how many claims they paid out. Some of it is even dependent on how large the company is that somebody is with. you know, if you're with a really large insurance, They have reserves. They have money tucked away to where they can cover a lot more claims. If you're with a smaller insurer. And they had a lot of eggs in one basket, and that basket happened to be in the rural middle of nowhere. They get more nervous. They don't have the money to pay out the same way as a big company. And sometimes that plays in.

[00:11:12] Alice Lema: Well, that makes sense for sure.

[00:11:15] Megan MPherson: It is all regulated through the state. So before anything can really be acted on, every insurer has to go to the state department of insurance and they have to make sure that it fits within legal before they're able to make changes.

[00:11:30] Alice Lema: Oh, okay. So there's the whole process, the negotiation with the actual state that your in.

[00:11:35] Megan MPherson: There's a specific department of insurance and every company has to submit their proposals, whether it be to quit writing business somewhere, or whether it be to take rate increases, it's even regulated how much of a percent of an increase companies can give people each, based on factors, but it does have to go to the department of insurance before it can be done.

[00:11:53] Alice Lema: Well, that's really interesting. I had no idea. This is why I like talking to you because you're, you're very deep, you know, with the data and the details. It's just really, really fascinating. So there is a lot to it and you just, you know, you just don't know that, and then you get a notice in the mail. So let's say one of the companies wants to stop writing insurance policies in the state of Oregon. They go to this Insurance agency board, whatever with the state. What if the state says, no, we're not going to let you stop. Can they do that?

[00:12:22] Megan MPherson: They can, that gets a little more detailed than I've gotten into for the most part. They can, they usually will work. The department of insurance will usually work with insurers. But it's a, it's a process. I mean, There are always people above people who can make changes, but there's usually steps in place that have to be taken before, before then.

[00:12:41] Alice Lema: Wow. Poor oregon. Gosh, we're just slammed all the way. It's like, it's like being in a washing machine sort of pretty much. Yeah. Yeah. So if the rate increases are negotiable with the state than I'm supposing sometimes the state will say, no, that's too much. Or do they ever give them a graduated? Like you can do that much, but it has to be over three years or something.

[00:13:10] Megan MPherson: You know, I believe that they do that gets into a level that I don't handle very much. I believe that they do. It's just not an area that I have a lot of information on that part.

[00:13:21] I noticed that at the point that it comes down to the companies you know, at the point that you have a large company and then, you know, agents, agents who work for the companies at the point that the rate changes or the company changes have put in place, there's nothing that the agents or the agencies can do.

[00:13:37] So by the time it's come down the chain far enough, it's set in stone at that point, but what it's still being worked out. Yep. But at the point that it's still being worked out between the company and the department of insurance that's, you know, those are just conversations that they have to have at that level.

[00:13:52] Alice Lema: Yeah. So, Megan what about increases? Are there average increases that we're expecting.

[00:13:59] Megan MPherson: Yes. So each company is different. Each company has their own strategy. Realistically a 10% increase on a homeowner's policy kind of every year. Seeing a 10% increase is pretty, pretty standard. I've got experience with kind of captive agencies being with just farmers insurance. And then I've got experience with independent agencies where I had a handful of carriers to write from. An average is about 10% increase, for a year. Yep and then what people can do if you're with a company you really like,so you don't want to change companies, but you really need to kind of get your rates back down.

[00:14:36] You can always look at changing deductible. There are things like that, that don't jeopardize the coverages that you have, and they don't jeopardize the company that you have. You assume a little bit more responsibility if you have a water leak in your kitchen, but it helps with your rates a little bit.

[00:14:51] Alice Lema: Yeah. So I wonder if this is a good time for people to reassess their insurance, the residents of Southern Oregon, maybe they should make that call.

[00:15:01] Megan MPherson: Absolutely. I recommend with my agency that you reevaluate your insurance needs once a year, that doesn't mean you're making changes.

[00:15:09] Alice Lema: Stellar ideas. Yeah. Yeah.

