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White Coat Investor Podcast
WCI #482: What Doctors Need to Know About Home and Auto Insurance
00:56:49
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A
This is the White Coat Investor podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high income professionals stop doing dumb things with their money since 2011.
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Welcome to the White Coat Investor podcast where we try to help those who wear the white coat get a fair shake on Wall Street. And let's be honest, 95% of personal finance and investing is the same for everybody, right? It's not that unique for doctors, but there's a few things that are uni doctors and we certainly cover those here on the podcast. But mostly we aim the information we talk about here at high earners, not necessarily high net worth people, not wealthy people necessarily, but high earners. And a lot of us, especially those who went to medical school or dental school and like 75% of us use borrowed money to pay for it. A lot of us don't have much wealth. We actually have a negative net worth, everything you own minus everything you owe. And we're trying to get you back to the positive first, right? We have a sister podcast, a Milestones to Millionaire podcast. And the first milestone doctors tend to get to is just getting back to broke. And if you've gotten back to broke, you should be proud of yourself. That's a significant milestone in your life. Today's episode is brought to us by SoFi, the folks who help you get your money right. Paying off student debt quickly and getting your finances back on track isn't easy, but that's where SoFi can help. They have exclusive low rates designed to help medical residents refinance student loans that could end up saving you thousands of dollars, helping you get out of student debt sooner. SoFi also offers the ability to lower your payments to just $100 a month while you're still in residency. And if you're already out of residency, SoFi's got you covered there too. More information go to sofi.com whitecoatinvestor SoFi student loans originated by SoFi Bank NA member FDIC. Additional terms and conditions apply. NMLS 696891 all right, we've got a great discussion today. We're going to be talking about insurance, not the usual insurance we talk about in this podcast. We're not going to talk about life insurance. We're not going to talk about disability insurance. We're not even going to talk about health insurance today. We're talking about property and casualty insurance. We've got a great guest that we're bringing on that we're going to Talk to about that before we get to him. Let me share the quote of the day with you. This one comes from Jonathan Swift, who said, a wise person should have money in their head, but not in their heart. I love that. Deep thoughts, right? And the truth is that most of us didn't go into what we do purely for the money, right? We had more idealistic motives, of course. Most of us also thought we were going to do well while doing good, and that's okay. But I thank you for what you do because I know a lot of you are motivated just to help other people. You really do still believe that essay you sent in to your medical school or dental school admissions committee, that you just want to help people. You love science and you just want to help people. And I thank you for that. For that help that you do. For that help that you do at 3am when you're called from the emergency department, when you're pulled out of your bed to come help somebody. Thank you for doing that. It's not easy work. By the way, if you have not joined our community online, you should. You can ask your money questions to others in the White Coat Investor community or better yet, help others out with their questions. You can find us on Instagram, you can find us on Reddit, on Facebook, we have an exclusive Facebook group. We have a White Coat Investor forum. Join the community and you'll feel much less alone in your money journey. Okay, let's get our guests on the line. Our guest today on the White Coat Investor podcast is Jeff Wingate, the president of Reagan. Jeff, welcome to the podcast.
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Great to be here. Thanks for having me.
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Okay, so we've had feedback in the past to always let you know when there's any sort of financial conflict of interest. You should be aware that Rate Insurance is one of our sponsors, okay. We refer people all the time to rate insurance to help doctors and other high income professionals get a better deal on their property and casualty insurance. So you should be aware of that, that Jeff and I have some sort of a financial relationship. And if you go to Rate through White Coat Investor links, we White Coat Investor is gonna make some money probably at some point. Okay, so that disclosure out of the way. Jeff, Today we are responding to questions we've been getting about property and casualty. So let me read one of these that came in shortly after our conference this year that kind of sets the tone for what we're doing today. And they wrote in and said, I wanted to recommend if you have an insurance broker that would be willing to speak on your podcast. I think that would be helpful at this time to speak in regards to coverage needs for auto and home insurance at this time due to significantly elevated costs of these over the past few years. At one of the lectures in Las Vegas, Andrew mentioned it may be beneficial to drop auto collision and comprehensive coverage and not sure if that would be right for me and for others and would be interested in hearing a professional speak about this and would like your thoughts regarding the above if you'll feel comfortable commenting. We do feel comfortable commenting, so we're going to comment all about these topics today. We're going to talk about auto and home and you know, and even umbrella insurance which usually gets lumped in with these sorts of coverages. And I was surprised as part of onboarding rate as a partner, you know, it might be close to a year ago now, I went and shopped all of my insurance and I was kind of surprised how much we pay in insurance. It was a very low five figure amount a year that we're paying just in auto, home and liability coverage. So it's not an insignificant expense for lots of white coat investors out there. And people are saying maybe costs are going up lately. Is that true, Jeff? Are costs going up for these coverages?
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C
Yeah, great question and again, great to be on the podcast. So really with a couple things is with home insurance. Home insurance has gone up dramatically over the last four years. Absolutely. And dramatically it's gone up over even close to 100% in some cases. But in the last year, home insurance in 2025 went up by 9% and we're starting to see it to stabilize across the country because the insurance companies are starting to make money. They've raised rates dramatically and the storm activity has been actually very low this year compared to prior years in 24 and actually in 23. So for home insurance right now, yes, it is expensive. But we're seeing pricing stabilize across the country with auto insurance. That's another area where insurance companies are starting to make a lot of money in auto insurance. They jacked up the rates a couple years ago and auto rates are actually coming down. So in the first quarter of this year they've come down on average about 7.5%. And so my advice is that if you have not had your insurance policies reviewed lately is to get them reviewed because there is a high probability that you could be missing out on some proper protection in terms of coverage and then also missing out on opportunities to save money, especially for auto insurance.
