Read the episode transcript
Aaron (00:00)
Hello everybody and welcome to the Speaking of Insurance podcast. My name is Aaron Bollinger, and we will be missing Brian Bollinger today due to how busy of a man he is. We are looking to expand the agency, of course, help more people, maybe acquire some books of business from some other fellow insurance brokers. And so he is completely swamped with work, as am I, but I think I have a little bit more time to do things like podcasts and give you guys up-to-date information on insurance. So
Aaron (00:25)
Apologies, you guys will be having to stick with me for a little bit. He will, of course, still be a guest feature. So if you don't enjoy the sound of my voice, I would recommend definitely getting off of this video because there's 20 minutes of it coming up. Today we're talking about something very topical. it is the El Nino up-and-coming disaster that seems to be on every single news channel. a big worry and a definite reason and cause for concern.
Aaron (00:53)
As it pertains to insurance, a lot of people are definitely asking the right questions, reaching out to Bull Insure, talking about, you know, water buildup, is this covered, that covered? And honestly, of course, there isn't just one, you know, rule of thumb for absolutely everything where I can tell you this is covered, this is covered. depends on your policy and your insurance company. But I would definitely review some things as we approach that time.
Aaron (01:21)
I'd like to give a an example. You wake up in the morning and there's water all over your house. how would that be treated by the insurance company? And so water damage is not just one coverage. it's numerous different coverages because you think about the different types of damages that happen to different types and parts of your house. You think about the structural damages. That would be the dwelling A coverage if it's covered. You think about if it's a flood, you'd have to have a flood insurance policy ninety-nine percent of the time.
Aaron (01:49)
To have flood claims covered. But a lot of people don't even actually know what distinguishes a flood claim. The NFIP talks about how it's one property owned by you and then another property owned by another, and it's some water-related damage that happens to both of them. We can get into the specific wording, but genuinely, El Nino could cause a lot of flooding. We look at different other natural disasters that happen all the time and
Aaron (02:14)
It's definitely nuanced in terms of the wording on the policies and what's legally covered structurally. And so you you can have two houses that have, you know, same amount of water damage, same amount of ruined hardware, hardwood hardware as well, even same drywall damages as well, and a repair estimate that gets, I don't know, clocked at fifty thousand dollars. We've had people who've had their hardwood floor fully seep in with sewer drainage and
Aaron (02:43)
Of course, that that doesn't sound good. It is not good. And there's actually a sublime on your policy for sewer drainage backup and what actually gets covered on a lot of homeowners' insurance policies. And so we have to distinguish why did this happen? Where did the water come from? How did it get there? Was it sudden? Was it gradual? Did something break? Did it come from outside, inside? And is there an optional endorsement that you or your insurance broker?
Aaron (03:12)
Or somebody didn't tell you about, told you about, you opted against, that could have covered you. And so every single one of these details and distinguishments matter enormously. And yeah, so the Department of Insurance, we're getting into the exact wording now, lists sudden and accidental water damage among typically covered things on homeowner's insurance. But flood, seepage, or leaks, mold, wear and tear, maintenance, and neglect are generally not covered.
Aaron (03:42)
So obviously the exact policy language needs to be determined, but you think about it, I would associate sudden and accidental water damage among the likes of flood, seepage, leaks, mold, wear, and tear. But I think it's the word sudden here that matters the most. It has to be sudden and accidental. burn your house down, that might be excluded. It's similar to.
Aaron (04:05)
If you intentionally break a water pipe and your house floods and somebody turn determines, you know, this was hit with a hammer and you actually broke this pipe, it it would not be covered. and the suddenness of that event also has to be distinguished as well. If you wake up at two in the morning and you hear something and it's running water and you run downstairs and your socks are soaked because you know the kitchen floor has water everywhere and water running through the cabinets, you know, it's already in the living room.