[00:15:12] Megan MPherson: You don't have to make changes every year, but you should look at your policy every year and reevaluate it.

[00:15:17] Alice Lema: Yeah. Well, Megan, we've got a break coming up. This is Megan MacPherson, farmers insurance talking about what's going on in the insurance world, post Alameda fire and just in general, so many things have changed with the COVID and and then just living in Southern Oregon, it has its complications.

[00:15:33] Megan MPherson: It sure does.

[00:15:34] Alice Lema: So we want to say thank you to our sponsors. We've got John L. Scott, Ashland and Medford. Guy Giles, mutual Omaha mortgage, and our local Rogue Valley Association of realtors. We'll be right back. Don't touch that dial.

[00:15:50] Welcomeback to the real estate show folks. Alice Lema here, broker John L. Scott, your host for today. We're having a really informative conversation with Megan McPherson of farmer's insurance. You know, a lot of us did not realize how much has changed and it's not just about the fires. You know, we in Southern Oregon, we have all kinds of elements. You know living in the country, living in town, Southern Oregon still has its complications, doesn't it.

[00:16:13] And then the waterways I understand that that's not always an insurance policy that stays the same. Is that right?

[00:16:20] Megan MPherson: That's true. So under a standard home policy, it does not cover flood insurance or waters rising from the outside and coming in. So a basic standard home policy is going to cover typically, you know, your pipe bursts inside your house. Your policy's going to cover the damage resulting from that pipe, that kind of a flood that kind of gets covered. Typically we don't really call that floods in Southern Oregon. No, not really the flood where we would see where it would actually come up from the outside.

[00:16:50] And it's going to fill your house. That is not covered under any standard, typical home policy, that's where you really would need to purchase that separate flood insurance policy. And they do they do change year to year. They'll get rezoned and remapped periodically.

[00:17:08] Just in the last year or so there has been some pretty major changes where they've remapped and done some rezoning in areas that, you know, five, 10 years ago, weren't considered in a flood zone and they now have been clumped into a flood zone.

[00:17:22] Alice Lema: Do you know, we had that happen in east Medford in town.

[00:17:26] Megan MPherson: There are a lot more in town.

[00:17:28] Alice Lema: And it was like, there's not any water. And they got looped into a flood zone. Oh my God.

[00:17:35] Megan MPherson: It's crazy. And it's something, especially when you're looking at buying a new home is something to consider if you end up being in a flood area because. That's going to be a separate policy in addition to the home, you know, addition to your homeowners policy.

[00:17:49] Alice Lema: Right. Right now as the fire going back to what we're talking about in the last segment, is that fire policy, in addition, or just the more expensive?

[00:17:57] Megan MPherson: So fires, fires, are aincluded cause of loss on your home policy.

[00:18:01] Alice Lema: Even if you live in the boondocks.

[00:18:03] Megan MPherson: Even if you live in the boondocks,that one's covered.. Yeah.

[00:18:09] Alice Lema: God forbid you should be on waterfront in the boondocks.

[00:18:12] Megan MPherson: I mean, you're going to have a gorgeous piece of property, but you may pay a lot for it.

[00:18:16] Alice Lema: Yeah. Yeah. So do do the insurer, do the insurance companies, if you have a, a property that has water like stored water or a big pond, does any of that count or not?

[00:18:33] Megan MPherson: Yes. And no.

[00:18:34] Alice Lema: How you get it on your house if it was burning, how do you get it out of the pond.

[00:18:39] Megan MPherson: That's a yes and no question. You know, for some rural properties rural specific, right? Or if looking at a pond, if you have a fire and the fire department can access your pond and that's water that can be used. I mean, that can be considered because it is a water, it is a water source.

[00:18:56] That would be kind of a case-by-case basis if it made a difference.

[00:19:00] Alice Lema: Yeah, you might have to build a trajectory so that you can turn on something and shoot the water out of the, on yourself and not wait for the fire for the fire department. If that's what it looks like.