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B
And obviously we want you to go through rate to do that. Right? I mean, there's a financial relationship here. If you go to whitecoatinvestor.com Rate you can get with someone that essentially specializes in working with people like you and helping you get not only good coverage, but good coverage at a good price. So when you talk about storms, I mean, hurricanes, what are we talking about and why does that matter? I mean, aren't they just whacking Florida anyway? How does that really affect the rest of us?
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C
Well, it's amazing. I live in New Jersey, and we did get whacked by storm over the July 4th weekend. And I had a, you know, me personally, I had a huge tree that came down on my neighbor's house. And, you know, I called my insurance company, I actually work with an insurance company called Chubb, and they were absolutely tremendous and terrific to come to the table to help remove the tree, pay for the cost of that. And then I'm just working with them right now. And, you know, because some of there was some damage to my house. So, yes, storms are still occurring, but for hurricanes last year, we just didn't have any. We had a few. And then this year, the expectations are, is that, you know, we're going to have less, you know, hurricanes. So knock on wood. You know, in states like Florida, the insurance companies are actually starting to make money and we're seeing some rates come down. So it's just, it's amazing out there is that, you know, losses are still happening, but they're happening on a smaller case basis. And then the amount of hurricanes have also reduced. And I read an article the other day, it was like either La Nino or whatever was coming in. There was a different, you know, what kind of a weather pattern across, you know, states that's causing this phenomenon. So, you know, in summary, losses do happen. We had that July 4th storm happen in New Jersey, but across the United States, we're just not seeing the hurricane activity that we saw in prior years. And we're also not seeing, you know, all these convective storms happening in every single state like they did, you know, three, four years ago.
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B
Okay, so your, your tree fell on your neighbor's house and your insurance covered it, not theirs?
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C
My insurance covered the actual, the tree that fell down. And so they paid for the removal of the tree because it also damaged, you know, part of my, you know, my pipes and other things that attached to my house. So that's where the coverage, coverage triggered. But the actual payment for the damage to my neighbor's house is going to be covered by Their insurance.
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B
Interesting.
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C
Insurance companies will work it out, you know, in terms of if there's any segregation, you know, going forward. But it was unbelievable where that tree came down. It came down to my, my electrical wires, it ripped up, you know, pipes, you know, in front of my house that landed on my neighbor's house. And then we just worked together and it's coming through. So again, losses happen and it's really important to have good insurance and making sure that you've got the proper protection, you've got the proper limits. You know, inflation is still out there. So making sure that you've got the right replacement cost, you know, on your homes, you have, you know, the proper contents coverage because you know, these things happen. And this is a freak occurrence, you know, where there was a wind gust of approximately 80 miles per hour, you know, that knocked down this tree and hit our neighbor's house.
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B
All right, while we're talking about natural disasters, let's refer a little bit to the fires in LA and what that means for all of us as well as for people rebuilding in la.
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C
No, absolutely. So when all the fires happened, we definitely, in our portfolio we had a few insureds that had total losses and they're rebuilding right now. The California market, there's been a lot of insurance carriers that have pulled out, very well respected insurance companies, but they're starting, we're seeing inclinations that they're starting to come back into the market. So the market is starting to open up. Like in California alone we do have a lot of different options, especially surplus lines, carriers. And it doesn't have to be the California Fair plan, which is the insurance plan of last resort. We do have other options. So again, I think my message here is that a lot has developed, you know, over the last year or so where the market is starting to open up. And California is our second largest market at rate insurance, the second largest market. And so we are rating a lot of home insurance and also a lot of auto insurance as well. It's not an easy process, it takes a little bit longer. But we do have options that are coming to the table and especially with, you know, the California wildfire exposures that are out there. Again, it's so important to get your insurance reviewed. And you know, sometimes we'll reviewing insurance, you might have a great deal and we're gonna say, you know something, you've got a great deal, keep it whether you're your current carrier and let's stay in touch. Other times we're like, hey, we can do a much Better job. You know, we can improve the coverage, you know, save you some money and then also see if we can bundle, you know, both your auto and home together.
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B
Wildfires are a real issue in Utah right now. They we had probably our worst winter ever. You know, the Colorado River's in trouble, the Great Salt Lake is in trouble, and everything's on. I mean, for the first time ever, we basically outlawed fireworks for the 4th of July, you know, which was shortly before we were recording this. I mean, it's a real problem here in Utah this year. So it's not just, you know, these big widespread ones in California. You know, you can, you can have wildfires and all kinds of places in the country. Okay, let's talk a little while we're on the topic of homeowners insurance. Let's talk a little bit about how this changes as you get into an expensive home. A lot of people out there, a lot of white coat investors out there kind of have had the experience we had where we had essentially what we thought was kind of a standard home. We went and got standard homeowners insurance and then we did a renovation. And so I called up the insurance company when it was time to, you know, change the insurance a little bit, and they put me in, they had me talk to a whole other division of the company because it was now a luxury home. So tell us what that means and what that means for our insurance if we now live in a luxury home.
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C
Sure, sure. Yeah, there's certain. I think the first thing you need to do is that, you know, for all the white coat investors that are listening, is that you want to make sure that you've got the proper replacement cost for your home. And really that's the cost to rebuild in the event you have a total loss. And it's really important to make sure that you are reporting the proper coverage a which covers your dwelling and then also making sure that you are reporting all your contents, you know, and working with your agents on a go forward basis. And then if you're doing a renovation, you definitely want to be talking to your agent and talking about that because you need to make sure that you have a coverage called builders Risk, which covers the renovation, you know, as your home is being renovated going forward. And it's really important to making sure that you also, when you're doing the renovation, you know, people are asking you about your roof type and making sure that your roofs, you know, are not, you know, a certain age because you could get hit with a increase of premium. But in summary, Is when you're doing a renovation, make sure that you talk to your advisor. You may need a coverage called builders Risk as part of your homeowner's package. And make sure that you've got the proper replacement costs in the event of a loss, and especially you want to cover it for inflation. That's happening out there right now.
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B
Now, a standard insurance policy covers fire.
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C
Right.
