On June 27, 2024 I was able to speak with Christopher Togawa, owner of Togawa Insurance Agency. He was kind enough to let me ask him many questions I've gotten from clients over the years. Here's a quick bio on Christopher before I share the entire transcript:
Meet Christopher Togawa, the friendly face behind the Christopher Togawa Insurance Agency! With over two decades of experience in the insurance industry, Christopher is your go-to guru for all things insurance in the Pacific Northwest. Based in beautiful Washington State, he's known for his expertise in navigating the complexities of home, auto, and business insurance. Whether you're looking to protect your dream home in King County or ensuring your business thrives in Seattle, Christopher's personalized service and deep local knowledge make him the trusted advisor you need. When he's not crunching numbers or ensuring clients are covered, you might find him exploring the local food scene or catching a Seahawks game. Connect with Christopher and discover why his agency is a beacon of reliability and care in the insurance world!
Transcript
30 Minute slot - Christopher Togawa-20240627_134857-Meeting Recording
0:02So here are some of the questions that I had from people because obviously we live in an area with earthquakes and so they were looking at getting earthquake insurance.
0:16And her question was, so if my home owner's policy covers contents and what happens and but it but it doesn't cover earthquakes, what happens when there's an earthquake?
0:30If I have earthquake insurance, does that cover the contents when there's an earthquake?
0:35Or does the homeowner's policy cover the contents but not the house?
0:40Yeah.
0:41Traditionally speaking, these days, the more likely approach to earthquake insurance is a separate policy altogether from a carrier that specializes in earthquakes.
0:53So that that would cover the the dwelling, the other structures, outbuildings and personal property.
1:02So my recommendation to people is to think about if you want earthquake, that's an additional policy that you will purchase right separately.
1:13Yeah, like I, I started to do that and I thought it was going to be a simple phone call to my USA carrier and just say, yeah, just add on earthquake and they're like, Nope, you got to call somebody else and spend, you know, the entire fill out the policy form.
1:30And I was like, I don't have 45 minutes right now.
1:34Yeah, it's, it's a, it's a for a number of different reasons.
1:38It's the smarter way to go in my opinion, because the tolerance deductible tolerance with earthquake is likely to be a larger deductible that you would be willing to pay as compared to your, your day-to-day policy.
1:51So I like the fact that about 1520 years ago, it became popular to have separate policies for earthquake.
1:59Gotcha.
2:00OK.
2:01So, so the earthquake would cover the contents as well.
2:05If for if that was the event that happened, yes, absolutely.
2:11You would not be tapping your normal homeowners insurance policy if an earthquake happened for really anything, right, Because earthquake is, is it's an exclusion.
2:22It's it's not included unless that specific insurance company offers it as an endorsement or a rider like, like, like companies, you know, you'll, you might get a jewelry rider or endorsement for a piece of jewelry.
2:37Will some companies still offer earthquake in that same formatting?
2:43But it's becoming less popular.
2:45More and more companies are getting away from offering it, it at all.
2:49Because what insurance companies have to do to to afford earthquake as an option?
2:55Is it they have to reserve, you know, a gazillion dollars just in case that happens.
2:59So what it does is from a business standpoint, it limits the carrier from the fluidity of the law of large numbers, such as how many car accidents or house fires take place.
3:10The data shows roughly how many of those will take place.
3:13But earthquakes, that's really not built into our savings plan.
3:17Gotcha.
3:18OK.
3:19So that was one question.
3:20And then basically the same thing for flood insurance in our area.
3:27How important is flood insurance and who should be getting it?
3:31What data should we be looking at because now we have like floodplain data on the well, we can see it.
3:38I don't know if customers can see it, but who should be looking at flood insurance?
3:45My short answer to that would be anyone that lives close to nearby a, a river or lake in which they could be impacted by a, a, a big change, a big Mother Nature shift.
4:00So that that boils down to two, one, 2% of people of or of homes, right?
4:06Because we do have people on rivers, lakes and areas that flood, but statistically it's a very, very small percentage.
4:15So that's my short answer.
4:16However, when we have these groundwater basements that get wet and, you know, and these torrential downpours that we get, you know, when some people live in these valley areas that are susceptible for damp, dank, wet basements that wet, that wet basement would be covered by a flood policy.