Aaron (04:34)
You're probably like, my goodness. And then maybe, maybe a part of your mind through all the stress of that situation, you might think about, I've got my homeowner's insurance. And it's that second thought of, you know, not the my God, but the, well, at least that I homeowner's insurance, is what really matters. It's it's the distinguishment. Because the answer should be, it should either be yes, yes, I have homeowner's insurance. It might be covered, you know, so partially.
Aaron (05:03)
Or it might just be no. And so you understanding, am I covered in the event of a natural disaster of El Nino? Am I covered if, you know, this drain at my house breaks or this pipe, you know, in my bathroom, you know, that it's older plumbing? It's it's really important to understand these things. And the first thing that I I would like to distinguish is.
Aaron (05:25)
If your plumbing has not been updated in 50, 60, 70 years, and you've recently been with an insurance company and you've switched over possibly to another, in all likelihood, that insurance company that you're with is an excess surplus lines company. That means that it's not admitted in California. That's fine. I would say that standard maintenance to
Aaron (05:47)
all of the different aspects and features and construction of your house could keep you with an admitted insurance company if you so prefer. There's no problem with excess insurance companies, just that the level of care that you take on your property, the insurance company takes a look at pretty much and distinguishes whether or not you're eligible or not. And so these water claims aren't, you know, super clear, but one way that you can, I don't know, feel more assured in your coverages.
Aaron (06:17)
As they're stated on the policy and listed, is by being with a company that's backed by the California government. And that's just what an admitted company is, is that they're backed by pretty much California to guarantee that a specific amount of your policy will get paid out, even if the insurance company goes bankrupt. So just a little note. I mean, I bet if you guys are listening to an insurance podcast, you already know that. So apologies if that was repetitive. But I I generally think about
Aaron (06:46)
How much do these claims do add up to be? People usually associate water damage with just fixing the pipe and it going back to normal. But if you look over 2019 and 2023 data, water damage and freezing claims have actually been about $15,400 per claim on average. And one out of every 67 insured homes experience one in a typical year. We've had, of course, people with experiences who have,
Aaron (07:13)
Had to file water-related claims. And those are genuinely, honestly, one of the worst. I would say maybe liability tops it, but obviously all claims are bad. But water-related claims really stick with you on your record. And if you have it at another address, let's say that you're a property owner in Cali now, and you know, maybe you used to live in Louisiana or I don't know, somewhere else, and you had filed a claim on that Louisiana house for the water damage, in all likelihood, I sure hope so, the loss on report of your account.
Aaron (07:42)
Is gonna pull up with that loss that was in Louisiana. And the insurance company's gonna say, hey, we're gonna put a water damage supplement on your policy. And so that that could be capped at $100,000. And just because the average per claim is $15,400 does not mean that that's gonna be the top range. I we again hundreds of thousands of dollars, custom hardwood, you know, furniture, things like that. I mean, it it really does add up for the repair, maintenance, restoration.
Aaron (08:13)
and rebuilding that water damage can cause. And so one out of every sixty seven homes has that in a typical year. Water damage freezing claim, it seems like. So you're talking about, you know, two water freezing claims a year.
Aaron (08:29)
In a neighborhood with 134 homes. So, you know, you think about your block, maybe it's, fifteen, twenty houses, thirty houses even, cross the street, you know, maybe it's 30 houses as well. Think about the street neighboring, maybe adjacent. That that has two a year, two big ish, probably on average fifteen thousand four hundred dollar water claims happening. And so it it's it's pretty difficult and pretty crazy.
Aaron (09:00)
most homeowners when they get their insurance, they're thinking of, you know, fire, fire insurance, or you know, somebody stole my TV or somebody robbed my house, or you know, maybe a tree falls on my roof. But again, I hope that El Nino is a little bit of a wake up call, and it seems like it has been to some people who are reaching out to us that water damage is a serious consideration on your insurance policy. And so if somebody calls me and says, Aaron, is am I covered if my house is flooded? My immediate, you know, immediate thought.