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Your place burns to the ground in California or Utah or whatever. And, you know, that's pretty much covered by every homeowner's policy. But I find it fascinating that there are two coverages that aren't standard, earthquake and flood.
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C
Yep.
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B
Talk to us about earthquake and flood. Who should buy it, who shouldn't buy it, what the issues with those coverages are, et cetera. Let's start with earthquakes, since I live not far from a fault line here, and this is a debate we've had over the years of whether to have this coverage.
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C
Yeah, no, absolutely. So most homeowners policies, you know, cover obviously your fire, your lightning, your windstorm, you know, all those perils. And it's called an all risk policy. So everything is covered other than what's excluded. And what is typically excluded under every single homeowner's policies, as you just mentioned, Jim, is, you know, flood and then also earthquake. We do have a host of carriers that can offer flood across the country. We've got the private market and we've got the public market as well. And we have the same thing for the private market for earthquake. So again is we can get you quotes. If you're in an earthquake prone area, we can get you quotes for earthquake that covers that exposure in the event that you did have a shake and there was, as a result of the earthquake, it caused damage to your home. So we do have the ability to provide that coverage to you. And then for flood insurance, we're seeing that, you know, with all the storm activity that I mentioned at the beginning of this call is we are definitely seeing more flood activity happen, especially in areas where they're not typically a flood zone. You know, where FEMA would say that you are operating, excuse me, you are living in a flood zone, and if you have a mortgage, you must buy flood insurance. So again, as we find it, it's very, very important that you get a quote for flood insurance. If you're in a zone, obviously you need it, or when you're out of a zone, but just talk to the agents. So there are a lot of different private options. So, you know, with flood insurance, it's not Just being near a river or being close to the ocean. But, you know, you can have just a deluge of water that comes down and that just builds on, let's say next to your foundation and then rolls into your house. Well, guess what, that's flood insurance. You know, that's not covered under the homeowner's policy. So it's really important to look at these perils on a go forward basis. So again, you know, you could buy earthquake coverage, you can buy flood coverage, and they would be in addition to your homeowner's policy.
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B
Why are these excluded? Is this historical accident? Why don't they just throw these in for everybody and just charge more?
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C
Yeah, it's historical. I mean, especially for flood insurance, it's historical because, you know, you see a lot of claims out there and historically that's always been excluded from the homeowner's policy. They haven't been able to price for it. But the good news is that there is a private market that now is able to price the risk and that's both for earthquake and that's also for flood. So there is a private market, but I will not see those in a regular homeowners policies because they're also the insurance companies that issue. The homeowner's policies don't have reinsurance, you know, which is actually another way of protecting their balance sheet where, you know, they have to buy some reinsurance. So they don't have reinsurance for flood, they don't have reinsurance for earthquakes. So that's why there's a separate market.
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B
You know, when I lived in Tidewater Virginia area, we had one storm. We lived, I think we were 11ft above sea level is where we were. And so it wasn't an insignificant cost to buy flood insurance. And we bought it while we lived there. But I remember one storm, I was actually out of town. I was on a brief deployment somewhere in the Midwest, I think, at the time. And my wife ended up parking the car up on the curb, up on the lawn, and the water literally got to the front little concrete porch thing. One more foot higher and it would have been flowing through the first story of our house. It, it, you know, it can cause a lot of damage in a hurry. We had a water leak later in the house from the swamp cooler or something. And I was surprised how much it cost. Just the damage from the water leaking out of the swamp cooler. And that wasn't, you know, a foot of water flowing through the first story of the house. You can do an awful lot of damage in a hurry with the flood.
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C
Absolutely.
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B
I've always found it interesting with hurricanes, right, they gotta go through and fight about what's covered by which insurance policy. Right. If it's from the wind.
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C
Yep.
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B
It's one policy. If it's from the water, it's another policy. Even though it's all the same storm. Talk to us about these poor folks in Florida or on the Gulf coast or whatever that have a hurricane claim and how that all gets sorted out.
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C
Yeah, no, absolutely. So, I mean, I think that when you have a hurricane and, you know, a high velocity windstorm come through, is that hurricane, if it damages your home, let's say it rips off your roof, that that is covered under the homeowner's policy. The water, then that comes down from the sky, you know, with the roof being off, that damages your home, that is covered from the homeowner's policy. The actual flood, you know, that hits your foundation and let's say your first floor, you know, and causes a collapse, well, guess what, that's a flood policy. So a lot of times there is finger pointing, you know, between the flood carrier, you know, and the homeowner's carrier. But it's so, so important. And, you know, this is one of, really one of my takeaways, you know, on this podcast is, you know, look at your homeowner's policy, making sure that it's, it's, you've got the broadest coverage available, make sure that you've got the proper replacement cost, take a look at flood insurance, and then if you're in a flood zone or not, and then you can look at the cost and say, yeah, I should buy this, you know, just to protect my assets and even take a higher deductible, you know, on a go forward basis. One thing I do want to point out is for auto insurance is that, you know, there is not a separate flood policy. It's covered under your comprehensive part of the policy. So let's say your, your auto is, you know, sitting in your driveway and then all of a sudden you've got a flood, your auto is damaged. Well, that's covered under comprehensive. And that's the other thing with auto insurance versus home insurance, is that that flood is included. So it's really important that when you look at your auto policies, you know, so even if you own your auto outright and you don't have, you know, an auto loan, you know, where with an auto loan, you're definitely going to be required to carry some comprehensive and collision coverage, because you have an auto loan. But if you don't have a loan, it's also very, very important to look at, you know, making sure that you procure some coverage because these things do happen. Or, you know, set aside some funds to, you know, for risk management, you know, in the event that you do have a loss, you know, from a catastrophe standpoint, you have a line of credit or you have set aside some funds if you're going to self insure.
