Ted (00:01.048)

Good morning everyone. Welcome to our show. Today we have guest Steve Henney from Board Henney Insurance Agency from right here in Englewood, Ohio. Steve, welcome to the show. Thanks, Ted. Thanks for inviting me. Today we want to talk about insurance and in particular liability insurance. You know it’s a big part of my clients estate plan. Every time we get together with our clients, more and more they’re expressing concerns.

about potential liabilities. And while we do some substantial asset protection planning, what I always tell everybody is your first line of defense is your insurance. And sometimes that insurance is done correctly, sometimes it’s not. And because you are my personal insurance guy, I thought I’d bring you on the show and maybe

have you explain some things to our clients? Sure, So the basic policies that we recommend everybody carry are going to be the home, which could be home renters or condo insurance, the auto policy, and the third one that’s overlooked quite a bit is an umbrella policy. It’s the third leg of the stool. So the umbrella gives you an additional million of liability coverage over the underlying policies. It covers you and your

your spouse, whoever is the name you’ve heard, and really extends to anything you do on a personal basis. So if you have boats, motorcycles, campers, cabin at the lake, condo in Florida, it extends to all those risks. So let’s start with the basic policy that everybody seems to have, a homeowners policy. What are we insuring against and what do you recommend in terms of

How you fix the limits of liability on that? So liability pretty standard starts with a $300,000, $3,000, $5,000, or $1,000,000 are the options and they’re all pretty inexpensive. You also have a med pay limit which we don’t love because it’s kind of a giveaway coverage. anyway, your liability is the basis there. On the auto… Well, let’s start just with the home though. Okay. So we’re talking…

Ted (02:25.431)

roughly a $300,000 liability limit. What about the structure itself? How do you get into determining what you’re gonna cover there? So this has changed a lot since the 30 years when I started. Anymore, as soon as we input your name and address in the computer, the rating program, accesses your property information and develops a replacement cost estimate.

It’s looking at the specs of the house, type of construction, that type of thing, various amenities. So it is giving us a rebuild value. We always include a fallback, an endorsement that says we’ll go 25 % over above that, 50%, or the best endorsement you can get is guaranteed replacement. So it pays whatever it costs to rebuild your house with no maximum. That is a little bit more limited because they only make that available on newer properties. Interesting.

What do you typically, what the policies you’ve written, is it across the board? Some do simply replacement values, some add the 25%, some add the guaranteed amount. Our agency standard is to add the guaranteed when we can. If not, we go with 125%. So this is another area in the past, I’d say, three to five years that we’ve seen dramatic increases on rebuild values.

due to inflation, cost of building materials, supply chain issues. It’s shocking to some folks what the rebuild value of their property is going to be. And where I used to have flexibility to go in and alter that anymore, we have to go with the company’s recommendation. Interesting. So does that impact the price? Yep, absolutely. The dwelling value is the primary factor that drives the premium. So it gives us a base amount.

and then we add the various endorsements. I would say kind of in conjunction with that, deductibles have changed a lot in recent years. When I first started 30 years ago, we were seeing 250, 500, any more. A thousand is the minimum deductible. And now we’re seeing that increase to 2,500. And with wind and hail risks, or claims rather, it’s going to a 1 % of the dwelling value. So if your dwelling’s 500,000, your deductible for wind and hail’s 5,000.

Ted (04:48.854)

So in terms of the underlying policy itself, do all of your policies cover the same perils? Yes, for the most part. There’s two basic forms out there. One is the HO3, which is a named peril form. And the one we use is the HO5, which is considered all risk or open peril. It’s the broadest form you can get. And so that broad form is going to cover things like what?

Wind, fire, lightning, hail, riots, civil commotion, theft, vandalism, most of your apparel. The benefit of the broad form is it puts the burden of proof on the insurance company. With the HO3, you have to show it’s on the list of apparels, and with the HO5, you have to show it’s not covered. So what are some of the add-ons that people put onto that broad form policy?