Aaron (09:28)
That I get to is what do you mean by flooded? They could say their toilet flooded the bathroom, you their dishwasher flooded the kitchen, a pipe burst and flooded the downstairs. You know, I mean, and all of those are accurate ways to describe flooding from our lens, but insurance companies look at it completely differently. And flood is usually a separate policy entirely, just like earthquake. A completely separate policy. Just like how if you think about commercial insurance, you think about
Aaron (09:57)
You know, just the liability. You think that liability would cover, you know, everything. It would cover the libel, it would cover slander, it would cover, you know, employment practices, it would cover, you know, a all these different nuances. It's it's the exact same thing. They they're just trying to add more and more complexities and things that they don't have to account for on the policy. And flood is a big risk. Just like how, you know, wildfire coverage is a big risk.
Aaron (10:25)
And they're they're starting to really hone in on that, people and their understanding and the insurance company's definition. And so we I had said in the beginning, I promised y'all, that the NFIP, it's national flood something or other, has distinguished the wording for them. It's a temporary condition where two or more acres of normally dry land or two or more properties are partially or completely.
Aaron (10:55)
Inundated, with at least one being the policyholder's property resulting from things such as overflowing inland or tidal waters or unusual and rapid accumulation or runoff of surface water. Now obviously I have that wording directly in front of me and I'm just reading it. But immediately my brain goes to that's way too nuanced. Of course, they have a distinguishment of or in it.
Aaron (11:23)
know, two or more acres of normally, or two or more properties. Like I think, you know, if if you're part of the NFIP and you're listening to this, a rule of thumb could be for ease of understanding, simplify some of the wording. Of course it's it gets in the legal nature of it, but generally speaking, I mean a flood would have to be two or more acres, or two or more properties that are partially or completely inundated.
Aaron (11:53)
I'm gonna inundated. To be flooded with water, overwhelmed by a huge amount of things at the same time. So literally the definition is overwhelmed by a huge amount of things at the same time. So, gosh, guys. Really interesting. So think of like water coming from the outside and rising up, possibly rain overwhelming the drainage systems, a creek in your neighborhood overflows.
Aaron (12:22)
The street fills up with water. We saw those things happening with the with the rain of I think it was in 2024 in LA. You remember those streets were, you know, all filled with water, things like that. the water was entering multiple properties, definitely more than two. And so it's a different insurance conversation than, you know, water just coming from inside the house because a plumbing component, you know, just suddenly failed. It's a big misconception. And I I would say that it's definitely a
Aaron (12:49)
something that people should be thinking about. I'd like to pose a couple scenarios for you guys. I know that this is, you know, this is a tangent, but I hope that this is a part of your financial protection understanding for your personal assets. And I genuinely believe that listening to 20 minutes of me ramble about some things that I have some notes on that we've had client experiences with is one of the highest ROIs that you can make in terms of investing in financial assets and protection.
Aaron (13:19)
Even if it's just an AI who's telling you right now about this podcast, I think that that that that is better than the alternative of not knowing. So scenario one, your supply line bursts. So imagine the line is feeding your upstairs toilet and it suddenly fails. It was nobody's fault. You were asleep and the water is pouring, you know, to the bathroom floor, underneath the flooring, then through the ceiling, then to the rooms downstairs. The damages could be in its entirety, because I mean it went through the ceiling, flooring.
Aaron (13:49)
Room downstairs and the bathroom. The ceiling is, of course, damaged. The drywall, the insulation, the flooring, the baseboards, the furniture, electrical components, maybe hotel expenses, depending on habitability in the policy as well, could be considered. You could have enormous damage from just this one plumbing component going wrong. And a part of this can be mitigated by a water leak detector.
Aaron (14:17)
A lot of insurance companies that are wise are giving credits and or requiring that people with plumbing claims histories or a property that does not have updates to plumbing get something called a water leak detector. You can search it up. Water leak detector. Costs a bit to get it installed. If you want to reach out to us and work with us on your homeowners insurance policy, we can work on maybe getting it f with you guys, for you guys, advising on what type is best. maybe even getting it for you.