[00:19:14] So one of the other I don't know if you get asked this question a lot, but in real estate people don't really understand their policies and they don't understand their rates. And what else you can do to kind of adjust the premium. Maybe you can give us some tips about that.

[00:19:30] Megan MPherson: Yeah, absolutely. So within the policy you know, there are some set coverage limits that if you own your home, you shouldn't make any reduction to. If you own your home, you should have a minimum of $300,000 liability, really 500,000 is better. Let's talk about some additional liability policies to really protect you, but there are some things within the policy that you can adjust and you can make some changes to, and you're not necessarily jeopardizing your actual home policy.

[00:19:56] Deductible is one of the key key items on a home policy, kind of the standard deductible that you're, you'll hear is a thousand, a $1,000 deductible. If there's a covered loss on your home, you're responsible for that much. The rest of it, the insurance company pays. If it's covered loss I suggest higher if you're able and you're comfortable with it. Now, if you have a loan on the property some lenders have a threshold that you just can't go any higher than this because you have a loan on the house.

[00:20:23] So. There are some things you have to consider there.

[00:20:27] Alice Lema: But you can't have a higher deductible because the lender said so.

[00:20:30] Megan MPherson: Yeah, a lot of, a lot of times, depending on the amount of the loan will depend will actually be the determining factor of how high the deductible. So interesting. Yeah. So you can get a home policy with a $10,000 deductible, but if you have a loan, a lot of times the lender won't allow you to have it that high.

[00:20:47] Most of the time you can get up to a $2,000 deductible and the lender doesn't balk very much dependent on how much you owe on the loan and who the lender is kind of scenario. But those are really the deductibles. Really the key one that I see as a way to adjust your premium you know, in my agency,and my clients, I don't advise that you've submitted a claim for anything under a couple of thousand dollars, if you don't have to.

[00:21:12] So in the state of Oregon, Auto policies, you get into an accident you're surcharge for three years on that. On a home policy for three years. So don't get into an accident. On a home policy you get surcharged for five years. So if you submit a claim for anything under a couple of thousand dollars, you end up surcharge that amount over the course of five years or close enough to it.

[00:21:34] I really advise people to look at their home policy as a catastrophic. It's not, it's not a wear and tear maintenance for the most part. There are some endorsements and coverages that allow you to use it that way, and that's fantastic. But when you're really looking at submitting a claim, I really advise, weigh, weigh, how much it's really going to cost you before you do so, because you will be surcharged on it. Whether it's with your company or whether you move to a new company the very next day, you've now got that home loss. So if you're able to take on

[00:22:04] Alice Lema: I did not realize that, wow. So use your insurance sparingly prudently.

[00:22:11] Megan MPherson: Use it prudently. You know, there's a lot of things as homeowners that we can do that are maintenance issues, that if we can take care of them, if we can take care of them, you don't have that big loss. And then when you have that really large water loss, you submit your claim. Your company pays. You pay your your deductible and everybody's happy. But you don't want to, you don't want to use it as your maintenance program.

[00:22:36] Alice Lema: Yeah. Interesting, interesting. And, you know I'm a big fan of people having their house inspected every so many years and not very many because you just don't know and, and yes, things happen and it seems like we're always on vacation when whatever blows up.

[00:22:50] But getting like a home inspection on your own, not just when you're selling or buying, I think really helps you take better care of the property. And then you don't have those catastrophic situations as often.

[00:23:04] Megan MPherson: As often. you know, and that's the purpose of insurance, right? It's there to cover those accidents, those things.

[00:23:13] Alice Lema: Yeah. Yeah, for sure. So interesting about the deductible that if you have a mortgage on it, you really can't have as high of a deductible as you want necessarily. The lender gets to decide.

[00:23:27] Megan MPherson: It depends on the value of the loan, the value of the home, and then who the lender is, but it's something to consider.

[00:23:38] Alice Lema: So, is that something you can find out when you're in the home buying process? Like when you're getting your what we call the binder, the home insurance to close your escrow?

