Property Valuation

1. Property Valuation • The webinar will begin shortly. • There is no audio at this time. • This presentation is being recorded for your viewing pleasure at a future date. • The attendance and proctor forms are available under ‘Materials’ in the Webinar’s Console to the right. • The PowerPoint presentation is also available under ‘Materials’. • You will receive the course number for your state near the end of class. • Use the ‘chat’ window for questions on the content. • 100% Participation in Polling Questions is required to receive credit for this class. Even if you do not intend to receive credit, please participate in the polls.

2. Welcome to your Insurance Community University Audio 2 • All of you are currently on mute • Un-mute your own system • Telephone Option • Select Telephone on your screen • Dial in the PIN number so that your number becomes active • Microphone and/or Speaker Option • You can use this option if you have a headset that you use with your computer

3. Participation & Chat Window 3 • You will receive information from the monitor via the ‘Chat’ window.  • Please locate window in the control panel • Q & A is welcomed during the presentation and at the end of the presentation • You will find the question box on your control panel • Write your question in that box and send it to the presenter/organizer • The presenter will take those • questions in the order submitted

4. DOI Requirements = Hand is down 4 • When you see a slide with the hand up symbol, touch the “hand” icon on your control panel • Click ONCE only • If you do not raise your hand, the monitor will be in contact with you in the chat box  • If you are in a group, the designated proctor is responsible to make certain you are all in attendance at all times

5. Polling 5 Throughout the class we will be conducting periodic polls We need 100% participation on the polls The polls are intended to check participation but also to create discussion topics throughout the presentation

6. Forms To Complete for CE 6 • After class ends • Return attendance form • Proctors – return your form to email address • Email address is in chat window or in email sent to you today

7. DOI Requirements 7 We will file your hours with the DOI after the completion of this webinar and we have received the attendance form. You have 48 hours to return the form You will be sent a Certificate of Attendance/Completion by email.  Please retain this for your records for five years.

8. Internet Disruption • If the presenter looses internet connection STAY ON THE LINE • The administrators will communicate with you

9. Internet Failure • If the internet fails and all participants are kicked off line by Go To Training or other source then the seminar will be terminated • You will receive instructions by email as to how we will proceed • This is a precautionary notice, only

10. This class is being recorded • Available in the University • Does NOT qualify for CE if not taken during a scheduled class

11. Your Instructor Today Laurie Infantino, CIC, AFIS, CISC, ACSR, CISC, CRIS President and Co-Founder of The Insurance Community Center

12. California Department of Insurance New Regulation on Valuation

13. The Regulation is Long Overdue • The discussions began as far back as 2005 when SB 2 was added to Section 1749.85 to the California Insurance Code (CIC). • The regulation is in response to the “chronic” problem of underinsurance most notably in the area of residential properties.

14. The Regulation is Long Overdue • The State Insurance Commissioner, Steve Poizner, initially proposed these regulations as a result of major wildfires most notably in the San Diego area that destroyed 1600 homes and a reported 35,000 claims according to the L. A. Times.

15. The Regulation is Long Overdue • A major issue following the loss was underinsurance and who should be held responsible. Many homeowners publically complained that they felt they had been mislead by their insurers. • United Policyholders, an insurance consumer group, called on the commissioner to take action.

16. The Regulation is Long Overdue • California courts have ruled that homeowners have the primary responsibility for ensuring that they have enough insurance on their property. • Insurers are brought into the actions because they are supplying the valuation tools that they require be completed for acceptance

17. The Regulation is Long Overdue • The agent certainly has been held responsible but errors, omissions, negligence are not that easy to prove • The regulation is a heightened responsibility on the agent/broker

18. An Agent is the Eyes and Ears of the Company they represent AND

19. Polling Question #1

20. Polling Question #2

21. Overview (2188.65 and 1749.85) • (b) On or after June 27, 2011, every California resident fire and casualty broker-agent and personal lines broker-agent who has not already taken a homeowners' insurance valuation training course must satisfactorily complete one three-hour training course on homeowners' insurance valuation meeting the requirements of this section prior to estimating the replacement value of structures in connection with, or explaining the various levels of coverage under, a homeowners' insurance policy.

22. Overview (2188.65 and 1749.85) • For resident broker-agents, this requirement shall be part of, and not in addition to, the continuing education requirements of Insurance Code section 1749.3. The homeowners' insurance valuation training course needs to be taken only once in order to satisfy the requirements of this subdivision • http://www20.insurance.ca.gov/epubacc/REG/151771.htm

23. Overview (2188.65 and 1749.85) • This class must only be taken once and does qualify for three hours of CE • An individual who no longer has to take CE in California due to their age still MUST take this class if they are involved in residential insurance • The regulation is for California resident fire and casualty broker-agent and personal lines broker-agents ONLY

24. Overview (2188.65 and 1749.85) • If individuals who primarily write commercial lines also offer advice and provide any information on estimations on residential insurance then they should attend this class, as well to avoid any future problems

25. Section 2695.182. Documentation of Person Making Estimate • This section is VERY important and discusses the new requirements for documenting estimations. The section should be read in its totality, communicated to the entire office staff and procedures should be put in place for compliance and monitoring of the systems. We will discuss some of the key requirements later in the course.

