Episode 2: Changes in Insurance Policies and Public Adjusters

Episode 2 of the Florida Insurance Survival Series 

Rick Kooyman discusses the stringent insurance industry standards affecting home inspections, particularly the four-point inspection. He notes that roofs, once insurable for 10 years, are now only insurable for 21-22 years, leading to higher costs or refusal of coverage. The industry also scrutinizes electrical panels, wiring, and plumbing, with specific attention to the type and age of materials. Kooyman highlights the impact of humidity and corrosion on appliances like air conditioners and hot water tanks, which are now insurable for only 12 years. He also explains the Wind Mitigation Program, which offers discounts for homes built to the Florida building code, and the importance of arc fault and ground fault outlets in modern building codes.

Transcript

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It or say it's good, I can't. I used to be able to come out and do just the roof section of the four point and they called it a roof certification. And they would say, Okay, well, what's the condition of the roof, Mr. Inspector, and how long do you think it will last? And they really gave me credit for if I said I think there's 10 years on it, they'd be okay 10 years. Well now if I say there's five years, they're only going to offer you one more year coverage, and if I say there's three, they're not even going to talk to you. They're just going to tell you to buy a new roof. So now your 30 year product is insurable for 25 really, it's more like 2122 before they're going to call and say, You know what, twice as much for a policy, or we're just not going to offer you one. You got to put a new roof on it, and there's nothing you can do about it, right? You can't have a roofer come and certify it. They won't accept it. They're just going to look at that chart and say, This is what we got to deal with, and this is how it's going to go, right? So there's more things than just the roof that the insurance industry is doing this on. You know, it goes to the electric panels. There's a whole list. There's probably a half dozen panels out there that are, yeah, they weren't good to begin with, right? And they're not insurable. They're fire hazards. They doesn't work. Basically, they don't do anything. Some of them fall apart when you take the cover off. They're just all the pieces fall out of them like that. Can't be right, you know. But you know, so the panel manufacturer now matters what kind of wire they're really paying attention. They updated the form just this year, finally, and now they actually have a six different types of wire. They want to know exactly what kind of wire is it? Is it copper clad? Aluminum? Is it aluminum? Is it solid? Copper? Is it stranded? Is it single strand? I mean, they're getting into the weeds on this stuff. Why? Because you're not. I mean, if we're looking to buy a house, yeah, right. See this? This goes to the importance of the insurance industry is controlling the market, and people don't realize it, right? The real estate market is finally starting to see the effects of the insurance industry putting their thumb on this stuff because of what you just said, How do I know? I can't tell you. There's so many houses on the market right now. It's, it's crazy, but most of them don't pass that four point. And the homeowners, they'll know it, right? So they're, they're up here with their value, and I'm coming in and going, well, it's my might be here because you need a panel, you need a roof, and you need a re pipe. That's 100 150 grand. This matters. Now. We're not talking about peanuts, yeah, so yeah. Pipe type is a big deal. Pipe age, big deal. Re piping a home. It used to be some rare thing that happened to people when they had, you know, reoccurring leaks. Now it's just a chart. It's an age, 20 years, sorry, new pipes. And they're talking about the now they're talking about the drain systems. They never asked about the drain lines before, but now they realize that the cast iron drains that they put in in the 80s are all corroded and junk, and they're under the slabs, and they didn't think about it, and they're paying those claims, so they're not doing it anymore. They put it on the new form, and they said, What kind of drain pipe is there? I mean, it's getting in the weeds on specifics, and the rates are only getting worse, the coverages are getting less, and you're getting the industry to tell you that it's getting better for them. That's what they're saying, right? And they're saying there's new underwriters, there's new opportunities out there. I hear it on the news that, you know, insurance rates are going down. There's new new policies out there. It's not really good news. It's not it's a manipulation of the market. It's not in your favor. And like you said, it very much matters what you're buying now, especially in this market where the hidden things matter so much, and almost nine out of 10 people don't get it. They don't understand. They don't know what those words mean, and they just assume, like everything's the way it used to be, and it's a whole new market, right? And that's part of what we do when we come and do the inspections, we have to confirm and show photos of the proof. This is what this is. So I got to open up the panel, and I got to do all this checking and make sure there's no fire hazards. And you got the right wire, and they're attached right it's the right brand and the right brand in the right box. Right? Because I can put, you know, a square d breaker in a Siemens panel, but the UL underwriter didn't test it right. So the insurance company goes, Well, you got a mismatch manufacturer right there, and it caught on fire. That ain't my fault. Well, they they went in the same and it might even not be the case, but it ain't gonna pay, right? And the AC guy, he only got a couple of breakers in the truck, and he don't pay attention to the label of the panel, and he puts in what works. And now you've got mismatched stuff. So this is what's going on every year as they start asking for these inspections. And these inspections are starting to occur on condos, right? And a lot of times, the condo will get done as a whole building, you know, because they want to know what's what's the wire, what's the pipe, what's the roof attachment, what's the system types, what's the ages of these products. And then they go into the units and they want them done on the specific units, because they want to know what's going on inside your particular house. What are the conditions of your valves? What are the conditions of your outlets? Right? Because everything's different in everybody's house, and then we have high humidity. You're here by the ocean. You've got a lot of salt in the air. Corrosion is a real thing with the humidity. It rapidly ages stuff, especially the heat and humidity, right? So things just don't fundamentally last that long. Air Conditioners maybe 15 years. At the high end, you'll get out of an AC, a hot water tank, they won't insure past 12 years. I mean, it could be brand new. I just saw one yesterday. It was a 99 the older ones tend to last. The new ones, they don't even make them to last anymore. I mean, it's normal. They'll see a six year old hot water tank that's it's leaking, you know, and it's just