Homeowner’s Insurance Expert Interview with Keir Jones
This week I catch up with Keir Jones, a State Farm Insurance Agent, and we discuss homeowner’s insurance.
We discuss everything that a new homeowner needs to know about shopping for homeowner’s insurance, to saving money, to knowing what the right coverage is to protect your home and family from an emergency.
To speak to Keir Jones about your homeowner’s, or any other insurance needs, you can get more information from his website at www.KeirJones.com.
- Introduction to Keir Jones
- What is Homeowner’s Insurance?
- What is the Right Insurance Coverage?
- Saving Money on Homeowner’s Insurance
- Annual Mortgage and Insurance Review
- Working with a Professional
Introduction to Keir Jones
Scott Schang: All right, well, welcome everybody. I’m super excited today. I had lunch with an old friend last week, and I was able to catch up with Keir Jones.
Scott Schang: Keir is a homeowner’s insurance … Well, he’s an insurance agent with State Farm, because I’m in the mortgage industry, we work with a lot of homeowners and they’re always asking about homeowner’s insurance.
And after talking to Keir, and I realized I really don’t know how to answer a lot of these questions. And I also realized that it’s in my clients’ best interest that I connect them with somebody.
‘Cause just like the mortgage industry, you’ve got weird stuff that happens with insurance, and you’ve got discount online insurance companies and things like that. It’s a jungle out there.
Scott Schang: So in our tradition here of giving you access to experts when they’re not trying to sell you something. And that’s really the whole purpose here.
Scott Schang: Keir and I are gonna have a conversation about what we do for a living, and I want you to pull away from it. Hopefully it can help you out.
Scott Schang: Keir, how are you, bud?
Keir Jones: Good, how are you?
Scott Schang: I am excellent, I really appreciate you doing this-
Keir Jones: Absolutely, thank you.
Scott Schang: … Like I mentioned, after our conversation, I realized that I don’t know what I don’t know. So we’re going to talk about homeowner’s insurance. How exciting is that?
Keir Jones: I like to talk about it. It’s what I do all day.
Scott Schang: That’s funny. Yeah, I know I always feel funny doing this, as I’ll have conversations with people like you, and they’re like, “Why are you interested in this stuff?” ‘Cause you deal with it everyday, but for me, I get to learn something new.
Scott Schang: So I’ll show you real quick, here’s Keir’s website, I’m gonna show it to you again later at the end of this.
What is Homeowner’s Insurance?
Scott Schang: But let’s go ahead and dive right into this. I’m kind of approaching this from new home buyers, because especially with interest rates going up, a lot of new people buying homes and purchasing homes.
And if you’re purchasing your first home, you’ve never had to deal with homeowner’s insurance, so you don’t even really know what it is or what’s covered.
Why don’t you tell us a little bit about what homeowner’s insurance is, and why need it?
Keir Jones: Absolutely. So homeowner’s insurance is there to rebuild your house if you have a fire. And that’s the primary reason you’re required to get it when you get a mortgage is your lender wants to make sure the house gets rebuilt if you have a fire. And that is like basic homeowner’s insurance.
Keir Jones: But on top of that, you can get coverage for your personal property inside, you can get coverage for loss of use if you’re not able to be there, so you can stay somewhere else. You get liability coverage, and that’s to protect you if someone’s injured on your property or you cause damage to someone else’s property.
Keir Jones: And then the other pieces are coverage for other incidental things. You can get riders on your homeowner’s insurance for identity theft and you can get riders for backup of sewers and things like that. So the basic-
Keir Jones: … and there’s lots of options.
Scott Schang: A rider is what? Like just additional coverage, so it just sort of expands your coverage, is that what a rider would be?
Keir Jones: Correct. So a rider is something that’s not necessarily on the standard policy, but something you can add to give yourself additional coverage.
Scott Schang: And that’s R-I-D-E-R, right? Like it’s riding on top of the policy?
Keir Jones: Right, riding on the horse.
Scott Schang: Okay, okay, okay, so you need a strong horse and you might wanna fancy saddle
Keir Jones: [inaudible 00:04:09]. You got it.
What is the Right Insurance Coverage ?
