Roofs & Ruffs - More Insurance Info

As I have highlighted in the past few weeks, insurance companies are trying to reduce risk and cut their losses.  I noted in last week’s newsletter that Fireman’s Fund, the state’s largest condo insurer saw 80% of their global losses occur here in Hawaii.

 

I received a ton of responses from readers sharing their personal stories of large hikes in their renewals and some being cancelled due to claims.  Roofs are a huge issue with insurance companies right now.  There are roofing companies operating throughout our state that hire inspectors to go around looking for bad roofs.  These inspectors offer the homeowner a new roof by filing an insurance claim.  These inspectors are paid a commission on every roof job they bring in.

 

This week a client of mine purchasing a home had a difficult time obtaining insurance.  First the roof, an aluminum shingle type, is 24 years old.  The insurance companies are scrutinizing the condition of the structure before issuing a new policy.  They are fearful that once again, an owner with an older roof is going to obtain a report from a roofing company that a storm damaged their roof and are now filing a claim.  The second issue my client faced was that they did have a recent insurance claim.  Their previous home they had a roof leak after a storm, and they filed a claim with their insurance carrier 4 years ago.

 

A long-time insurance agent provided me with the following guideline for various roof types and the expected age of replacement that the insurance carriers use when determining to issue or renew a policy.

 

 

 

The above is only a guide.  But for example, if your home has an Architect Composite Shingle roof that’s 23 years old, your insurance company may require a report from a licensed roofer stating the roof is in good shape.  But if that roofer is looking to cash in on another insurance claim, you may get a free roof, but end up with significantly higher premiums later, or find it hard to obtain a policy at all.

 

On the other hand, when I chose a roof product for my home I chose a Spanish-style terra-cotta roof.

 

 

 

Under the insurance guidelines above, this roof has a maximum life of only 40 years.  The company that manufactures my roof tiles has homes with this roof system that are in perfect shape that were installed 130 years ago.  And the ones in Europe are still in great shape well over 200 years.  I guess when we get to 40 years of my roof’s life, I’ll be arguing with my insurance company!

 

 

Roofs are not the only issue that will prevent you from obtaining insurance coverage.  Many may not know, but owning a dog could cause an insurance carrier to decline issuing you a policy.  The important fact is not having a dog or not, but the breed of dog you have.  I’m a dog lover and I truly believe there’s no bad dogs – just bad owners.  But insurance statistics paint another picture.  Certain breeds tend to bite more than others, especially those bred for guarding – which makes perfect sense.

 

Below is a combined list of breeds from several insurance companies.  They will decline issuing a policy to you if that’s your breed of dog.  And don’t think you can or should lie about it.  If they find out, you’ll get cancelled ASAP and be flagged for lying on your application.

 

 

 

Roofs and things that go ruff!  They can make it rough for you to obtain insurance.  When buying a home, knowing its age or when it was remodeled is important.  But don’t forget to inquire about the age of the roof.  I was also never aware that breeds I thought were great to have, are on the naughty dog list!

 

 

 

 

Tooth Fair Index

How about a little levity instead of all the negativity?  According to research from Delta Dental, in 2023 the Tooth Fairy is now paying out an average of $6.23 per tooth, up 15% from 2022 numbers. Remarkably, the trend in cost per tooth closely follows the S&P 500 trendline.  $6.23 per tooth?  I’m starting to feel old.  I think I got 25 cents.  I don’t think it was even a dollar.

 

 

 

Our National Debt

$34,471,061,012,653 – the total amount of debt of the United States (at the time of this writing).  This number can become outdated quickly as over $300 million is added to the debt every hour of every day.  Per person, the $34 trillion breaks down to over $102,000 per person in the United States.  The numbers around the national debt are staggering, and more and more people are taking notice and voicing their concerns.

 

It is predicted that by 2033, the national debt will top $50 trillion.  As the debt continues to increase, so do the interest payments.  Paying interest on the debt is the fourth largest government program behind only Social Security, Medicare and defense.  It also happens to be the fastest growing part of the federal budget and already exceeds many important programs.

 

 

 

 

 

And now the week’s economic news…….

 

Inflation Drops

It was another quiet week for mortgage markets.  The latest inflation data was right on target and caused little reaction.  Similarly, the other major economic reports had just a minor impact, and mortgage rates ended the week nearly unchanged.

 

Fed officials keep a close eye on inflation, and the PCE price index is their favored indicator.  In January, core PCE, which excludes food and energy to reduce short-term volatility, was up 2.8% from a year ago, matching the consensus forecast.  This was down from an annual rate of 2.9% last month and the lowest level since March 2021.  While still moving in the right direction, it remains above the Fed's target of 2.0%.

 

Another significant economic report released this week from the Institute of Supply Management revealed unexpected weakness, highlighting the recent struggles in the manufacturing sector.  The ISM national manufacturing index fell to 47.8, well below the consensus forecast.  Readings under 50 indicate a contraction in the sector, and this was the sixteenth straight month below 50, the longest streak in about 15 years.

 

After shooting higher to start the year, mortgage applications have stalled in the face of rising rates, according to the latest data from the Mortgage Bankers Association (MBA).  Applications to refinance dropped 7% from last week and were slightly lower than one year ago.  Purchase applications fell 5% from the prior week and were down 12% from last year at this time.  One interesting note was that mortgage demand from buyers looking at newly built homes was 19% higher than a year ago, emphasizing the increased interest in new homes due to the lack of inventory of existing homes on the market.

 

 

 

 

Next Week

Investors will continue to watch for Fed officials to elaborate on their plans for future monetary policy.  For economic reports, the ISM national services sector index will come out on Tuesday and the JOLTS data on job openings on Wednesday.  The key Employment report will be released on Friday, and these figures on the number of jobs, the unemployment rate, and wage inflation will be some of the most highly anticipated economic data of the month.  In addition, the next European Central Bank meeting will take place on Thursday.

 

 

Until next week…….