4:38But Gretchen, the truth is, is that most people, you know, that live in Seattle in those pockets like in free lard or whatever that have these low points, you know, Ballard, Fremont, Yep.
4:53They're, they're not going to typically buy flood insurance for a couple $1000 occurrence to replace carpeting or, or things like that.
5:01So the, the, the truth of the matter is live, you know, live with or, or bet or get a French drain for your house that's susceptible to a wet basement in the winter.
5:12I wouldn't generally recommend buying a flood policy to claim that type of situation.
5:19And most people don't unless they're really more susceptible to the Skagit River, so to speak.
5:26OK, gotcha.
5:29Because the flood policy is going to be quite expensive and, and really not all but many of these wet basements, it's a Band-Aid.
5:38I think when people have these wet basements, they, they probably need to look at, you know, a, a, a French drain of sorts to make their property more stable as compared to a flood insurance policy as a Band-Aid, which really is I don't think that's a good, that's a good play.
5:54Gotcha.
5:55OK, So then moving on to the next one is homeowners associations in all their various forms.
6:05You know, we've got condos where they're you know, condos where with buildings that are multi stories like apartment style.
6:14We've got condos that are townhouses.
6:19We've got town condos that are two property, you know, a a house and a dadu.
6:29So what what types of warnings or caveats would you tell people to be aware of if they're buying into a community that has an HOA of any sort?
6:44That's a that's a pretty big question that probably entails more time than we have right now.
6:50But I would say this, if someone is buying like a friend, friends of mine just bought like a DADU, right.
6:56That was, it was re parceled so they could be sold separately.
7:00Yeah.
7:01And so really, you know, understanding and sometimes, you know, the level of expertise might even challenge their realtor.
7:09And so I would, I would, you know, discuss with their realtor, like who's a real estate attorney that can kind of help unwind this.
7:16Because sometimes I know that some Realtors don't want to and really shouldn't try to speak, you know, try to speak the real estate law part of it because a lot of these situations are new and unique and they're, and they're, they're built and conformed differently.
7:34So I, I would say just know your PS and QS when you're not buying a traditional condominium with a traditional association.
7:43And also, before you really sign around on everything, talk to your insurance carrier to, to then determine, you know, how that will or will not comply with the, the, the contracts that they offer.
7:59Because what you're talking about is it is kind of a new movement of sorts.
8:04And that that's happening a lot faster than insurance carriers providing new endorsements to their homeowner contracts to, to really blend in and fit like a puzzle with, with some of these situations.
8:19So having said that, what we're seeing now and as you know, we're seeing associate traditional condo association premiums skyrocket.
8:29We're seeing more and more condo associations non renewing properties requiring deductibles two or three times higher than they were before.
8:40And what that really does is it it to me.
8:45If I were a buyer, unfortunately I would be much more concerned about buying a condominium today than I would have been 20 years ago because of the uncertainty of insurability moving forward and affordability of your personal condo policy through your insurance carrier, let alone your association policy for the property.
9:09So though I, I'm seeing a lot of people getting priced out just from the HOA dues, etcetera and restrictions.
9:17And you know, with the HOA deductibles sometimes being 25 and 50,000 now, or even, you know, maybe a $25,000 deductible, but, but 50,000 water related it, it puts more friction and weight on that buyer to, to try to bridge the gap on their personal policy.
9:35And, and they're just, you know, a lot of these gaps that are being created cannot be bridged.
9:43Gotcha.
9:44So, so it puts people in the position of they need to have $25,000 available to even get something fixed maybe, right?
9:57Because here's the thing, these condo, these HOA's, if there's an 80 unit building, the last thing they want to do with an isolated incident only impacting one unit is to make a claim.
10:09Because if they make one claim for one unit, it it really puts the future insurability of that property, the, the vast, you know, 80 unit property in jeopardy.
10:20And So what those associations are doing now is, is they're saying, no, you need to build this frontline coverage through your personal policy.
10:31And that language is, is not always extremely succinct and concise.
10:36So really, I think one of the hardest things about being a condo buyer these days is not to have someone interpret how the HOA policy and the personal policy meld, but will they be able to afford the ebbs and flows of the HOA policy because those policies are changing rapidly just to try to survive affordability for all of the owners.
11:01And so it's, it's, it's becoming a very unstable situation.