Scott Schang: Okay. So is there such a thing as the right kind of coverage versus the wrong kinda coverage? I mean I asked you this question, and the answer was actually really interesting.
So there is a minimum, right? And then you can add like what you said is the rider. What are most lenders asking for?
Keir Jones: Well, lenders wanna make sure that your home is rebuilt.
So they’re looking for the dwelling coverage, so they wanna make sure you have at least replacement cost while in coverage to get a similar-sized home rebuilt on the property, so that the collateral for your loan is rebuilt. So that’s what the lender is looking for.
Keir Jones: You as the homeowner have other interest, and so the right coverage I always tell my clients is the coverage that helps you sleep at night, so that if you’re worried about water coming into your house, you’re worried about mold, we can get earthquake coverage for your flood.
Whatever you’re most worried about, we find the coverage that will protect you in the scenarios that you’re concerned about.
Keir Jones: So the right coverage is the coverage that you feel is adequate to take care of your needs if you should have a catastrophe that you’re most concerned about.
Scott Schang: What does that process usually look like? So if they call KeirJones.com, they contact you, what does the conversation typically look like so that you can identify what their needs are? Is there a questionnaire or?
Keir Jones: Well, and that’s why it’s really important to actually talk to somebody, because if we just go with what we see online, or what we see in the MLS square footage, you’re getting a very broad generic quote on your property.
And we know that there’s a huge range in building quality in a 1500 square foot house. So you could have marble floors or you could have laminate floors.
You could have plastic, you could have all types of different types of cabinetry, but it’s still a 1500 square foot house.
And so if we’re going to just put a generic quote together, we will give you the average. And every house could have aspects of it that could cost more or less to insure.
So by having a conversation with us, we will ask you detailed questions about your specific property to make sure that we are matching your house with what you actually have, so that you get that rebuilt and restored if you should have a claim.
Keir Jones: So that’s also … The lender side of it is looking for a minimum to get things done, and you might be looking for the minimum initially to make sure you get your loan, but ultimately you wanna protect your asset, and make sure that you get it back just like you had it potentially.
And that’s why the conversation is very important.
Saving Money on Homeowner’s Insurance
Scott Schang: Okay, and you said something that was really interesting that I definitely wanted to touch on, which was how do you get the lowest price? And you and I kinda discussed this a little bit.
You’re right, the lender has the basic coverage that they need, and when you’re talking about qualifying, if you’re qualified for like just the maximum payment you qualify for, you debt-to-income ratio is maxed out and it’s limiting the amount of the loan amount that you qualify for, then you may not …
It’s possible, I guess, to get the bear minimum coverage with the bear minimum insurance payment, so when I’m doing what’s called debt to income ratio, and essentially what it is, is you’re qualified for your loan amount is really you’re not qualifying for a loan amount, you’re qualifying for a maximum payment, and then you’re backing in the loan amount from there.
Scott Schang: And that payment is made up of a principal and interest payment on the loan, your homeowners insurance, and your property taxes.
Now, you don’t have a ton of control over the principal and interest, it’s whatever the market bears based on your credit and that kind of thing, and the type of loan you’re using. Property taxes, we have no control over, but we do have control over homeowner’s insurance.
And we usually encourage people to shop, but I tell you what, as soon as your offer is accepted and people go into escrow, there’s not a whole lot of real good thinking going on there. There is a lot of stress that happens.
The clock’s ticking, you got 30 days, you got all these inspections, what do you mean I need insurance? Okay, just give me an insurance policy.
Scott Schang: So we kinda talked about this a little bit is you can actually go in there, you can get the bear minimum coverage that the lender’s requiring to keep your premium as low as possible to make your payment as low as possible, so that you can qualify for more mortgage.
But there are other ways to reduce the payment as well, right?
Keir Jones: Absolutely, so first of all, we wanna make sure that you’re not getting more insurance than you need. So let’s have that conversation to make sure we have the house well in coverage, like we talked about, exactly what you need in order to get the loan.
Keir Jones: And then the second piece we can look at is your deductible. So the higher a deductible you have, the lower your premium cost will be.
And so instead of having a $500 or $1000 deductible, you could look at a $2000 deductible. And the difference for you would be instead of coming up with $500 if you had a fire, you would have to come up with $1000 or $2000, depending on how much the deductible was.