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B
Now let's talk some more about earthquake coverage. I mean, I live on the Wasatch front here in Utah and they say we're due for the big one, right? And the pricing when we went to price earthquake insurance, and I've had it at times, and I've not had it at times, but the pricing is kind of silly, kind of ridiculous. I mean, I think it had some sort of a six figure deductible on it and the premiums were still, you know, really, really high. And so I had a long discussion with the contractor about what damage my home was likely to see in, in an earthquake and what that was likely to cost to repair. And at the end of the day, I decided to drop it. I dropped my earthquake coverage and figured I was going to self insure that. Why is the pricing so wacky when it comes to earthquake coverage?
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C
Yeah, I think there's a couple things. I mean, I'm not the expert in the pricing standpoint, but, you know, one is they're probably not able to gather as much premium, you know, to cover a lot of the risks out there to their modeling. So everything is done with a model, you know, so for earthquake, for, you know, for wildfires, for flood exposures, you know, there's a ton of models out there that the insurance companies are looking at and the models and the algorithms that the models, you know, show saying that you need to charge X amount of premium, you know, to cover the risk. And then you need to also, you know, have some sort of a deductible, you know, to cover the exposure. And so with everything, it's, it's, you have to balance the two together. So you have to say to yourself, wait a second, you know, if this earthquake insurance is costing me $10,000 and it's going to also have a high deductible, it's better, you know, maybe at times to self insure like you just did and you know, to put those funds, you know, off to the side so in the event you do have an earthquake that you can pay for it because, you know, the earthquakes are, you know, they're going to be, they're, hopefully they're not 1 in 10 year events, but they're going to be 1 in 100 year events or 1 in 50 year events. And then you can put that money aside, you know, or you could say, you know, something, I'm just going to look at CAT coverage, you know. So that's the one thing that we do as well, is that, you know, we work with our clients and we don't want to trade risk with a lower deductible, you know, like with $1,000, you know, you know, we really want to look at how can we provide really good protection, how can we look at all the risks that are out there and making sure that in the event a catastrophe happens that you're properly covered. So for earthquake insurance, getting back to that subject, it is expensive, it's not cheap, and it's really the underwriters trying to price for it in the event that a situation does happen.
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B
You alluded a little bit to the dilemma of choosing a deductible.
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C
Yeah.
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B
And obviously the wealthier you are and the bigger your emergency fund, the higher of a deductible you can afford. But are there certain levels of deductible at which it's a better deal, you know, where it just doesn't make sense to have a higher deductible or you might as well just have the thousand dollar deductible because you're not saving much to have a $10,000 deductible.
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C
Yeah, that's a great question. So really is ask your broker, you know, when you're working with rate or working with your other broker, ask for different deductible options. It's really that we're seeing in this marketplace right now is for homeowners insurance, it's to get below a $2,500 deductible. It really doesn't make sense, especially with inflation. So we're seeing more standard deductibles, you know, from $2,500, you know, up to 10,000, and then there's even some percentage deductibles, you know, on Windstorm and some other perils as well. But definitely ask for options, you know, and then we can get from the insurance carriers what the credits would be, you know, to go up the higher deductible. And if it, if it doesn't make sense, really, it doesn't make sense. There also there are some products out there where you can buy down the deductible. So let's say that, you know, we wrote a policy with one of the listeners here, and the deductible is 5,000 and we got a credit of $1,000 to go up. That way we could also buy it down with a separate product for less money. So that's also available as well. So again, there's a lot of options out there. Our job is to work with you to make sure that we give you options so you can make better decisions.
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B
I think one of the things that a lot of people find very interesting is if you get something stolen out of your car, someone smashes your car window and steals it, you know, your computer or whatever was in your car, it's not covered by your auto insurance. It's covered by your homeowner's insurance.
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C
Right.
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B
Why is that?
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C
Oh, it's. It's just. It's just because it's a. It goes back to the days when insurance, you know, back in London, you know, way back, it's considered marine. You know, it's a movable object. It's not tied down to the actual car itself. So it's a movable object. So it's part of your homeowners, part of your content. And so that's the other area that. And again, insurance gets confusing, you know, at times it gets confusing, but that's why you want to make sure that you have appropriate, you know, coverage on your homeowner's policy to cover your contents anywhere.
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B
Yeah, so let's talk about contents coverage. I mean, I walk through my house, I look at all my stuff, and I'm like, I don't know. I don't know what this is all worth. Am I supposed to go through every book in my library, every shirt in my drawer, and figure out what all my stuff is worth? How do you estimate that? And number one, and number two, in a claim situation, you gotta claim all that individually. I mean, how do you deal with content?
- [27:54]
C
Yeah, so based on, under the homeowner's policy is you're gonna get coverage A, which is your dwelling, and then you're gonna get a percentage of your contents coverage, you know, which will be a broad amount. And usually that broad amount will cover all your miscellaneous content. And so in the event you had a loss and, you know, the loss adjuster comes through, I mean, again, what I would do is, you know, you bond your insurance policy, you know, you've got your proper, you know, limits for coverage A, you got your proper limits for coverage, you know, for your content, you've got, you know, coverage for loss of use for any additional structures, you know, making sure if you've got a pool, you've got that covered in your little, you know, your, your pool shed, all those different things, making sure that's covered. But then I would, I would take a video, take a video of all your stuff and then just document that. So because again, claims do happen, you know, just, I was talking about the tree that hit my, my neighbor's roof, you know, this, this past week, claims happen and just make sure you're documenting it, you know, going forward. So I think the best way to document your stuff is to take a video of your stuff. Now the other thing that's important though is do want to talk about like jewelry, fine arts and collectibles, you know, on your policies there's only certain supplements.
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B
Firearms too, right? Aren't they on a separate list?
