Picture this: Your next-door neighbour Gary runs an alpaca farm. Most of the time, the alpacas are happy springing along, munching on grass, and looking cute. But on one occasion, a dog agitates the group, and the alpacas storm their enclosure and stampede over your property, leaving a trail of damage in their wake.
While the likelihood of an alpaca stampede causing problems in the US is pretty low, unfortunate events like this can and do happen. The good news is that there’s insurance for that – not alpaca insurance or stampede insurance, but good old home insurance.
Many homeowners fall into the trap of considering home insurance as a necessary requirement in order to get their mortgage. They see it as protection of their four walls and don’t consider how expansive the coverage can actually be. Homeowners know that if their house burns down or if there’s a hurricane, their home insurance policy will cover it. But they don’t typically know about the other activities, both inside and outside of a house, that home insurance policies can cover.
Bill Martin (pictured), president and CEO of Plymouth Rock’s home insurance group, commented: “In some ways, home insurance is mischaracterized as being solely for the home. It’s meant to be your primary insurance policy, covering the things you do in life as opposed to just your home. The term life insurance was already taken, so, we called it home insurance, but maybe it would be better if it was just called personal insurance. That personal insurance is where a lot of the more interesting stories and claims come from.”
Martin has seen his fair share of ‘surprising’ home insurance claims during his time at Plymouth Rock’s home insurance group – the alpaca stampede being one of the more memorable ones. Others include defending a family that was accused by a teacher of posting defamatory remarks on a public forum, a drone that was hit and damaged by a firework, and a food spoilage claim for an old but valuable (at least sentimentally) piece of wedding cake after a refrigerator failure.
“We had one claim where a homeowner ran a hose into a bucket on a rooftop deck, forgot about it and then went to work. When he got back, the house was flooded. That was one accident that caused a really big problem,” Martin remarked. “We would only reject a claim like that if it was an intentional act of stupidity. Usually, it’s not intentional, and in this case the policyholder was very embarrassed. Our job is to provide indemnity, which means claimants shouldn’t come out ahead because of their insurance claim. There’s usually some cost for the policyholder and there’s a deductible involved. This policyholder lost money on his deductible, which we knew was going to be tough for him. He just made a mistake.”
Insurance brokers and agents play a vital role in educating homeowners about the scope of a good home insurance policy and the potential value-add they can access. According to Martin, it’s important for brokers not to focus too much on rate, and to focus more so on coverage.
“If you talk with your customer about what coverage they’re buying, you’ll be surprised how often they want to buy more coverage rather than the minimum,” he told Insurance Business. “As price sensitive as customers are today, they’re not willing to give up protection just to save money. Questions like: Do you need jewelry coverage? Do you need cyber liability coverage? Do you need extra coverage for kidnap and ransom? All of those things are more worthy of discussion as questions like: When did you last replace your roof? What are the labor costs in your area? Those are rating questions that the customers want the brokers to figure out themselves. What they really want to be talking about are the optional coverages, so brokers need to have those discussions as quickly as possible. Work with carriers that let you talk about coverage and not just about how to calculate the rate.”