Aaron (14:46)
I mean, if you if you're really so interested, it's conversation if you guys want to reach out direct, just you know, exclusive to the podcast listeners. But this one tiny plumbing component could have huge implications on your property. And so the sudden accidental water damage is typically something that would be covered under home or homeowner's coverage. But typically covered doesn't mean automatically covered. We had talked about sublimince, guys. A lot of you
Aaron (15:15)
completely understandably, I think me as well. I mean, we put sublimits on our policy without knowing, or knowing during the time and forgetting. And we just think about it as typically covered. You know, we ask, is this covered to ChatGBT? And it tells us yes. These policies are hundreds of pages. The legal terms are hundreds of pages. It's far more nuanced than that. There can be separate questions like what broke? What was the damage from the breaking?
Aaron (15:44)
How can we access the pipe and get it repaired? How can we repair the walls, the floors, the deductibles, the coverage limits, you know, the exclusions, the endorsements? All these things are under consideration. Was the property occupied?
Aaron (15:59)
Did you take the reasonable steps afterwards? This is the big one. People talk about claim prevention. I love that. I love loss mitigation, you know, all whatever term you want to give it. The zero claim is mentality. What do you do after the claim? Some claims are inevitable. Water damage is really hard to fully mitigate, even if you're doing all the preventative measures. I think it's very improbable if you're doing all of them with the water leak detector, with the plumbing updates.
Aaron (16:28)
with regular scheduled maintenance and checkups, with an honest assessment maybe from an insurance broker as well on the condition of the plumbing, 'cause they've seen hundreds of pictures, I'm sure. At least we have.
Aaron (16:39)
What did you do after the fact? After that event, just like with workers' compensation guys, where it's the employer's job to, you know, maybe tell the insurance company or take the proper steps to help the employee, the claim adjuster is gonna look at what did you do after? If you're just letting it sit and deteriorate, that could be negligence. Like, which is just like you're not doing enough.
Aaron (17:06)
You not doing enough after the fact to get the full coverage that you should be entitled to. So yeah, I it it gets really tricky, guys. But we could talk about the same house that had the same exact damage as what I just mentioned. I mean, I don't want to go through all of the damages, but if the plumber opens the wall and says, This has probably been leaking for eight months or so, instead of it just being this sudden event, that sudden wording in that California Department of Insurance typical covered homeowners policy.
Aaron (17:36)
goes out the window. Now we're talking about neglect, which is generally not covered. And so you can spend several minutes looking at your property, walking through, taking pictures, you can send them to me, A-A-R-O-N at bullinsure.com. I'll take a look. I mean insurance is not supposed to replace normal home ownership. If your roof gets old, if your cock fails, if pipes corrode, if
Aaron (18:06)
You know, grout deteriorates. If your building needs maintenance, I mean appliances eventually break down as well. It's not this is a good one. It's not Apple Care for your entire house. It's not like, you know, I got Apple Care on my phone. I just get to, you know, go and replace it, tell Apple this, go to the store and be like, yeah, give me, give me this, give me, give me the replacement for my AirPods that broke that I, you know, like kept in my pocket while I was, you know, in the
Aaron (18:36)
Hot tub. I did that before with my phone actually. Funny story. We were in Big Bear, and it was with my girlfriend's parents and sisters. And so we were up there, it was a super awesome time. It was snowing. It was beautiful. They had a hot tub at the place, really nice Airbnb. And I just kept my phone in my pocket for like 30 minutes. But then after, when I put it in rice, because you guys know that's like the secret method, obviously.