26. Polling Question #3 Do you have an area in your agency management system where you store the underwriting questions you asked about the home before you wrote the coverage?

27. Polling Question #4

28. Course Objective • Be able to differentiate between a homeowners policy and a dwelling property form • Be able to estimate the value of an insured’s property by having basic knowledge of its value • Know the valuation principles and methods • Know the value of the components of a dwelling to access its replacements cost or value

29. Course Objective • Have the ability to recognize other factors influencing the replacement cost • Have knowledge of endorsements used in relation to the insuring of replacement costs of homeowners’/dwelling policy; and, • Understand the process used in determining the value of an insured’s property

30. No Two Homes Are Exactly Alike

31. No Two Homes Are Exactly Alike For Sure

32. Property Valuation • “Value is a matter of opinion”, according to a New Jersey court. “Not only in the eyes of the courts is value indeterminate, but appraisers differ in their opinions and contractors bidding on the same job vary widely in their cost estimates”. • Practical Risk Management

33. Property Valuation Practical Risk Management • “Further, values for insurance purposes differ significantly from values for other purposes”.

34. Differences between Homeowners and Dwelling Property Policies

35. Insurance Policies • A dwelling is considered a residential property of up to four units, whether occupied by the insured or not • There are several forms of insurance for residential properties • The type of policy that should be written on a residence depends on the underwriting considerations discussed in this course

36. Insurance Policies • A Homeowner’s policy is for a dwelling that is owner occupied • In general the major considerations that determine the type of policy to be issued include: • Type of Residence • Ownership • Occupancy • Age, Condition and Protection • Values • Insurance Companies all have different eligibility requirements for different insurance forms

37. Insurance PoliciesDifference in property coverage forms

38. DP Forms Available

39. Reasons to Write the Dwelling Fire Program • Home does not qualify for a Homeowners Policy • Residence is NOT owner-occupied • Residence is in a designated brush hazard area • Residence is under construction • Home is vacant • Differences in property coverages available on the DP series necessitates different coverage levels and valuation triggers

40. Reasons to Write the Dwelling Fire Program • Residence value is less then the minimum or maximum allowable by the company • Residence is a “seasonal” or secondary • Residence is not up to the “physical” standards   • Residence may be owned in a name different from the “home owners” such as a partnership, joint venture or corporation

41. Reasons to Write the Dwelling Fire Program • The insured may prefer having their home issued on a Dwelling Program because: • The insured might not want or need the full range of homeowners coverages • The Homeowners Program might be more expensive than the insured chooses to pay

42. California FAIR Plan • The California FAIR plan policy is written on a DP 1 basis • The policy is written on an ACV basis and Replacement Cost is optional on the Dwelling

43. CEA (www.earthquakeauthority.com) • Dwelling coverage - The coverage limit is the insured value of your home stated on your companion homeowner policy. • Additional Coverages Limited Building Code Upgrade In most California communities, repairing or rebuilding a home after an earthquake must be done according to current building codes. 

44. CEA (www.earthquakeauthority.com) • In addition to providing funds for repairing or replacing your home, the CEA base policy includes an additional $10,000 in Building Code Upgrade coverage. Option to Increase Building Code Upgrade CoverageFor policies that renew or become effective on or after July 1, 2006, homeowners can choose to increase Building Code Upgrade coverage by an additional $10,000, for a total Building Code Upgrade coverage limit of $20,000.

45. CEA (www.earthquakeauthority.com) • Your CEA policy excludes some items from dwelling coverage.  A partial list of items that are not covered includes: • Detached garages and most other structures that are not part of the dwelling • Land damage (other than $10,000 in coverage for land stabilization) • Swimming pools and spas • Awnings and patio coverings

46. CEA (www.earthquakeauthority.com) • Fences, landscaping, and irrigation systems • Antennas and satellite dishes • Patios and decks • Walkways and driveways not needed for pedestrian or disabled access to your home • Certain decorative or artistic items such as mirrors, chandeliers, stained glass, or mosaics

47. California Earthquake Authority (CEA) Section 10081 • That coverage may be provided in the policy of residential property insurance itself, either by specific policy provision or endorsement, or in a separate policy or certificate of insurance which specifically provides coverage for loss or damage caused by the peril of earthquake alone or in combination with other perils. • http://www.leginfo.ca.gov/cgi-bin/displaycode?section=ins&group=10001-11000&file=10081-10089.4

48. Homeowners • Homeowners Policies are the premier policy for the owner of a home who occupies it as their residence. • It is a package policy of Property and Liability and includes a lot of enhanced coverages and numerous endorsements.

49. Homeowners • Every company has their own eligibility and their own form and endorsements • ISO provides a guideline for homeowners coverages

50. Homeowners Forms Available