Well, I mentioned the expanded dwelling value at 125%. Water backup is a major endorsement. We see a lot of water backup claims every year. We start with a $10,000 limit. I wouldn’t go any less than that. Damage to utilities in the yard is a newer endorsement that we like a lot. Pays up to $10,000 for damage to any of the utilities in the yard. Used to be on an older house. You couldn’t even get something like that. But now we include it standard on everybody.

Another one that we’ve seen more recently is called ordinance or law coverage. For instance, down in Kettering, well, the cover says if you have to alter, rebuild your house in a different way to meet a local ordinance or law, it pays the additional amount. So for instance, during the tornadoes a couple years ago in Kettering, if you had a 3 1⁄8 inch deckboard on the roof, it had to be ripped off and replaced with a 1⁄2 inch decking board. So that was a major increase, major expense that

was covered by the Ornister Law.

Ted (06:47.212)

What about scheduled property? Let’s say clients of ours have extensive jewelry collection or collectibles, antiques or paintings, things like that. Are those automatically covered or is it required that we have to purchase additional coverage? So there are…

limitations within your contents coverage on the homeowners policy. Gold, silver, goldware, silverware, things like that. Coins, stamp collections, baseball cards, jewelry is the biggest. Theft or misplacement is your limitation. Most policies will only pay a thousand, maybe two thousand for theft or misplacement of those items. So we recommend you add a schedule for the full replacement of those items. Doing that does two things. It increases your limit.

for the full replacement value and it also eliminates deductible. One caution though is companies normally don’t increase that value every year. So if you added it 20 years ago when you got married, you need to make sure that value is still sufficient.

Ted (07:58.799)

What are you seeing with respect to deductibles? Talk to me a little bit about what you’re recommending and what you’re seeing people do. I assume some people are raising their deductibles to try to minimize the cost. Correct. Yeah. So we start with a thousand minimum. If somebody’s got the appetite or a higher value home, maybe even 500,000, we will recommend the 2,500.

if you’ve had a claim some companies require thirty five hundred deductible like i say a few of the company’s well if your roof is over ten years old they require percentage at one percent deductible of the dwelling value so roofs are another hot topic these days once a root becomes ten years old no company’s gonna offer full replacement value it goes to depreciated sentiments you may have a thirty-year shingle on there but after ten years you’re not going to get the full replacement value and that’s pretty consistent with all companies

industry-wide.

Yeah, and then I suppose to some extent that makes sense. it’s roof claims have just gone off the rails. seems like nobody replaces a roof without trying to file a claim on it first. And it’s just kind of gotten out of control with the amount of roofs they’re replacing.

Let’s talk a little bit about the named insured on the homeowners policy. As you know, we do trust-based planning and virtually 95 % of our clients will own their home in a revocable trust or own their home in an irrevocable trust. Yet, when they bought their home and got their initial insurance, it was in their individual name.

Ted (09:51.224)

Right. Talk to me a little bit about what you’re recommending and what the insurance companies are requiring to be done. So the named insured is important. The named insured on the policy has the rights and privileges of the policy. Also, the obligations pay the premium. We are seeing a lot more. We’re putting the actual trust language as the primary named insured. But we’re also including the spouse, husband and wife. If you want to make sure both of them are on there, if something were to happen and one of them

leaves the household, if they’re still named insured, the policy will follow them in that temporary location. So what I think I hear you saying, are you having them as named insureds or are you adding any of these as additional insureds that I’ve seen some companies do? We are adding them as named insured. Can you tell me the difference between being a named insured

versus an additional insured or an additional named insured? the additional insured, the named insured pays the premium, manages the policy while an additional insured is added via endorsement and only has coverage for claims relating to that named insured or that additional insured status. It’s not as broad as being the primary named insured.

Ted (11:14.944)

So the goal overall would be to have a trust as the named insured versus additional insured. Correct. But if the company won’t do it, I suppose we’re better off having the trust as an additional insured versus not being mentioned at all.

Yes, yes. You know, I struggle with this a little bit because the policy is not obligating, it’s providing coverage. So, if you are the named insured, you have the coverage if you need it. Same with the additional insured. In both positions, you’re still going to be covered. The concern that a client recently raised with me is that they had a denial of coverage because they had transferred

prior to my representation with them, they had transferred their farm into a trust, but the insurance did not reference the trust, it only referenced the individual. And in that instance, the company denied the claim, just on that basis alone. No insurable interest? insurable interest. Yes. Yeah, yeah, that’s definitely a pitfall. You want to get that?