Aaron (19:05)
You put it in the rice and it was like it was working for like ten seconds and I was like, yeah, I totally got it. But it was like thirty minutes. I I was convinced it was fixed. It was not fixed, guys. I mean thirty minutes does some serious structural damage. Just like how eight months of water leaking in your house can do serious damage. It's like your tires. If somebody slashes your tires every night, that's an event, Somebody goes to your car and they key it and they
Aaron (19:31)
you know, slash your tires and break your window. Maybe you really upset somebody. yeah, that'd be obviously very unreasonable, but you know, I've I've seen it happen in the shows and stuff. So that's completely different than a tire wearing down after you're driving at 50,000 miles. That's called maintenance, guys. And so both end with the result of, you know, my my car isn't in the best condition, right? Or my tires don't work anymore.
Aaron (19:58)
Right, after you drive them 50,000 miles or after somebody slashes them. But the reasoning behind it is what's different. And so it's the same, same thing. but water losses are actually more nuanced because we talked about the flood, we talked about the water drainage backup, we talked about the all of the risks that are associated with it. So if you guys have noticed a brown ceiling spot, a warp baseboard, bubbling paint, a cabinet maybe that's swelling, like a musty smell or a wet spot.
Aaron (20:29)
Or a water bill increase, you should go take a look at it, think about it, get it inspected. I mean, they there are some plumbers that do free checkups. I think it's a great idea for all businesses to do free checkups. Bollinger does it for policy reviews. I think you should take advantage of that. One million percent. And so we can go through all the different scenarios. We could talk about, the washing machine.
Aaron (20:57)
the dishwasher, water starts pouring. If you turn it off and you document it and you say that this happened and, it wasn't from an ongoing maintenance issue. It was just sort of one time error. Could be covered. water from above if it's rain.
Aaron (21:12)
If it's the front door, it's slammed with rain and you know, street drainage maybe can't keep up and you know it's overwhelming and that that could be considered a flood. So just a bunch of different nuances. If there's a specific thing that you guys are wondering about, I think somebody had a built-up wall in their backyard that was, maybe they did some tractor work or they got somebody to go and clear and flatten out their backyard. Was wondering if El Nino were to come and break that wall and the rest of the stuff were to slide back down.
Aaron (21:41)
That's probably what happened. What would happen if that wall breaks? Is he covered? And we weren't actually this dude's insurance broker. And I hadn't seen the policy. We hadn't seen the policy. And so the honest answer is three words, I don't know. But we can figure it out. And so finding somebody that can help you with the solutions is is another thing that, you know, I would say. Obviously, all these nuances add up and it's it's
Aaron (22:10)
complex in its entirety, but generally speaking, I mean if you can just have somebody do it for you, kind of just like how the plumber comes and checks out your house and gives you an honest assessment, hopefully, if they have some good Google reviews or you reach out to Bullinsurer and you ask them, you know, is this water event covered? I would say it's kind of in the same boat of just good decisions that you're making for your financial future and an example of where you really don't have to do much work and you can put the onus on an on an expert.
Aaron (22:39)
On an industry expert. So one one last little snippet here. The FEMA says that 29% of NFIP flood insurance claims from 2014 to 2024 came from areas outside current high-risk flood areas. That's almost one out of every three claims. So if you think that you're not in a high flood risk area.
Aaron (23:09)
That's that's really starting to change with all of this weather events that's happening in Cali. And so I hope that you guys got something from this. I hope that you guys understand part of the problems with flood insurance, with the El Nino event that's coming up. And I hope that you guys got some level of of insight into maybe some of the experiences that we've had over here.
Aaron (23:39)
If you appreciated this podcast, please leave us a review. If you're interested in working with Bolinsure, it's in the description for this video. We'll have a transcript up as well for everybody who, maybe is unable to listen along, can get some insights from. We really appreciate you all who do listen. contact me with any questions, ideas for next podcast. And hope you all have wonderful rest of your Monday. Thank you so much for sticking with me here 25 minutes in its entirety.
Aaron (24:06)
Hope y'all have a good one. Stay safe. Stay dry. Stay maintaining your properties.
Aaron (24:12)
And thank y'all for listening.