But ultimately, over the life of having that insurance, you save quite a bit by having the higher deductible.
Keir Jones: Another route you could look at is having someone like myself look at all of your insurance, and seeing if there’s opportunities to bundle policies together to maximize your discounts. So for instance-
Scott Schang: Take your car.
Keir Jones: … Yeah, so you could put your car insurance together with your homeowner’s insurance, if you have an umbrella policy for liability, that also gives you an extra discount.
By having somebody look at the whole package, they can look for spots where you potentially save more money on your homeowner’s insurance by putting it together with your car or other types of policies that you have.
Scott Schang: Very cool. And maybe even somebody that doesn’t have an umbrella policy, and they’re not even familiar with that, but once you explain it to them, they’re like, “Oh hey, I need that.” That could also contribute to reducing their homeowner’s insurance quote, right?
Keir Jones: Absolutely, and sometimes we can look at other policies they have that might become redundant once they get their homeowner’s policy. So we can look at ways to save them some money as well that way.
Scott Schang: Okay, no, that makes sense. Now in terms of the … I didn’t ask you this before, but in terms of the deduction, have you run across …
Do lenders look at what the deductible is at all? Do they typically say it has to be, it can’t be higher than $1000 deductible, have you ever run across that?
Keir Jones: I have not run across that on homeowner’s insurance. Every now and then I run across it on condo policies, where they want a $1000 deductible.
As we’re doing the math with these, usually it makes more sense to keep the deductible under 2500. If you go to a very large deductible, which we can write a 5000 or $10,000 deductible, the saving isn’t as great. And so we haven’t really looked across that very often.
Scott Schang: It doesn’t make a ton of sense. Now, you just mentioned something important. If you’re buying a condominium, right?
So typically, if you buy a condominium, the Homeowners Association covers walls-out, and as an owner, you’re insuring walls-in, right? That’s a different type of policy.
Keir Jones: It is. You’re responsible on the condo for the interior of the unit, so any upgrades you’ve done.
So if you’ve redone the floor, you’ve upgraded the kitchen, you’ve redone the bathroom, you need your condo insurance policy to take care of those things from a building standpoint, and then with a condo, you also wanna make sure you have liability coverage.
So let’s say you caused the fire, or your dishwasher starts to leak into your neighbor’s unit, you wanna make sure you have enough liability coverage to cover any claims that might come up from that.
Scott Schang: Okay. I think we alluded to it, but I think it’s worth repeating. If you need a higher deductible to reduce your homeowner’s insurance a little bit, I can tell you from my side of the fence, if you go back and redo that policy and lower the deductible later, that’s fine.
The lender is not … That’s not gonna raise a red flag when the insurance is due the following year, you may have a gap, right?
So typically when your insurance is included in your mortgage payment, the mortgage lender pays it once a year. So they’re only collecting enough every month to pay that policy every year.
So do you run into that often where people will make changes to their homeowners insurance, they’ll be … Usually the lender would pay whatever the policy is, and then reach out to the owner to get the difference.
Keir Jones: Right, and we’ve seen it go both ways. So we’re talking about condos, and sometimes we’ll see unusual underwriting as far as purchase price being utilized for the interior of a condo, even though they don’t have to rebuild it.
And so sometimes we’ll have to do really high building property on a condo to close the loan, and then we change it after the loan closes.
Keir Jones: But the other side of it is that maybe in this case, you were really worried about your monthly payment to make sure you qualified, and so we just did bear bones coverage to make sure that all your numbers worked, we can change it the next day.
You can pay the supplement yourself, and then the rebuild will go through your impound account.
Scott Schang: Yeah, ’cause-
Keir Jones: And the key is that we won’t insure anything for less than 100% replacement cost. So we’re saying that when we do it, when we’re submitting it to the lender, that there is enough coverage there to rebuild the 1500 square house hypothetically.
Keir Jones: But if you have done a lot of upgrades to it, then you need more coverage. We can add that at a later point.
Is There Bad Homeowner’s Insurance?