[00:23:47] Megan MPherson: Abs. Absolutely. So as soon as the, as soon as you're in escrow and your lender sends that binder request over to your agent, that's really when when you're at the place where you can ask your lender, what is the highest deductible I can have if you're comfortable with that. And, you know, you need to be comfortable with your deductible amount. If you don't have $5,000 set aside to be able to cover the portion of the deductible, a 5,000 deductible doesn't do you any good.

[00:24:14] Because then you're in even worse trouble. You have a really, really large loss. You're responsible for 5,000 and you don't have that. So don't set it so high that you could never use your insurance if you have something catastrophic. But if you can comfortably set aside 1500 or $2,000, then set it that amount.

[00:24:31] So you've got to weigh both sides of it, but it's a really helpful way if you really need your premium to go down and you're able to set aside a little bit of money on your own and your comfortable with that amount.

[00:24:42] Alice Lema: I think that's a great idea. And, you know, I really like homeowners to have a, an emergency fund just for their house, you know, and this is something I learned from landlords. They said, well, the, the landlords that are successful, they set aside a certain amount of money every month just for maintenance and emergency and they never touch it. And I just don't see very many homeowners doing that. It would be a great practice to have an emergency fund just for your home.

[00:25:09] Megan MPherson: Absolutely. And really when you have that emergency fund, then it would prevent you from having to submit claims all the time, because just like auto insurance homes are the same way that so many claims on one house. A company may not want to continue to insure you if you have water loss after water loss, after water loss. So it's very prudent to take care of that maintenance side of it.

[00:25:32] Alice Lema: But if that's happening you're not getting a good repair person.

[00:25:36] Megan MPherson: Exactly time to start asking for some references. Yeah. Yeah.

[00:25:41] Alice Lema: So one of the things that I heard somebody talking about was that there, when they went to buy a house, that they were told that there were insurance claims in the past on that address. What is that all about?

[00:25:58] Megan MPherson: So in the state of Oregon, and this is again, something that's been regulated by the department of insurance, so the insurance companies themselves this all got approved via the state before this could happen. But if you have a water, if you have any sort of a loss for a home, the loss stays with that home for five years.

[00:26:14] And then it stays with the person who submitted that claim for five years as well. So that house has a claim on it and is searchable for the new owners and then the person who had the loss themselves, and really it's that way because the house was the item that had the loss. So from an insurance company standpoint, chances of that home, having another loss are now greater because it's had one loss. It carry, it follows the person who had the loss because that person has submitted one claim. So from the insurance side, They have a greater chance of submitting another claim.

[00:26:46] Alice Lema: So you're tagged and your address is tagged in a database somewhere.

[00:26:51] Megan MPherson: Yeah. Yeah. So, okay. So I'll be honest. I've had that happen. I've had a massive water loss, myself, hot water heater, things happen. Right. It's not really fun to think about if I were to go and sell, it's gonna carry or somebody were to buy my house down the road it could carry.

[00:27:10] But from an insurance standpoint, I have to understand it because you know, somebody shown a propensity to file a claim. Chances are they're more, they're more willing to file a claim than somebody who's just going to pay for the entire repairs.

[00:27:22] Alice Lema: Oh, I get ya. I see. They're kind of predicting the, the risk because of the way the person handled, the way that somebody handled it.

[00:27:31] You know, that is so interesting. I had no idea. You know, what I did like, cause as the buyer's agent and that situation, we had a disclosure from the insurance company that we did not have from the seller. So, so we found out that there had been a water claim for damage on a house in escrow. The seller did not tell us.

[00:27:54] But we found out. So at the time I thought this is great. I didn't stop to think about the tagging. I didn't follow it for five years.

[00:28:04] Megan MPherson: No,it's a real thing. And you know, and that's just why I advise, Hey, use it for catastrophic scenarios where you just can't afford to cover it out of pocket. That's what, that's what I advise you use your home policy.