That’s why we want them in the first position very good. Okay, so that’s good advice there. Let’s move to Auto coverage vehicle coverage Really important that we talk about this What are you seeing with respect to autos and the types of coverages and the dollar amounts of coverage So the industry as a whole the past two years have been it’s been a tough market

We’ve seen rate increases all over the place. Thankfully, we’re starting to see the auto prices level off a bit. Actually had a company come out and said they’re taking a decrease next year. So that’s encouraging. The problem we’re running into is auto claims are more severe, more high-costly due to the high value of the vehicles and the cost of repair. The amount of technology they’re putting into these cars is amazing. We replaced a cracked windshield.

Ted (13:32.559)

on a 19 Toyota Camry and it was $16,000. So by the time you get the sensors, the calibration and all that, so claims are going up, but thankfully we are seeing those rates starting to level off. Now as far as coverage, the umbrella requires that you carry at least a 250,000 per person liability limit. So 250, 500,000 are the limits we recommend there.

And what does that all cover? Are you talking about 250, 500 for liability coverage? And then talk to me a little bit about how the collision fits into that. So it’s bodily injury and property, bodily injury of 250,000 per person slash 500,000 aggregate per per the entire claim with an additional 100,000 for property damage. Okay. That’s the minimum for liability damage you do to other people. Your vehicle.

is covered under the fiscal damage comp and collision, which has its deductibles. We start at 250 comp, 500 collision. I like to put a glass waiver on there, which says if you have a glass claim, it’s free to you. Nobody likes to glass claims. So our philosophy is it’s not the small little towing rental claim that’s gonna hurt you. It’s the big liability claim. So we encourage high liability limits and high deductibles. You take care of the small stuff.

let the company take care of the large stuff. So with that, increasing your deductible helps to reduce the premium, which you can apply the savings toward that additional liability coverage. That makes a lot of sense to me. What about uninsured motorists? You know, my experience is, for a lot of my clients, if they do get in an accident, oftentimes it’s with somebody who has minimal insurance,

or these days no insurance. How does that coverage work under a normal auto policy? So your uninsured medical, which includes underinsured, will be the same limit as your bodily injury, 250,500,000. So if that person hits you doesn’t have insurance, they’re supposed to pay the claim, but they’ve got nothing, so you go back to your policy, you’ve got the

Ted (15:58.381)

the medical coverage up to the 250,000. You go back to collision coverage to fix your vehicle. Now, nobody likes to that deductible if they’re not responsible. So if possible, so we have some companies that let us put a waiver on that deductible. It’s called uninsured motor’s property damage. So that eliminates your deductible. Now, one caveat is if you come out of Kroger and somebody hits your car and took off, that’s not uninsured. You have to identify

the other party and verify they do or do not have insurance.

So what do you do in the event you are in the Kroger parking lot and somebody takes off and you can’t identify them and you, I presume, make a claim on your own policy if it’s significant? Yes. You make a claim on your policy and if, well one of the things I do is I check, we have the company check the surveillance film first of all to see if we can get a license plate and turn it into police. If not,

You’re enforcing it to pay your deductible. Can’t get around it.

Same thing with respect to who is the named insured on the policy. Again, most of our clients are funding their vehicles. It might be a car, it might be a pickup, it might be a trailer, it might be a motorcycle, a jet ski. Those kind of things are going to be funded into their trust. Once again, is the rule the same in terms of who is the named insured? Yes, yes. Same thing. You want to put the trust as named insured and also list

Ted (17:33.902)

the individuals. And so what I think I hear you saying, at least with respect to the companies you work with, you’re able to have multiple named insured. Correct. That seems like the easiest solution. I agree. Yeah, that seems to work. We want to cast the net as wide as possible for coverage. So I had a case recently in which a child was injured.