Scott Schang: Okay, we’re gonna actually cover that in just a second and how that works. But I always … In these interviews, I like to say … Because after talking to you, people are gonna … they’re gonna say, “Man, Keir knows what he’s talking about, this is a guy I wanna talk to.”
But if you don’t end up talking to a Keir’s, is there a wrong way to get homeowners insurance? I mean what’s the worst thing that could happen? What could go wrong?
Keir Jones: Well, the wrong way to do it would be solely looking at price instead of what coverage you’re getting. And unfortunately, like I mentioned at the beginning about homeowners policies, they’re not all the same.
And so a basic homeowners policy will only cover fire damage. If that’s all you’re worried about, you’re fine, and you might get the really cheapest price.
But most of the time, our biggest claims that we have in our area here in southern California are water claims. And so that’s not covered on just a standard homeowners policy.
So you need to make sure your homeowners policy covers water, you wanna make sure that it’s gonna cover your personal property.
You wanna make sure that it’s covering loss of use, so you can stay somewhere else.
Keir Jones: So the worst thing to do would be solely focus on the price without making sure that you have the right coverage.
Scott Schang: So I know there’s a … I’m gonna go ahead and call it a plague in my industry, of companies that spend a lot of money on advertising, these online companies that claim to be online lenders.
But when you offer a product to the masses, you’re really watering it down, and it’s kind of it’s not for everybody. And I know there’s a lot of like online insurance companies, and it seems to me like they focus a lot on price.
Is that a concern? Like going online and using an online insurance company. I mean I can say for what I would … My input on this is if you’re not taking … I think that it’s vitally important.
This is important enough in your life that they should have a conversation with someone like you.
Scott Schang: Unfortunately, not everybody is going to care as much about the consumer. And a lot of times you’re afraid of being sold to and things like that. But I mean this is a big deal.
I mean it’s probably the largest investment you have. I mean do you ever see something like that?
Keir Jones: Well, I think that … There was a bunch of points there. So I think that when you shop online, you’re utilizing your own knowledge and your past experience. But you’re missing out on the opportunity to talk to somebody that’s a professional.
And like we talked about it at the beginning, I talk about homeowner’s insurance every day. I’ve seen a lot of claims over the years, and what I see from a claim perspective is making sure we get the right coverage in place to start with, so when you have a claim, it’s covered, people’s lives get back in track.
And if you are just trying to guess that yourself by going online, you might miss some opportunity to make sure that you have the coverage that you need in your particular area.
Keir Jones: And it really goes both ways where you could become over-insured by shopping yourself, because they’re like, “I’m just gonna get it, I don’t know, I’m gonna just make sure I have the most I can have.”
Or you’re under-insured and unfortunately at the point where you have a claim, you don’t have what you need to make sure you get your house put back in shape.
Keir Jones: When you’re working with a reputable professional, I know my approach and yours too, Scott, we are just about educating our clients, and sharing the information we know.
And we let them make the decisions, and we just try to give them the tools they need to make the right decision.
Scott Schang: Make an informed decision.
Keir Jones: And when it comes to insurance, my approach is I learn as much as I can about them, and then I try to find out exactly what they’re insurance needs are, and then I present options to them.
And depending on what your risk tolerance is and what keeps up at night, we try to minimize the cost and reduce the risk.
Annual Mortgage and Insurance Review
Scott Schang: One of the challenges that happens when you get into this fast world of online instant gratification kind of stuff, you kinda miss the … you miss that long-term relationship with a professional that can be there by your side to give you advice.
For me, owning real estate is a long-term wealth-building strategy, and there’s a lot that goes into it.
Scott Schang: And you don’t get loan and then just forget about it. We try to circle back with our clients once a year, 99 out of 100 times, it’s like, “Hey, you’re in great shape, we got you another best loan.”
You don’t have a bunch or you didn’t rack up a bunch of debt you need to wipe out. You were saying that that’s a super important part of you insurance as well, right?
Scott Schang: And I think really quick before you answer, you gave this example earlier that maybe when you buy your home, maybe you did a bunch of upgrades last year, and you put granite countertops and marble tile, and a gold fountain in the front yard or whatever it is, and maybe your insurance isn’t adequate anymore.