11:07I, I, I won't be overly specific, but the three, three of the biggest name carriers that come to mind to most people in, in America of insurance carriers probably would be like Farmers State Farm and in Allstate, right?
11:23Those are three household names that we see on TV every day on listen on the listen to on the radio every day.
11:30Well, one of those 3 carriers for almost a year now is no longer writing condominiums in the state of Washington.
11:38Wow.
11:39So if your next client says, hey, I'm a lifelong policy holder with, with one of those three named carriers and I, you know, I'm so excited about this condo.
11:49When they called that one company, that company is going to say, sorry, Gretchen's client, we at this time are no longer writing condos.
11:59So that's there you go.
12:03If, if one of the biggest players is saying that there's more to be said and, and comprehended.
12:10Right, right.
12:13OK, let's see.
12:15What were the other questions?
12:19Oh, oil tanks, 'cause you know, there's, there's still homes that have oil heat, some of them have CLIA, some of them foolishly don't and will never get it.
12:34And some people who are buying them want to maybe decommission the oil tank or maybe not.
12:41How how have you seen that effect insurance or insurability if there is functioning oil tank or maybe a non decommissioned oil tank?
12:53Good question.
12:54And this might help answer some of the other questions like knob and tube wiring or roofs that are older or slopes and things like this.
13:05But with this huge transition and impact that the insurance industry is still fighting to get through as far as huge immense losses from every company from coast to coast.
13:20What happens with that is tightening of guidelines.
13:24So if if a carrier were lukewarm about it, a non decommissioned oil tank or a property on still on oil heat.
13:33In tightening the guidelines to try to find a roadway to profitability, topics like this are becoming more and more challenged.
13:41So 20 years ago we find a way to work with it, probably not a problem today.
13:47I could promise you that most carriers are not going to deal with anything oil tank related or properties even on oil heat.
13:55So what?
13:58What's always been, you know, and maybe in the back of your mind as a potential issue, I could pretty much tell you now it's more likely an issue.
14:07So what that means, Gretchen is this that there are still there are still carriers that will ensure knob into wiring or or a non decommissioned oil tank.
14:20But what you're dealing with is maybe a carrier that you're not overly familiar with that potentially may not have as strong as of coverage that you're used to and a premium that's likely to be far more expensive than you expect to pay.
14:38Gotcha.
14:39So what, what, what are some ways for so, so let's say I have a seller who has oil heat that they're currently using.
14:49They've, they've reached out to me and they say, you know, Gretchen, we, we want to sell our house, you know, either now or someday.
14:57What, what, what would they be better off doing like switching their heat before they sell that That's definitely one option.
15:09I think it's a, the, the question is relative to your client that has a 20 year old roof on a, on a home that, you know, and I know we would probably love to have replaced if we were to buy the home.
15:22And they're, you know, but do they spend the $20,000 to then probably more than get it back in, in, in a sale?
15:30Because of course, as you know, a home with a, with a new roof, that's a very attractive feature here in our climate.
15:38So I, I can't say yes, you know, convert to natural gas, But well, I, what I would emphasize is that more than ever, you're going to broaden the offering to find a more, more more attractive buyers because many buyers are going to have challenges with, with these issues that are on the cusp that, you know, years ago were not.
16:05So definitely it's going to narrow the, the, the, the, the playing field for buyers.
16:14Some of these characteristics.
16:16How many carriers?
16:18I mean, maybe I should, I'm not sure which way I should ask negative or positive.
16:23How many carriers do insure homes with oil heat or how many carriers don't insure homes with oil heat?
16:30I can't really tell you that I can't speak to that.
16:35I, I think the, there's a, there's a bigger concern for a, for a property that that is no longer on oil that doesn't have a decommissioned assert, right?
16:47That's a bigger concern if if a property is still functioning on oil heat, but they have a newer furnace because the person is just insistent on keeping, you know, the oil heat, but they have updated records, not the oldest furnace that that property is probably going to skate along a lot better than than the property that had that used to be on oil but doesn't have proof of it being decommissioned.
17:13So really what it then boils down to is, is kind of the the the survey as to the systems inside.
17:20Tell me more about your heating system, your plumbing, your electrical and so forth.
17:24And the quiz on systems is becoming more and more of a page 2 requirement these days as compared to years past.
17:34So I don't want to say that properties on oil heat are, you know, 50% of the companies won't do it or 50% won't.