They were a minor. It took a little while to work its way through the court system. But ultimately, this child was permanently disabled. The TV lawyer who represented them

put on a jury trial and in the jury trial brought in an expert that said it would cost $22 million to raise this child to their life expectancy. The jury up in Miami County awarded $11 million. I was brought in the case to prepare a trust. So these awards, some of these awards are substantial

and far outrun any insurance we can provide. No doubt about that. Having said that, the umbrella policy, as you say, can provide some additional coverage above and beyond the basic coverage, the underlying limits. How high of an umbrella can I buy? And what determines how much I can buy?

So it’s sold in increments of one million, and one is the most popular. We can go as high as five, or in certain circumstances, we can go as high as 10 million. They’re gonna look at your overall exposure, your net worth, to see if it warrants that big of an umbrella. So the umbrella is priced based on your exposure. So it typically starts one house, two cars, will run you about 150 to $200 a year. Each million on top of that is pretty much

Ted (19:45.528)

the same cost, so 200, 400, Uninsured motorists is an endorsement we can add. I like to say excess uninsured because you have primary coverage on the auto policy, but if that’s exhausted, you can buy additional millions of uninsured via the umbrella policy. You know, Steve, it’s probably my single biggest recommendation for all of my clients when we’re looking at insurance coverage. One,

I routinely recommend an umbrella policy to go talk to their agent about, but I tell them to make sure they add the uninsured motorist to the umbrella. I feel much more comfortable that my clients are going to be taken care of and compensated if they get injured if they have it on their umbrella. Well, there are certainly a ton of uninsured drivers out there. That’s for sure. Do you have any idea what the daddy is statistically?

what the number percentage is? No, unfortunately I haven’t seen any recent figures on that, but I know we actually had a non-standard auto agency for number of years, and it’s a different market. People aren’t interested in getting protection, they just want to be legal. If they get their license suspended, they get the policy for a down payment, and then let it lapse again until they get caught. So you have to take care of yourself out

Let’s talk about a few of the, what I would call, kind of specialty policies. You know, I have clients of mine who have businesses or have farms, that kind of thing. Where do those policies fit in with once, you know, we kind of cover the homeowners and we cover the auto and we cover the umbrella, but then all of a sudden we got a business operation.

Are all of those commercial policies separate from the other policies or are there circumstances where you see them kind of combined all in one? A lot of different ways. If you’ve got acreage adjacent to your home that is farmland that you own or maybe rent out or if you have a barn with a couple animals, we can typically endorse the homeowners policy to protect that liability exposure.

Ted (22:09.656)

Okay, if it’s a bigger operation, more of a full farm operation, we would issue just a separate farm policy, kind of like a homeowners, but it’s geared more toward the farm exposure with barn coverage, equipment, and then addressing livestock as well. Any other unique characteristics to those farm policies? Crop insurance could be one. That’s a whole separate product altogether. You know, you have weather damage to your crop in the field.

That can be insured as well. know, last month I had one of our crop insurance agents come on and do a podcast just on crop insurance. And I learned an awful lot there. Yep, yep. That’s unfortunately not a product we deal with. We’re being, you know, in the suburbs like we are. We don’t see too much farm exposure. Sure. Now what about business coverage? We have multiple clients who own businesses.

Again, much like that foreign policy, are you writing those kind of underlying business policies for their building that they own, for their operations, things like that? absolutely. We do a lot of commercial insurance. One thing you’ve got to watch out for is if you are running your business out of your home, there are limitations and exclusions. So if you’ve got customers coming onto your property for business reasons, that could be

that could be a denied claim. You also gotta worry about any kind of inventory you keep at the house. But if you do have a separate location altogether, similar to a home, you wanna ensure the structure, the content, and the liability. Now business liability typically starts out at a million dollar limit. Same thing if you have business autos. They start at a million dollar liability coverage. So we have a lot of great commercial markets.

You know, what are you seeing with respect to autos and businesses? Is there a reason for people to put their autos in the name of their business or should they be keeping their autos in their individual name? What’s your recommendation? Well, it kind of depends on the usage. If it’s more of a contractor with a van with signage, tools and everything, that definitely belongs on a commercial policy.