[00:28:14] Alice Lema: Right. And if you're getting ready to sell, know that if you don't disclose it, It could very well still show up. We'll come back up. You are really, really in big trouble. So don't, don't cheat there. Cheaters don't win. Right? Yeah. So folks, we got to take another quick break. We're talking with Megan MacPherson, a farmer's insurance, bringing us up to speed. All things insurance wise in 2022, we'll be right back.

[00:28:43] Well, good morning again, Southern Oregon. Welcome back to the real estate show. We're talking with Megan McPherson of farmer's insurance today. And boy, we're just getting an earful about all the intricacies of the insurance world and for homeowners who don't know, you definitely want to listen to this broadcast again tomorrow at 6:00 PM, or you can go on to either Megan or my website and get a copy of it.

[00:29:07] So. Yeah, it's good. Good stuff, Megan. So we've been talking a lot about rural districts and fires and floods. Let's take the conversation into town because that's where most of us live. Absolutely. So do you have anything special for people who live in town, any, any idiosyncrasies that they may not know about certain kinds of houses?

[00:29:29] Megan MPherson: Yeah, definitely. So my mind instantly goes to if you're in a homeowner's association. So there are plenty of subdivisions here locally in Southern Oregon, where there is an HOA, whether it's a super active one or not, you're still a part of that association. So with an HOA, they are able to assess their they're able to do assessments.

[00:29:48] So if there is a loss to the actual association to any common area, common ground, if you have a clubhouse, if you have a pool, if your association owns the roadways, if there is a covered loss to association owned property, the homeowners via being a part of that association can be given a portion of that assessment.

[00:30:07] So they can actually be assessed. You owe this much percentage of this loss and that goes out to all of the owners in that association.

[00:30:14] Alice Lema: Okay. So let's just say before you go on, let's make sure we understand. So you pay HOA fees every month. Okay to support the care and whatever of the so let's say that the clubhouse has a huge leak in the roof and damages the floor.

[00:30:31] You're saying that the homeowners can be asked to fork over more money?

[00:30:36] Megan MPherson: They can be. So within an HOA a n active functioning HOA, let's say there's one with a clubhouse and they are active. There's going to be a board. And that board is going to have the decision to either submit the claim to insurance. Or if they too are using it sparingly and saving it for that giant catastrophe, they may choose instead to assess a portion of that loss, to all the homeowners so that they don't have to submit the claim against the policy.

[00:31:03] Alice Lema: Wow.

[00:31:04] Megan MPherson: So then you're in a position where you are being asked to fork over money that you may or may not have at the moment. Provided the loss that the HOA sustained is insurance coverable, it's gotta be a covered loss. If it, if it couldn't be a covered loss under say your home policy, your home policy, couldn't step into help insurance covered loss.

[00:31:27] You as a homeowner, with most companies are able to purchase an additional endorsement called homeowners loss assessment. It's a loss assessment coverageand with most companies, so farmers offers it, you know, we can go up to $50,000 in loss assessments coverage. It is minimal what it adds to the premium to add it on to your policy every year.

[00:31:49] And then if you were given loss assessments and you owed a certain portion, as long as they were able to be covered by insurance in the first place, then your home policy under that endorsement could actually pay what you owed in those loss assessments so that you weren't forking over a giant amount. And that's a homeowner specific.

[00:32:10] Alice Lema: That's not the whole HOA itself. That's you as an individual.

[00:32:15] Megan MPherson: Exactly. Yeah. It's an endorsement that you would put on your personal home policy.

[00:32:19] Alice Lema: Wow. You know, I've never heard of that. And gosh, I work with so many HOA it's, I'm kind of surprised I haven't heard of that before. That would be quite a lifesaver.

[00:32:28] Megan MPherson: It's super, super important for the homeowners. You know, the HOA it's the association itself. It isn't very important for but an HOA is made up of a body of homeowners. So really it's important to every one of those owners in the neighborhood. I, if I go ahead, if I am writing insurance for somebody, and I know that they live in a homeowner's association, it's one of the first things I advise, let me add this endorsement on.

