Every year – every single year these past 26 years – I get a call from two to three clients, each of them about to burst into tears. In every case, they’ve just bought a house and are about to close. All they have to do is acquire house insurance. That’s when the insurance agent pummels them with question no one human can possibly know.
“Does the home have a backwater valve?”
“Uh…”rifling through their real estate information and can’t find it.
“How old is the roof? Is the plumbing system galvanized or lead? Does it have aluminium or knob and tube wiring?”
“Umm…”not really knowing where to look.
And this was a first and my favorite, “Are the fire hydrants pressurized? If so, what is the psi?”
They call and tell me all the questions the insurance company asks, seeking answers, and I wonder what the insurance company is trying to pull. Fire hydrant pressure? Really? And they’d like them not only to be aware of what precisely that pressure is, but then to confirm that it is functioning?
Here’s the thing. No one person – not even a highly skilled knowledge ninja – would know all of these things, no matter their field. The home inspector might know about the plumbing and wiring, but not necessarily ALL of it, EVERYwhere. I mean, inspectors don’t open up the walls and peek inside. So there’s room for error.
The fire department or municipality might know what the fire hydrant pressure should be, but would have to come out to specifically confirm that A) the hydrant is functioning, and B) that the psi is at a specific pressure. I’ve never ever heard of anyone doing that.
Here’s the other thing. With ‘room for error’, or with incorrect information, a homeowner can be s--t out of luck when it comes time to make a claim. That means all these weird and highly detailed questions might get you, the homeowner, in a tight spot.
Even a common and seemingly simple question like, “What percentage of the square footage is carpet, hardwood, vinyl?” can cause a serious kink in your coverage.
You’d think the square footage should be in the real estate property information, right? You just bought it, and the information’s right there.
The insurance measures houses differently than the real estate industry. So, for the purposes of insurance, the numbers will be way out if you use the real estate info.
Here’s a quick breakdown:
The real estate industry requires measurements be taken, yes. BUT, we measure from the outside and have guidelines based on the style of the building. That includes almost an extra foot between interior and exterior dimensions. That can amount to hundreds and hundreds of square feet more than the actual interior measurements that the respective rooms and spaces measure at.
The insurance question requires measurements be taken from the inside. Calculating flooring? It’s measured from the inside of a wall to the inside of a wall.
The difference can be huge, and can make an impact on your coverage.
Estimate too low, and you’re under-covered for a claim. Estimate too high, and you’re paying higher premiums than necessary.
What to Do About It:
It seems to me that even the most anal of detail collectors wouldn’t be able to gather accurate information for every question the insurance company asks, but there are things you can do to get the best information possible.
Basically, contact the appropriate professional from your team (you have a professional team, right?), and benefit from their expertise.
Plumber – type of plumbing, Electrician– type of wiring, Roofer - age of shingles, Fire department or municipality – fire hydrant pressure and function.
Ultimately, it’s one of the many things that remains ‘buyer beware’. So, as you’re gathering information for the insurance company, be careful about where you get it from.
What’s a weird question you’ve had from the insurance company?