Mortgage 101 – Insurance: Don’t Set It and Forget It | Aug 21, 2023

In this brand new edition of Mortgage 101, Clinton Wilkins and Todd Veinotte are discussing how to navigate insurance in an unpredictable world. They talk about the main issues surrounding recent disasters, why people might be underinsured, the importance of a broker, why you should always be reviewing your insurance and how climate change is affecting insurance.

Clinton Wilkins 00:04
Our last show, it was really kind of just after, you know, the fires and things were kind of trying to start to get back to normal. And then the weekend of our last show, is really when the floods happened.

Todd Veinotte 00:15
Yeah, well, it was when the floods happened.

Clinton Wilkins 00:17
And the weather here in Nova Scotia has just been really all over the place. And really, our hearts go out to anyone who has been impacted by the floods. And obviously, anybody who was impacted by the fires, we don’t want to forget about these things. But we just have so many clients and so many people were impacted. We’ve had clients reach out to us, they’re dealing with insurance claims, we’re helping them talk to their lenders, you know, about potentially looking at deferrals and things like that. And, you know, a lot of people were impacted.

People are underinsured

Todd Veinotte 00:43
What are some of the bigger, bigger issues that you’re hearing from people over all of this?

Clinton Wilkins 00:47
You know what, I’ve heard, a lot of people don’t have enough insurance coverage. So I’m hearing people that are potentially looking at taking a settlement, even from their insurance company, because it’s hard to get a contractor right now, really tough contractors are busy. I mean, it’s busy time of year anyway. And they’re thinking about taking a settlement, but the amount of money that they’re getting, is not enough to necessarily get the work done. Either they don’t have enough insurance on their structure, or the work that they want to do is, you know, bigger than maybe the insurance company will give. So we’ve actually been seeing some customers in the office, even looking at, you know, maybe borrowing some money to maybe do some work on their homes, as well, as, you know, just a consequence of needing to do insurance claim. They wouldn’t necessarily have done it proactively. But if they’re like, we’re getting some work down now, we might as well really go all in.

Todd Veinotte 01:37
So why is it that people are underinsured, in some cases, just they weren’t, were the brokers or whomever they were working with not doing their jobs or ultimately whose I guess responsible?

Clinton Wilkins 01:50
I think insurance, like home insurance, and you know, sometimes this auto renews people don’t necessarily dive deep into, do we have replacement coverage to our home? You know, what is the building limit? You know, do we have coverage for things like act of God and water and all these things that can really have such an impact on your home?

Todd Veinotte 02:12
Overland water, I mean, this is something that people don’t have coverage for, in many cases, right?

Working with an insurance broker

Clinton Wilkins 02:15
A lot of people do not have really any coverage for this type of issue. And, by in large, there’s a lot of provinces in Canada that really don’t have finished basements. But we have a lot of homes here, that we live below grade in many cases. And you know, living below grade can certainly be a challenge, and especially based on the water table, it can also be a challenge when we’re talking about things like radon gas. And there’s challenges here in Nova Scotia, that are just not present in other provinces. Just like I’m sure there’s challenges in other provinces that are not present here. And that’s why you almost need to be the best advocate for yourself. And I think when things come up, like your insurance, you need to open your insurance binder that you’re getting from your insurer, and go through the channels of your insurance, and see what is covered and what is not covered, figure out how much coverage you have. I did the same thing with myself, recently. I moved from one insurance company to another insurance company, and actually saved a couple bucks, but I got more coverage. And I was dealing with a broker. Because you know what, I have a relationship with a broker, I have other insurance products with that broker and the broker gave me really, really good advice and save me a couple bucks. It’s the same thing in our industry. And I think customers sometimes really don’t understand what a mortgage broker does, and why a mortgage broker might be, you know, important to have a conversation with, but we are so entrenched in dealing with insurance brokers, and they’re just a way of life. Like my parents dealt with insurance broker my entire life growing up the same person, they had a relationship with them. And yes, there are some direct writers for insurance. Like for example, TD Meloche Monnex, they’re while we consider kind of a direct writer, they have a couple insurance companies that they work with, including TD insurance. But the majority of insurance that is bound here in Nova Scotia, is with a broker that is the most common and you know what, I think it’s very similar when you’re dealing with an mortgage broker. More and more mortgages are now being funded with mortgage brokers really than ever happened before.

