I have had plenty of clients over the years that had more than one home in more than one state. Contrary to popular belief, they were not all ‘snow birds’. A good majority were either weekend or summer getaways or his and her houses. A smaller portion was investment properties or rentals.
In the case of my own family, my grandparent’s owned two houses in the same state – one near the city and one near the beach. The beach house was only utilized and/or occupied during the spring and summer months. The remainder of the year, it was furnished with no occupants.
On the other hand, I insured a married couple who owned two houses, one in Arizona where she stayed and one in New Jersey where he stayed. When she had accumulated more than four sizable claims in two years it was not pretty having to move the entire book when the carrier non-renewed everything. I am almost to a point where I can laugh about that.
When insuring a secondary home, there are three basic points that have to be covered.
Make sure you are licensed
It is real easy to fall into the hum drum of one state. That way, there are no tests, no additional continuing education, and no added fees to your licensing. However, if you want to grow your agency, most likely, the more wealthy clients will have more than one home and more than two cars. Moreover, the second home will likely be in a different state.
After all the legwork and talking with the insured, you do not want everything to be held up on the assistant underwriter’s desk because they can’t find any trace of your license in that state.
Before you start shopping insurance for the client it is best to get a non-resident license. This is easy enough by visiting www.nipr.com or www.sircon.com. You can log in and review the requirements, apply and get approval. Be aware, there are states that require additional legwork, like submitting fingerprints and they may also call and speak to you so make sure your information is current.
What type of policy do they need?
The additional property could be a house or it could be a condominium or townhouse. Is the insured living there part time, is this just an investment property, or are they renting it out?
Do not expect the primary homeowner’s policy to extend liability to the secondary property. Although some carriers may still do this, a lot of them shy away from it. Of course, it does not hurt to ask. If they do extend liability, the carrier may decide that they only want to offer a lower limitation amount. So be careful about asking the underwriter if they say yes.
When addressing a secondary property, pay attention to the protection class. This should be a good indicator of the willingness of carrier to extend liability and/or hint at the premium amount. It would also give you an idea if you should chat about getting a security system (and any discounts).
Although liability is a big portion of the policy, how the policy will address their belongings is another important factor. Whatever type of policy you write for the insured – a Homeowners or a Dwelling Fire – make sure they understand what type of replacement cost is in place. Also, be sure to review if they have loss of use or loss of rent on the policy.
When you have stepped into the realm of more than one house and more than two cars, any agent should be talking about an umbrella policy to the client. Given all the many moving pieces and money invested in two properties that increase the likelihood of a lawsuit.
One of the agents I previously worked for often had us do a brief review of assets during the retention phone calls at renewal. When calling the insured to remind them about their renewal payment, we often asked if they purchased a new car, purchased a new home, got a new job or had any new additions to their family.
It was a friendly way to find out information and see if they would need any additional coverage. A secondary home gives any agent a chance to shine as a good resource.
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