Scott Schang: So you were saying that that’s an important part as well, right? [crosstalk 00:21:25]
Keir Jones: Absolutely. So when you first are getting your home, we understand, you’re going through a lot. We try to get you on the phone so we can get the best policy for your situation as possible.
But you’re also hearing from a lot of other professionals at the same time. So it’s not the best time to retain information, and you’re usually so worried, you don’t have a lot of questions.
Keir Jones: So when you first get a policy with us, we like to schedule a time within the first three months for you to come in, and we go through everything that you’ve already gotten with us, and come in and ask the question about what happens if the pipe leaks, what happens when you have a claim?
Is this thing covered, is that thing covered? Should I get earthquake insurance? You come and ask all those questions. And then every year we circle back with you to see what’s changed in your life.
Keir Jones: So we try to have you come into the office so that you’re not distracted, and you have you bought anything news for the house? Did you buy a new ring? What are your plans for the future?
And we wanna make sure that your insurance is keeping up with you, whether or not you’re remodeling your house, buying a new car, or planning for retirement, it’s really important to talk to your insurance agent, so that the policies keep up with you, the coverage keeps up with you.
And then we’re also planning for the future to make sure you’re buying that retirement home, we wanna make sure that it’s part of your whole package, whether or not you have an umbrella policy for liability or you’re planning on selling your house. We make sure that it’s all covered.
Keir Jones: And [crosstalk 00:23:02] because that’s the time when we might even talk about your work benefits, you have other insurance questions, but we talk about buying that vacation home or whatever, that investment property, and help you come up with that plan too.
Scott Schang: Yeah, you just can’t … I mean I love the internet as much as the next, I love buying mu stuff from Amazon as much as the next guy. But there nothing replaces a long-term relationship with seasoned professional.
Scott Schang: And I think a lot of that gets discounted as we try to go faster, more convenient, less interaction with our business transactions. But there are some things that you … There are some things that it makes a lot of sense.
I mean I wanna reach out and … Like you just mentioned. I mean I’m getting them into a home, you’re insuring them in order to get into a home. But you’re right, what if they buy jewelry?
Or they get some sort of personal property during the year, and their insurance isn’t adequate to cover that in the event of some sort of tragedy or disaster, or even burglary, right? So those things are super important.
Keir Jones: And I think on top of that, Scott, the other piece is that I own my business, I’m not going anywhere. And so when you have a claim, you’re calling me, you’re asking questions about it, and I have a high degree of accountability from the get-go to make sure that you have the right coverage, so when you call me because you have that [inaudible 00:24:43] I know you’re covered.
And then I’m gonna really help you through that process to make sure that the claim is done correctly, you’re able to find the right professionals to help you.
Because when you are a client with my office, you’re a client for life, and I wanna make sure it all goes well.
Keir Jones: And unfortunately if you’re shopping online, or sometimes some of the other companies, you don’t know who you’re gonna talk to next time you’re interacting with them.
And that’s the real blessing of working with a professional that you know is going to be around for a long time is that if they do sell you something, you know they’re gonna stand behind it, and they’re gonna be in your corner to protect and help you when a problem comes up.
Scott Schang: I was gonna ask you if you had any final thoughts, but that was just epic. So I think I’m gonna thank you for your time, sir, and I really appreciate you coming on here and sharing your expertise, I hope somebody reaches out to you.
I know you’re a go-to when we have buyers that are asking. I want them to talk to you when they’re thinking about their homeowner’s insurance.
So I really appreciate you taking the time to come out here and to jump online here and put yourself out there and help explain this topic a little bit better. I think it was really helpful.
Working with a Professional
The reason why I do these interviews is to give consumers an opportunity to hear from professionals in an environment where there is no sales pressure influencing the conversation.
The professionals that I work with here would never put pressure on you to write a check, or commit to something that is not in your best interest just to meet sales goals, these are friends of mine that I trust and respect.
To speak to Keir Jones about your homeowner’s, or any other insurance needs, you can get more information from his website at www.KeirJones.com.
As a California Mortgage Broker, BuyWise Mortgage is here to educate you first, and to empower you as a consumer, so that you are making more informed decisions about home ownership.
If you have questions, feel free to reach out to Keir directly, or you can ask questions below, and we’ll do our best to point you in the right direction.