the waters corroded through the tank and it's just disintegrating. And the insurance doesn't want to be part of that either, right? So the details are coming up and getting relevant, that the expectations are getting just really kind of hard to accomplish, or they're baselined off of that life expectancy chart, and you kind of held hostage to it, right? And then there's the other form that goes with those, and that's the augmented thing that, you know, the uproar created when citizens started and the rates went up originally, back in the early 2000s and they said, Okay, well, you did this four point thing. You came and told me, I need a roof they see, you know, a panel and a hot water tank and probably some new socks. But why do I have to pay so much well, how can we make it better? So they created the wind Mitigation Program, which is also known as the Florida my safe home program, which you sometimes hear about in the spring, because the government funds it small amount, and then the pot gets hit and, you know, 10% of the people get something, and then it's depleted for the year, and if they do it again next year, right? So there's an opportunity, if it's like a lottery, you know that the state says, Hey, we're going to pay 50% of these updates to improve the stability of your home, to make it more storm resistant, we want to bring the older homes that were built under that international residential code to the new Florida building code. Well, that can be expensive, and to encourage people to do that, that's why they started the my safe Florida home program, where they so much give you money that they don't, and then they said, well, let's do a discount program, and we'll call it this wind mitigation certificate, right in the windmill. You may have heard of because it's been commonly asked for, because it's the discount, right? The 4.0 damn, they asked for the four point. They might probably have repairs. The winmit didn't say anything about good, bad, pass or fail. It just asked, what were the techniques used to do certain things? The first one they wanted to know was, what was the building code? What's this thing built to you? When was it built right? Is it built to the International Code? Is it built to the Miami Dade Florida building code, or is it built to the south Florida building code, because South Florida accepted the Florida building code up in Tallahassee, when it was the Florida building code for the state of Florida, they still refused to recognize it, and they still built to the international code and let the builders do the cheaper thing, even though it was straight against the law, because they said, we don't get hurricanes in the panhandle. Yeah, Michael showed up and said, Hi, I'm a hurricane. And they said, Damn news. They showed all the beach photos, and they're like, the whole town's devastated, but that one house unaffected. How about that? I. Yeah. Well, that house was built to the Florida building code and the other ones weren't right. So Florida building code is the first thing they give you a discount. And the reason I gave you that brochure is on the last page of it. Let me show you. Okay, so this stuff here is stuff that's on the four points. This is products that they're not wanting to deal with, and it's just a identification kind of knowledge stuff. And then arc fault and GFI ground fault. When were they required by the building codes? It's just a chart for informational purposes, but people often ask me, Well, why doesn't my house have ground fault outlets in the wet locations? Ground Fault is when there's another pathway for the electricity to go from the source to ground, which is generally you when you're wet, so you touch something wet that's charged, and now you become the wire, and you're the ground fault, right? So when that happens, those outlets sense that switch, that surge in current, and they turn off to prevent that from occurring. Well, the other side of that are these outlets where you can put your plug in there, and sometimes it arcs right. So as outlets age go around, and they're loose in the wall. Well, every time you move the outlet in the wall that that wire in there's going and it's getting loose and it's getting weak, because every time you turn it on, it gets hot. When it gets hot, it expands, and then you turn it off, and it contracts, and it cyclically does that over time, and it gets loose. So now it's loose at its terminal. The box is loose in the wall, and you're jiggling the outlet the plug. Now there's arcing going on in there. And then it could be a fire, right? And, you know, extension cords, dust behind our furniture that we never move, and it's been there forever. This is how we get room fires from outlets that are aged out well. Now in the new building code, they're saying we don't want that to occur. We think we should have some way to protect against the arc. So now they're arc fault outlets. And the original, first generation of the outfall arc fault stuff was a nightmare. It just because the arc induced pulse was a very threshold line, and they just kept tripping. You're just always off. Like, I think these things suck. They work too well, and they don't let power through. And they worked on and worked on them, and now they've come up with, typically, they're a combo now, they're arc fault, ground fault combo, and they're, they're required on the new building codes. This is not something they're asking the house is to get updated to yet, but when you have them asking you to replace your panel, you have to bring it up to the new standard, right? No, you have to. You have to put in a new stack of breakers, right? So now you putting in those arc fault and those ground faults where you didn't have them before, right? So the whole thing just gets more expensive. No, this stuff is all the same. I mean, you want to make sure it's secured, and if it's loose and it's corroded, then it is a problem and they should be corrected. And you know, that is stuff that's in the four point that they ask in those check boxes, if you look through it, there's, you know, scorching loose, this loose that, all you know, they're looking they want us to check those things, and then they follow up behind me and check if I checked it right. So it is getting paid attention to, and they're paying attention to it in fine detail now. And like I said, they updated the form and they added more stuff to pay attention to, because they matter, right? So now we got the discount thing going on with the windmill, and that went on, you know, what year was the house built, as per what building code it was and and just as a curiosity thing, the code your house is built to is the date that you applied for the permit. So when the when the construction guy went to the city and said, I want to build this. Here's my application. That day's building code is what they were approved for. So that's the year your house was built. It could have gotten built four years later, and they just extended the permit and in 2001 in 2002 when they were enacting this change in the building code, that happened a lot, because right before March one 2002 when it was mandatory on February, they were getting bashed at the building department for new construction per. Minutes they hit that they didn't know when they were actually going to build a house or so. You.