Todd Veinotte 04:20
And to your point, I think it’s it’s great when you can deal with somebody for a lifetime. And my parents did the same thing. They dealt with an insurance company for their entire life. Why because they were close by in that community. They developed a relationship with the person they liked the person but sometimes that can be a disadvantage because that broker or whomever can can just simply rewrite the business and not shop it around perhaps not be competitive. Not have one on one. And way okay, what’s changed in your home or what are your needs now? Whereas with you guys like I’ll use you for an example you guys have annual reviews with people, because of the specific reasons that we’re talking about.

Keep up with change and review your insurance

Clinton Wilkins 05:03
And people need change so much Todd. It shocks me, just think about what your situation is your your living situation has changed over the last months and years. My situation has changed over the last years. And you know what? people’s situation changes all the time. And when you set something up, I think we’re just as even humans, were so easy just to set things and forget it. But I think when we’re talking about mortgage lending, when we’re talking about insurance, we’re talking about our finances, they’re not always a set it and forget it type thing.

Todd Veinotte 05:37
Yeah, so and it’s not the time that when you need it, that’s not when you want to know that you don’t have it, obviously, I mean, I’m not breaking any news here when they say that. But that’s –

Clinton Wilkins 05:46
You don’t want to have to do an insurance claim. Nobody wants to.

Todd Veinotte 05:48
Nobody wants to, but when you are when you got water in the basement, or you’ve got something happening, or whatever it might be, that is not the time that you want to be finding out what you’re covered for, and what you’re not covered for.

Clinton Wilkins 06:00
100%. And with everyone’s insurance, coverage, if you have a mortgage or a lien against your property, the bank is the first loss payee. So they’re getting paid first, before anybody else is getting paid. They want to make sure their security is being protected. So if you were to take a settlement, so you know, quote, unquote, I’m air quoting right now, from your insurance company, the bank needs to concur that they’re going to sign those one funds over to you because they want to know that those funds are going to be going into the property to make sure the property is still going to be protected, the value is still going to be maintained. So certainly some questions you have to talk to with your lender. And, you know, the lender is really going to review things like an insurance claim, and they review it, every file on a case by case basis, everybody’s situation is different.

How will climate change impact insurance rates?

Todd Veinotte 06:47
I would think with all of these insurance claims that this is going to impact rates, home rates?

Clinton Wilkins 06:52
Like home insurance rates? Oh, I think I think they already have been impacted. I think even leading up to this, Todd, we’ve been having more and more hurricanes, our weather is changing here in Nova Scotia, our risk is higher. And it’s not just suddenly we woke up one day and you know, climate change happen. This has been going on for years, hundreds of years, really. And now we are starting to see the impacts here in Atlantic Canada, more and more than we have before. And, you know, I don’t want to be like Doomsday, but maybe this is only the tip of the iceberg. Do I think Nova Scotia is eventually going to be like Florida or California? You know, or is it going to be like, summer weather all the time? Probably not in our lifetime. But certainly, climate is changing and we are receiving the impacts.

Todd Veinotte 07:39
Do you anticipate potentially some large insurers just saying we’re not covering? Because that’s happened in the United States. There have been California, I think is one region where some and I can’t remember which one –

Clinton Wilkins 07:50
Like nationwide insurance companies.

Todd Veinotte 07:51
Yeah, huge insurance companies who say we’re no longer writing business in California. Because of wildfires.

Clinton Wilkins 07:57
Nova Scotia, I think is small enough, that it’s not a huge impact to some of these insurance companies. But you know, if the results are just bad, bad, bad on bad, they might make a decision not to insure. There certainly are lenders who will not do business in Quebec specifically because they don’t like the letter of the law in Quebec, compared to the rest of the provinces across the country. So it certainly could it could happen.

Todd Veinotte 08:24
Okay. What do you want to talk about?

Clinton Wilkins 08:26
We’re certainly gonna talk about inflation. We’re gonna talk about mortgage rates, we’re gonna talk about the market. And about refinance, lots of stuff to talk about,

Todd Veinotte 08:33
Okay, Mortgage 101 your guide to homeownership. We’ll be right back

Clinton Wilkins 08:45
If you’ve liked what you’ve heard, and you want to learn more, feel free to visit us online at Tim clinton.ca.