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C
You know, if you have antique golf clubs that you want to insure. So again, you don't want to insure, you know, you got to look at your stuff and say, you know, I'm not going to insure everything, you know, I mean, I'm going to self insure. If this thing loses, it's on me. But you want to make sure that your valuables are properly protected because you're only going to get sub limits on your, on your base homeowner's policy. So making sure that you've got, you've got fine arts that they're properly scheduled on your policy, work with your agent. Jewelry, you could probably get a blanket jewelry limit. But then if you've got individual items, you know, you want to make sure that those are scheduled, you know, looking at, you know, firearms, if you've got a firearms collection, all those different things, again, talk to your agent about that. They're there to help you so you can make those decisions because it's really, really important. You look at that. And then one thing we haven't talked about yet, and we're probably going to move into it, is umbrella coverage. You know, and this is an area that we're seeing on auto policies. You know, when there's an accident, we're seeing these primary limits erode. So. Meaning that if, you know, you have an auto policy and you've got personal, excuse me, property damage at 100,000 and personal liability at 300,000, you hit somebody and then somebody dies or you get sued. We are definitely seeing more penetration into umbrella policies. So it's really important that you protect your assets, you protect your liabilities with an umbrella policy. They're Normally very inexpensive relative to the exposure. But if you've got a few cars, you've got a couple houses, you've got kids, you definitely want to look at limits between, you know, a million to 5 million, you know, to cover yourself, and then you might even want to look at limits above that, you know, depending on your situation. But it's really important that you look at your liability exposures and you buy a policy for umbrella.
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B
Yeah. All right, well, we're definitely going to get more into umbrella, but I got more I want to talk about with homeowners still.
- [31:13]
C
All right.
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B
I'm still fixated on this contents coverage because this was a big deal when I was pricing out my, my homeowner's insurance is. I mean, how do I know what my stuff's worth? Am I really supposed to go through and appraise everything that I want covered? I mean, it seems like a huge pain. Do most people just use some percentage of the dwelling coverage and go, that's good enough? And then how does that work on the back end? Will they just send me a lump sum of money if the place burns to the ground and go, yeah, your stuff's worth 250,000. Here you go, here's 250,000? Or we really going to go through every book and look it up on Amazon and see what it costs?
- [31:49]
C
Yeah, no, I wouldn't recommend. I would recommend going with the percentage off of the dwelling and, you know, just like with my, my home, you know, being an insurance professional and, you know, a buyer of insurance, you know, I've looked at, you know, my content limit and I've looked at my stuff and I'm like, you know, something that's about right, you know, like all my stuff, my furniture, my clothes, you know, the rugs, you know, all, all the stuff that's in the house, I have it documented on a video. So it's kind of, you know, pushed to the side. And I've actually put together, you know, in, you know, in the safe, you know, just kind of like a, you know, one of those, those stick drives. You know, it's a hazard. So it's over there. And then, then I look at any valuable articles, you know, that you want to schedule on a go forward basis. But I would, Jim, I would definitely, you know, look at, you know, having a broader base limit for content. And it's not necessarily to look up, you know, like, you know, this, this, this, this, this, this. Now just go for a broad base and then walk around your house. It's like yeah. In the event I had a total loss, I would be comfortable getting this check.
- [32:52]
B
And that's, and that's how it works at claim time, right? My house burns to the ground.
- [32:56]
C
If this thing burns to the ground. And you know, you can document, you know, through your video, all your stuff. You know, the insurance company should be, here's the, here's the check, you know, on a go forward basis. Because all your stuff is worth X.
- [33:10]
B
Okay? So it's not a matter of them nickel and diming on every item you got in the house and walking through the video and going, what's the price of this? What's the price of that? You can buy a policy where you just say, you know, what if this burns to the ground, I want you to give me $450,000. And they say, okay, we'll agree upon that being the value. If it burns to the ground, here's your $450,000.
- [33:31]
C
That's, that's the way it should be done. They might nickel and dime you a little bit. But, you know, it's, it's basically is that, you know, if you can document, you know, the more you can document, the better position that you will be, you know, as the, as the buyer of insurance. So again, the more you can document, the more you can bring to the table to the insurance company, the more that they should be willing to pay you, you know, if you can't document anything and say, hey, you know, my stuff was 450, well, show me. You know, and it's. So you do run into a harder argument because you have no documentation.
- [34:04]
B
So there aren't policies where it's, where it's just agreed upon value. There's, you know, you actually do have to show I really did have something in the house. It wasn't an empty house that burned to the ground.
- [34:14]
C
Yeah, exactly. So, like, oh, our policies, jewelry, I mean, jewelry is, you know, you know, a lot of times with jewelry is, you know, you have an appraisal. You know, the insurance company agrees to that appraisal. Jewelry is covered for mysterious disappearance. You know, all of a sudden you like it just, you lose it. You know, you're at the beach and you're swimming and all of a sudden you lost your, your necklace or you lost your ring. You know, that is covered, you know, fully by insurance. And as long as you've given the description to the insurance company, and then they're gonna, they're gonna pay it, you know, and then they'll try to figure out if they can find the object, you know, but they're gonna pay it. So it's again, I think the, the message here is make sure that before you're buying the policy and then after buying the policy, making sure that you have some sort of documentation in the event that there's a total loss. It's just proper risk management.
- [35:05]
B
Okay, so some people don't own their home. Right. So let's talk a little bit about renters coverage. That's basically just contents coverage. How much cheaper is that than buying a homeowner's policy?
- [35:16]
C
Oh, yeah, it's a lot cheaper. So I mean, you can buy it depending on the limits for the contents for renters policy, you know, you could buy it for 200 bucks, you know, depending on it. And again, I think it's just money that's well spent because, you know, renters policies, it's going to cover mainly. I mean, when you look at it, you want to make sure there's two components of it. It's the contents coverage and it's also the liability. And so a lot of times we see, with renters, we do see water damage claims. So in the event, let's say that you're on the top floor, you know, there's a leak in your shower or your toilet overflows and then all the water comes crashing down, you know, under, you know, to your neighbor below, they could sue you. And so you want to make sure that you've got proper liability coverage, you know, going forward.
- [35:59]
B
I think a key point people may not understand is that your landlord's insurance policy does not cover your stuff.