17:42But I will say though, that it that it's not the best answer to that.
17:49That question got you.
17:51So it's carrier by carrier.
17:53It's it's and, and the underwriting guidelines with carrier to carrier are changing so rapidly.
17:59I really don't have a pulse on, you know, how many are thumbs up and how many are thumbs down?
18:05It it's so hard to tell.
18:07Gotcha.
18:08OK, well, those, those were my big questions.
18:12And and then my last, I guess conversation starter for you was as an insurance agent with years of experience.
18:24What what are three pieces of advice you would give a first time home buyer who's out there looking at homes when it comes to insurance?
18:36The first thing that I would do is once they find a home that they're really interested in, before they sign around on accepting an offer, I think that they need to line up their insurance 1st to make sure that there are not issues.
18:54So for for example, if if somebody signed around and then then they run into all the issues about insurance, they could find themselves in a position where they have to default on the transaction if they can't afford the requirement of insurance with the premiums that they're able to get because of conditions about the home.
19:14And so again, those conditions vary, but you know, many of them would be like old wiring, such as knob and tube or even dated plumbing on an old Seattle home or an old roof or a home that has, again, we'd like we talked about with the, you know, the oil tank situation or a property that that is, or on or around a steep slope or a, or a property that has a flat roof with, you know, with torch down material.
19:43That's, that's becoming a little bit more of a challenge with some carriers.
19:48The roofing material, even if it's not aged.
19:52So get getting really cleared with insurance first would definitely be critical because the difference could be the $150.00 per month to oh, the reality is $350.00 per month.
20:09So that couple $100 a month could ruin the transaction from closing, but also the the future insurability of that home that does close those insurance rates can skyrocket even further because.
20:24Where the insurance industry right now is, it's in a very, very fragile state.
20:28So Gretchen, look at your experience with following what's happening in California.
20:35Several carriers are not writing homeowners insurance at all right now, such as Farmer, State Farm, Allstate, USAA, Amica, Hartford, to name a few.
20:44So what are you going to, what are you going to do if you're a California buyer?
20:49So they're not issuing any homeowners policies at all in California.
20:55Many companies are and many companies are not.
21:02But the carriers I mentioned are, again, many of the first names that come to mind.
21:08So, yeah, they're sick.
21:10Where we are in Washington is not in that desperate state that California is in.
21:17I don't want to say the state of California's desperate, but the desperate state of the situation that California is in.
21:23However, where we are now, as far as seeing these concerns, seeing the rate increases, seeing guidelines tighten, this is probably where California was five or six years ago.
21:35OK, So unless there's a course correction, you might have a flashback to this discussion five years from now.
21:44And I hope that we, we don't continue to go and and parallel the avenue or the roadway that California's gone down because we're we're definitely going to be in in a really, really challenged situation if we continue to follow their footsteps.
22:01Gotcha.
22:02Wow.
22:05Well, thank you so much for your time.
22:08I will.
22:10Once I get my art, I'll probably do a couple different articles because I try to make them a little more bite size, but I might have you just review what I wrote, make sure I didn't misinterpret anything.
22:25Yeah, I'm happy to do it.
22:26Gretchen, I think that the you're going to really win with your clients because a lot of Realtors really are very hands off about insurability in my experience.
22:40And I think with you being really ahead of that, you can, you know, when it's just when you, when you give your, your, your clients kind of a, a punch list of, of, of a prior a list of priorities.
22:56This, this is the insurance piece has got to jump up a few rungs up because in, in years past, it really wasn't a big deal.
23:05There would always be a suitor, a good suitor.
23:07But now, like, for example, if you have a buyer that wants to buy a secondary residence in Suncadia or that area, yeah, five years ago, everybody was playing and insuring that area.
23:18Right now there might be 3 carriers that are riding at that area.
23:23So that that proves that in a three or four year period of time, it went from wide open to very, very exclusive.
23:33And the few carriers that are riding in that area, my bet is that they may not be in the next few years because, for example, that's circling around the wildfire risk region, growing and growing, right.
23:50Wow, This is not, this is not a fun time for me at all.
23:56No, no.
23:58Well, hey, I got to run to my next meeting.
24:00But I really, really appreciate this.
24:04Hey, my pleasure Gretchen.
24:06Talk to you later and thank you again.
24:08Yep, take care.
24:10Bye.
24:11Bye bye.
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