Ted (24:28.112)

Somebody more like myself as an insurance agent driving my car around, appointments, not really a business exposure. From a premium perspective, commercial policies tend to be a little bit more expensive right now. Somebody with a larger fleet, this is a little bit more of a challenge. It’s a problem area for companies claim-wise. They want to see specific fleet management in place. And we’re seeing some companies who actually require

I guess it would be driver monitoring software so they can see how this vehicle is being driven. So if I’ve got a small business and I have 10 employees and I have a company vehicle that different employees drive, does that necessarily mean I want that auto in the name of the company and the insurance through the company on a commercial policy? If you’re having multiple employees drive it, I would definitely put it on the commercial policy.

There’s going be limitations on the personal auto policy that could get you into trouble. There’s another coverage that we add. It’s called hired and non-owned auto. So this would be an employee using their personal vehicle for business errands. So the employee, for example, causes an accident. Their personal policy will pay to repair their vehicle and the liability to other people. But when they notice they are on a business errand, they’re going to go after the business.

and the higher-than-own protects the business in that situation. good. I know one trend is that we have to talk about cyber insurance. Is that something that your firm is engaged in? Absolutely. And this is probably the hottest topic in the industry right now. Four or five years ago, we came out with these introductory type coverages for commercial policies that we rolled onto every policy. We gave you a

a small $50,000 limit, protects your hardware, also your obligation as the business to your client database. past two years we’ve been increasing everybody up to a million dollar limit when applicable. Coverage is something like that, starts around $2,000, $2,500 a year, but as we say the internet is kind of wild west right now. The claims are coming in, new claims are coming in all the time from different sources, so you’ve got to protect yourself.

Ted (26:57.324)

And so you’re recommending these days, what would be your current recommendation for individuals? Do individuals need cyber coverage? absolutely. Or is it just a business that needs the coverage? No, I think if you have internet access or any kind of financial accounts, need the cyber coverage. There’s two products currently available on a personal policy. One,

is is a expense. We refer to it as identity theft, expense reimbursement. So if you or your spouse are victimized, have your identity stolen, it will pay a certain amount to help you clean up your credit. Could be you have to travel, hire an attorney, hire a CPA, whatever your expenses are up to the limit, but not necessarily what you get taken for, not that financial loss. That’s where the second product comes in and protects you from fraud. It limits

usually start at around $100,000. Coverage is fairly inexpensive, maybe $100, $150 a year. Seems pretty inexpensive for these days, what appears to be some substantial and needed coverage. Yeah, think the Internet’s the Wild West. The claims are just creating new claims everywhere. Even if you keep track of your finances,

It’s what you don’t know that’s going to hurt you. Maybe somebody took your social and opened up a bank loan in another state and you don’t find out until you’ve been victimized. Steve, if clients of ours want to have their insurance evaluated, there’s so many TV ads out there, there’s billboards, people are getting inundated. What do you recommend that people do relative to trying to figure out

how much insurance, what type of insurance, what they ought to be paying. What do you recommend that my clients do? Well, I think they need to establish a relationship with an agent where they can meet personally and go over the options. As an independent agent myself, we don’t work for any company. We have multiple carriers we work with, and we basically work for you, the customer. There are other agents out there. A different model is the captive agency system.

Ted (29:24.708)

where they only work for that company and they’re actually an employee. Less options, there’s some good ones out there, but I like the independents just because there’s more variety. You know, you hit on something. I can tell you this, the personal relationship with your agent at the end of the day does make a big difference, doesn’t it? absolutely, absolutely. We see more policies written through the internet or the 1-800 numbers that are

bare bones minimum and people think they have good coverage but it’s really a poor policy. in terms of your contact information you want to share that? Absolutely. We’re at 915 South Main Englewood. Email is steve at boardhaney.com or www.boardhaney.com That’s great. Well I really appreciate your being with us today. I see our time is up. I learned a lot.

and I think our clients will really appreciate your insight. would certainly encourage all of our clients to have their insurance reviewed on a regular basis by a professional who can give them recommendations and advice. Okay, great. Thanks for having me on Ted. Thanks Steve. Take care.