- [36:06]
C
It doesn't.
- [36:07]
B
They're not buying contents coverage for you, they're only buying dwelling coverage, basically.
- [36:12]
C
Correct. Landlords are only covering the corn shell. And then, you know, all your stuff, you know, so if you had a burglary, you know, we see, obviously you see that the two top claims are water damage and burglary, you know, of your stuff. And then of course, if there's a fire, you know, all your stuff. But definitely is for renters, it's cheap, it's good coverage. There's a whole host of carriers out there that we can, you know, set you up with. And you want to make sure that you've got the contents coverage and you've got the liability. And then also if you buy an umbrella, you know, that umbrella policy will sit on top of that renter's policy, you know, as well, especially if it sits on top of your auto policies. Yeah.
- [36:50]
B
And we should talk a little more in depth about Auto and umbrella coverage as well for those just tuning in. And we're talking with Jeff Wingate, the president of Rate Insurance. If you're interested in, in pricing out your insurance, which you probably should do, you know, every year or two anyway, you can go to whitecoatinvestor.com Rate and get connected with them. Lots of white coat investors have been having great experiences with them. But let's talk for a minute before we move on to auto and Umbrella. Let's talk about why you should use a broker in the first place. Why don't you just call up each of the insurance companies and ask them to price you out, for instance? Why use a broker?
- [37:27]
C
Yeah, great question. And so, you know, with Rate Insurance, we're an independent agency, so we operate in all 50 states and we have access to over 100 plus insurance carriers. So what we're able to do is we're able to work with you to really understand your risk. You know, coming up with our game plan, making sure that you've got the proper coverages and then going out to the marketplace and shopping on your behalf because you want carriers competing for your business. And it's really, you don't really want to go to an exclusive carrier because they only have one product. You know, so like for instance is we've got access to travelers, we've got access to Chubb Insurance, we've got access to, to Pure, we've got access to Liberty Mutual, you know, a whole host of carriers that are just quality insurance carriers that pay claims and that are becoming much more competitive. If you were just to go to an exclusive writer such as State Farm, State Farms Exclusive writer. Yeah, they're competitive at times. You know, sometimes the independent can't beat their price, but it's just one option. And so for us, it's really important to look at a variety of different options. And so you know that you've got the best deal in the marketplace. And then let's say if you're currently a State Farm customer or you know, you're, let's say with usaa, we will shop those policies. And they're good carriers, trust me, very strong carriers. And if we can't beat the price or beat the coverage, then you've got a great deal. That's awesome. And that's the beauty of the insurance marketplace. Because the insurance marketplace is one of the most competitive markets out there. You know, I know that, you know, when they're, and when it's claims time, you know, people, you know, like, you hear horror stories, you Hear great stories. I had a great claims experience. But use an agent. They can get access to multiple carriers, multiple options. And then also we can be an advisor on your behalf in the event you do have a claim. So we can talk to the insurance carrier. And especially with the volume of business that we do with the insurance carrier, we can give you some leverage, you know, in terms of that claims discussion.
- [39:32]
B
As part of bringing a rate on his partner, I shopped my insurance around and actually bought my boat insurance for my new boat through rate. And it was interesting. I've got USAA insurance having been in the military and indeed we were able to save money versus usaa. I think my total for homeowners auto and liability that Ray was able to find was 10 or 12% less total. It was $1,000 a year or so savings on my 10,000-ish insurance costs that they were able to find me. And then of course we had this big debate, do we leave usaa? We've had a great claims experience over the years with them. Is it worth 10%? But they were able to save us money, there's no doubt about that. They did find less expensive options and we certainly went through with it for the boat coverage. All right, let's move on to auto. Auto. You know, I think about auto and I'm like, okay, well, as white coat investors build wealth and become multimillionaires, the value of the car is not the big deal here, right? I mean, most white coat investors, if they save up for a few months, they can buy a new car, right? It shouldn't be that hard for people. It shouldn't be a huge piece of your financial life. But the part that can be a huge piece of is the liability coverage on your auto. So let's talk about all things auto coverage. We gotta make sure we answer this person who wrote in with the questions, question about when to drop comprehensive and collision and just have liability coverage. But teach us about auto insurance.
- [41:12]
C
Yeah, sure. No, absolutely. So you've got really kind of the three parts of the auto policy. Just to be very simple, you've got your comprehensive. So in the event that the auto is stolen, in the event you've got a flood, it's covered under comprehensive. You bang into your own property, things of that nature, then you've got collision. So in the event that you hit somebody else, somebody else hits you and there's collision to the car, and then you've got your liability. So if you are, well, means you don't have an auto loan on the car, you want to make sure that. And you can't drive the car without liability. You know, obviously it's a state, state
- [41:50]
B
law across the country, sure, you gotta have liability coverage. But it's like no, no coverage at all. In a lot of states if you get the minimum, it's 50 or 100,000.
- [41:59]
C
Is nothing highly not recommend buying minimal limits. Absolutely not. Because especially if you're high net worth, you're a doctor, you know, you've got good income, you've got a family, you don't have a family is you could get sued and you're on your own if you don't have insurance. So I think the first recommendation is that for liability insurance, do not buy minimal limits. You want to buy the maximum limits on your primary policy for liability. And then also look at the umbrella protection on the comprehensive and also the collision depending on your financial means. If you don't have a lien on the automobile, you know, that's a personal decision, you know, that's a personal decision in terms of do you self insure, you know that exposure and again work with your agent, look at the pricing, you know, so if you did liability only, what would be the price and then what would be the price with comprehensive and collision, you know, plus the liability. And then you make a decision, you know, with your agent, you know, on a go forward basis. Because if it's only a thousand bucks, you know, it might be worth it to, to spend $1,000, you know, for the comp and the collision. So but that's a personal, you know, decision. But on the liability is is highly recommend that you go for the higher limits, you know, on your, on your autos and then you schedule umbrella on top.