[00:32:55] It costs you pennies on the dollar over the course of the year. If something happens, you know, you've got some money to protect.

[00:33:04] Alice Lema: Yeah. Wow. That's, that's amazing. Cause you know, during the crash we had a lot of problems with HOA's and homeowners associations not taking care of the buildings where things happening, they didn't have the money or they did have the money, like you said, and they didn't want to spend it. And those poor homeowners on top of their HOA fee, sometimes they had to pay another, you know, $3,000 because something happened.

[00:33:29] Megan MPherson: And it all depends on, you know, how their HOA is structured, what all is owned by the HOA. But it can make a difference.

[00:33:36] Alice Lema: Yeah. Yeah. I mean, I'd love for the HOA's to talk about that with their residents, even though it's not an HOA responsibility necessarily, but like you just said, they are made up of homeowners in that in that area. That would be a lovely thing. So maybe we'll start making some phone calls. Absolutely. We'll definitely start telling people who are buying and selling in those complex. So is that, is that at all transferrable to the next person?

[00:34:03] Megan MPherson: So it's not the endorsement itself, it's not transferable. So homeowners insurance policies, you aren't able to just transfer to the next person coming in. Because insurance in the state of Oregon is based on a million factors. One of those being credit, one of those being your insurance, or so every home policy is individual to the next buyer.

[00:34:23] So you may have you know, seller paying $500 a year and buyer, it may be $1,500 a year. Well, there's a lot of factors that make up that difference. My suggestion would be to someone purchasing a home and an HOA would be make sure that the company you're with offers loss assessments, coverage. Yeah. Find and use a company who does offer that.

[00:34:42] Alice Lema: Great advice, Megan, very great advice.

[00:34:45] So in the past, talking about HOA's and condos and attached buildings and things like that I have had clients have trouble getting insurance policies or not having the right insurance. Do you have any advice for those situations?

[00:35:00] Megan MPherson: Yes. Condos are super, super important. Read the bylaws read, actually read your HOA policy. It is within the bylaws and the CC&R's that will specifically define, are you responsible for just the portion within your home walls in, or are you responsible for walls out? Meaning you're responsible for a portion of the outside items. Knowing that will make the difference of, do you have enough coverage?

[00:35:25] If your house God forbid catches fire and you're in a condo or not. Because condo policies are written either walls in or walls out. You have to find that information within your CC&R's and bylaws rules and regulations. So look at that policy and make sure that your insurance agent is aware of that. If you can provide your agent a copy of that and do the homework yourself and find out, find out for certain, are you walls in, are you walls out?

[00:35:50] Because the lender typically won't pick up on that. They can, but that's not really the area that they have to focus on. Really that something do your due diligence and then talk with your agent about it and make sure, you know, are you walls in or are you walls out? Because it will make the difference of what kind of policy your written.

[00:36:07] Alice Lema: And that's in the CC&R's, the HOA bylaws.

[00:36:10] Megan MPherson: It's going to be, it's typically in and the bylaws and the rules and regulations and, and that's where it will define what the homeowner's responsible for and what the association is responsible for.

[00:36:21] Alice Lema: Because a lot of people just assume that they're only responsible for the interior. And then we've had things happen down the road and it was not the case. They were responsible that roof or that outside wall that somebody just smashed into with their brand new Corvette. Weird stuff happens with real estate, all all the time.

[00:36:46] Megan MPherson: Read all of those documents. Do your due diligence, know what kind of policy you need. And make sure that your agents are aware of that.

[00:36:52] Alice Lema: So if you're listening, especially if you live in the rural district or in a condo, a townhouse ,in HOA or any other kind of dwelling, give Megan MacPherson a call farmer's insurance. Megan, how do people get ahold of you?

[00:37:05] Megan MPherson: You can my office 541-776-0673. Or shoot me an email MMcPherson1 at and I'd be happy to talk.

[00:37:16] Alice Lema: Great. You can always get her number for me too. Have a great weekend folks. See you next week. Bye.

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