- [43:20]
B
And I've always thought it was worthwhile having comprehensive and collision on at least one of your vehicles for when you travel totally. Because then it generally covers your rental.
- [43:30]
C
Totally. Oh that. Well, that's a great, another great point as well, because yes, it will cover your rental, you know, as well. And then also you've got to look at your credit card deals because you know, a lot of times your credit cards, you know, cover your rental. But again it's. Everyone's different. And so have that conversation with your agent because the agent is there, you know, if you go an exclusive with your agent or if you go with an independent like us, have that conversation with your agent in terms of how, you know, what, what are the cars and the good news is us, we know all this stuff because we can pull it in from outside sources and So I don't have to ask you, you know, like, well, how many cars you have because I already have it in front of me. Just give me your name and address and I can pull that information automatically through our systems. And then the same thing with your property. I know exactly, you know, because you say, well, how do I determine the replacement cost here? I want to talk to replacement costs. I can determine that because we're pulling in from third parties. So all we need is your name and address. We can pull this information together. And then let's have a conversation of how you're using those autos, you know. You know, are some of those autos antiques? Well, there's a separate market to cover the antique side. And actually it's a really inexpensive market because you're really not using it to drive to work, you know, you're using it to, you know, for that car show or whatever it may be, fourth of July parade, whatever, July parade, you know, and you've got the historic plate on the back and stuff like that. So again, it's talk to your agent, talk about how you're using your automobiles, you know, what are the issues, what are your financial means? And then the agent and you will make a joint decision, you know, in terms of what the best way is to go forward. You know, we're here as we should be, acting as an advisor, an insurance advisor to you and again, to give you options so you can make better decisions.
- [45:10]
B
Certainly as the value of your vehicle drops out of the five figure range into the four figure range, I think that's probably the time for most white coat investors to start asking themselves, do I drop collision and comprehensive. At this point I can afford to replace this car using my emergency fund. You know, maybe it's totally time to, to have a little bit less coverage on it. I think that's, that's probably as good of a rule of thumb as we're going to come up with for white coat investors.
- [45:36]
C
If you've got an auto that's been, you know, you've owned it for many, many years, you don't have a lien on it and you know, let's say it's worth five grand, you know, you just have to say to yourself, you know something, if I had got this car stolen or got in an accident, it was my fault, fine, I'll just buy a new car and self insure that five grand and not pay the insurance. But again, recommendation is buy the liability.
- [46:00]
B
Let's spend a minute on umbrella. People are telling me that the Price of umbrella is going up. I used to tell people years ago that for 200 to 400 bucks a year, you can get a million dollars of umbrella coverage. And it sounds like that might not be the case anymore. What are people looking at with kind of typical liability profiles for a million dollars in coverage?
- [46:21]
C
Yeah, so we're definitely saying, it's a great question and a great observation is we're definitely seeing pricing going up. We've seen it for a million bucks. I mean, I think trying to remember what I'm paying for my liability, but it's definitely has gone up over the past years. And that's because losses are starting to pierce the primaries like an auto. And then also we're seeing some more claims activity on the personal liability side, you know, as well in terms of, you know, other suing individuals based on neglect, things of that nature. So it's really is, you know, we've seen cases where we still can get a liability policy for 200 bucks. We've seen it for $500 and we've seen it for 1,000. And again, it all depends on the situation. But compared to prior years, it's definitely a little bit more expensive than it has. But relative to the limits that you can get and the premium that you are paying, it's worth it. It's worth it because, gosh forbid there's an issue and you get sued is you want to make sure that you've got the insurance carrier on your side because that's a lot of money if things go south.
- [47:34]
B
Yeah. Doctors typically understand this. They're like, wow, I get a million dollars of coverage and it's only a grand. That's way cheaper than my malpractice coverage. Doctors tend to understand the liability issue here. What they may not understand, though, is something like 80% of claims are auto related. Right. These claims are you hitting somebody and hurting them. That's what these claims are most of the time. Or your teenage driver hitting somebody, totaling their car and putting them in a hospital. That's where most of these umbrella claims are coming from. It's not somebody tripping and falling on your property most of the time.
- [48:08]
C
The time, yeah. And then also too is the legitious climate they're in. I mean, I live in the state of New Jersey and just, you know, driving from where I live, you know, into Manhattan, all the billboards, you know, of the personal injury, you know, lawyers, you know, are just stacked up and they're just, you know, multiple billboards. And so, you know, that has not changed and then I'm sure that. And that exists in every single state. I travel a lot to our headquarters in the Chicago area. And you see the same exact billboards.
- [48:35]
B
Yeah, they're in there and they're in Vegas as well. And we're starting to see more and more of them in Salt Lake, too.
- [48:39]
C
So it's absolutely, absolutely, definitely a whole
- [48:42]
B
industry out there based on suing people. Once you get hit and all of a sudden, amazingly, your neck hurts, it's very, very interesting. So, okay, well, the other question people have about umbrella coverage is, well, why shouldn't. Shouldn't I just buy more? You know, when do you move from a million to 5 million? And the way I've answered that is when you're starting to consider some of these more complex and expensive and uncertain asset protection techniques. When you're starting to think about trusts and you're starting to think about family limited partnerships and equity stripping and these sorts of complex asset protection techniques, that's probably the time you ought to also bump up your coverage from 1 million to 5 million. It's relatively cheap compared to all that other stuff. As far as asset protection goes, I kind of think everybody ought to have seven figures of liability coverage and maybe go from one to five as you gain assets. Although you're not trying to match your net worth because you're trying to match your liability. But when it starts not being an issue in your financial life that now you're paying 2,000 bucks a year for your umbrella coverage instead of 700, maybe that's the time to bump it up to five. But you mentioned that some people are even looking into coverage of more than 5 million. Tell us a little bit about how that's changed in the last few years.
- [49:59]
C
Yeah, I mean, so, you know, it's a great point is that, you know, we're definitely seeing much more demand, you know, other than a million to, you know, to bump up the limits to three to five. And we've had had some cases where, you know, the individual was very wealthy, you know, had a lot of assets. And it wasn't just about wealth. It was that they had a lot of assets and they had multiple properties, you know, multiple automobiles. They were. They're involved in, you know, multiple businesses and really needed. They sat on some boards of directors and stuff like that. And so they really needed much higher limits. So, you know, we have done some, you know, $10 million deals and stuff like that, but, you know, we're not seeing a lot of those. But it's becoming part of the dialogue, I should say, you know, going forward. And again, what you do is like, can you get it? Great and let's price it out. You know, if it's a few thousand dollars, then it might be willing, you know, you might be willing to do it, you know, going forward, but the majority of the times we're seeing limits between 1 and 5 million.
- [50:57]
B
The wonderful thing about this liability coverage as well is, you know, I mean, you're always worried someone's going to clean me out and it's not fair. Right. I didn't really do anything wrong. Well, every now and then you do do something wrong and you hurt somebody. And sometimes it's somebody you care about. Maybe it's a passenger on your boat or a passenger in your car and the wreck was your fault, right? And here's a chance for you to do right by them, for you to pay not only for all their medical, you know, medical treatment, but also to be able to give them lump sum of money to make up for the fact that they're now disabled the rest of their life. So, you know, when you look at your liability coverage, recognize that this is a chance also for you to, you know, take care of those you care about in the event that you make some little mistake that just happens to have really high financial consequences.
- [51:49]
C
Yeah, no, no, absolutely. And again, you just brought up another point, is that, you know, with umbrella policies, it doesn't just sit over your auto in your home, it also sits above and making sure you schedule your boat. So if you've got a boat, you want to make sure your liability is scheduled to your umbrella. You want to make sure that if you've got some recreational, you know, ATVs and you're buying insurance on that. So just again, making sure that your entire portfolio is protected, you know, so you've got to in it. So the way we should, we, we look at insurance, we look at, okay, what are your assets, you know, what, what's your stuff, and then what are your liabilities, you know, in terms of making sure that in the event that, you know, something happens and you get sued, making sure there's proper protection on that. So it's looking at your entire balance sheet and making sure that you've got an insurance program that protects you going forward. Because. And that program is going to be, you know, multiple policies. You just can't get one policy that covers everything. Like we talked before, Jim, is just, you've got to look at earthquakes, you got to look at flood, you've got to look at Homeowners, you got to look at jewelry and all this stuff, but that's why you work with an agent, because they can put it into a package for you.
- [53:00]
B
Yeah, very well. Well, we've been talking with Jeff Wingate, the president of Rate Insurance. If you're interested in pricing out your insurance, if you haven't done it in the last couple of years, it's time to do it. Go to whitecoatinvestor.com Rate and you can do that today. Jeff, what else have we not talked about with insurance that white coat investors ought to know?
- [53:20]
C
You know, I think we've talked about a lot. And again, I just want to emphasize is that, you know, the market has changed, that if you have not reviewed your insurance, you know, with an advisor, you know, especially over the last couple years, now's the time to do it. There is an opportunity to save some money, you know, out in the marketplace. We're all looking to save money, but most important, importantly, is making sure that you've got the right coverage, you know, going forward. So it's really. I kind of look at it as we want to save you money, but it's not just about price. It's making sure that your assets and your liabilities are properly protected. There's a whole host of products that are out there. We're biased, meaning that, you know, work with an independent that has access to multiple carriers, you know, going forward. And our job is to be your advisor and advocate in the marketplace.
- [54:08]
B
Awesome. Thank you for your time today, Jeff.
- [54:10]
C
Awesome. Thanks for having me. Really great discussion. Appreciate it.
- [54:14]
B
Hope you enjoyed that interview. I think a lot of people have not thought about property and casualty insurance for years, or they get a new car and they add that to it, but they don't look at everything in a comprehensive way. You might be surprised how much better coverage you can get and how much money you can save. These insurance companies, they like sticky customers, people who don't shop, people who don't. Right? But $1,000 a year compounded over 30 years starts adding up to a significant sum of money. It's certainly worth a few minutes on the phone with an insurance agent, with a broker to get it sorted out. So make sure you do that sometime soon. In fact, why not just get it done this week? It's time. It's been a while since you did it. Shop your insurance again. As I mentioned at the beginning of the podcast, SOFI could help medical residents like you save thousands of dollars with exclusive rates and flexible terms for financing your student loans. Visit sofi.comwhitecodeinvestor to see all the promotions and offers they've got waiting for you. One more time. That's sofi.com WhiteCodeInvestor SoFi student loans are originated by SoFi Bank NA member FDIC. Additional terms and conditions apply. NMLS 696891 don't forget to join our communities, right? Whether that's Instagram, Reddit, Facebook, the White Coat Investor Forum. We've got a community that is a good fit for you where you can answer questions, where you can ask questions, where you can just shoot the breeze with people and feel some camaraderie as you work toward your next financial milestone. Thanks. For those of you out there leaving us five star reviews. Those do help other people to find the podcast. Find this life changing information that has affected your life so much. Please, when you get a chance, leave us a podcast review wherever you get your podcast. So reason one came in from Emily who said Life Changing Podcast. This podcast and the corresponding book has been easily the most influential podcast to my life and career, if any. I've heard strongly recommend for anyone who does not feel 100% comfortable with their finances. Five stars. Thank you very much for that review. Oh, I think I mispronounced your name. Emile, not Emily. Emil. Thank you for that great review. All right, for the rest of you, keep your head up, your shoulders back. You've got this. We'll see you next time on the White Coat Investor Podcast.
- [56:28]
A
The White Coat Investor Podcast is for your entertainment and information only and should not be considered financial, legal, tax or investment advice. Investing involves risk, including the possible loss of principal. You should consult the appropriate professional for specific advice relating to your situation.