Kansans urged to review their insurance policies after storm

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Tornado tears through Andover, Kansas

A tornado touched down in south-central Kansas on Friday night, leaving damage in its wake, but few injuries. Residents in the Wichita area, Andover and Sedgwick and Butler counties are picking up the pieces.

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In the two years since Stacey Hobbs bought her Andover home, she said the value has increased by $60,000. That’s money she might have been out after a tornado hit Friday night if not for one thing.

“Thank God we upped the insurance on the house,” Hobbs said to her husband, Matt, on Saturday morning. “Can you imagine some of these people down here who haven’t looked at it in a couple years?”

The realization of what rising housing prices and soaring costs of construction materials mean for insurance policies is dawning on a lot of Kansans following Friday’s EF-3 tornado.

It’s something everyone needs to think about now, experts say, not only for those whose homes were damaged but for all homeowners going forward.

“Now it’s on people’s minds,” said Shelter Insurance agent Trevor Harris.

Generally, he said, it’s more of a “it’s not important till it’s important kind of thing.”

That’s a mistake.

“I would say get on the phone and call your agent,” Harris said.

The prevailing advice is a once-a-year review of your policy.

The main reason the Hobbses are protected is that as they merged their households in advance of their April wedding, they reviewed their insurance policy in March.

Hobbs said some homes in the neighborhood have been selling for more than $100,000 over what people paid, but she fears insurance policies aren’t keeping up.

Harris said Kansas has an inflation protector for properties, which is something that happens automatically on policies.

“It will roll up some years, some years it doesn’t do anything,” he said. “It just keeps policies more in line with inflation.”

Even with that, though, he said, “There still can be a gap in coverage.”

Harris said that’s in part because no one expected such an inflation of construction material costs.

“Everything’s a little out of whack right now.”

When reviewing a policy, Harris said it’s important to look at deductibles and at replacement costs versus cash value, which may not be as high as people think due to depreciation.

“That way everybody’s on the same page. And when something happens you know who to call and know what to expect,” he said.

“Make sure you’re warm and cozy with what you’ve got.”

‘Current market reality’

Lee Modesitt, director of communications for the Kansas Insurance Department, can speak to the insurance issue from a professional and a personal point of view.

“Ironically I had this exact conversation with my insurance agent last week,” he said.

Modesitt was comparing the total cost of ownership for two houses he was considering buying.

Insurance was one factor, and he and his agent discussed what total loss coverage would be.

“The system that they were using did not match the current market reality,” Modesitt said.

Even if current material costs weren’t so high, he said there are other factors to consider, such as fuel surcharges on deliveries since fuel costs are so high right now.

“It’s real easy to have those numbers not match the way they should.”

His office recommends proactive conversations.

While the Insurance Department can’t mandate that companies pay more to customers who have gaps in coverage, Modesitt said the office can help in other ways.

He said there’s help if consumers think claims aren’t being processed appropriately or if they feel their policies aren’t being followed.

“We’re here to kind of help with that review.”

Visit insurance.kansas.gov for help via a live chat, or e-mail [email protected] or call the office’s consumer hotline at 800-432-2484.

Like Harris, Modesitt emphasized how crucial it is to understand the difference between cash value and replacement costs. Also, consumers need to think about what a deductible means. A 1% deductible on a $300,000 house with roof damage means $3,000 out of pocket.

“There’s no right or wrong answer. There’s just trade-offs.”

Also on flood insurance, consumers should know there’s a 30-day lead time, meaning if they want it, they can’t get it immediately in advance of a storm.

Earthquake insurance questions are more layered, Modesitt said, so he recommends talking with an agent.

“Frankly, I think everybody wants to pay as little as possible for insurance because we don’t think we’re going to need it.”

What to watch for

Another thing to watch for after a tornado or other weather events is, of course, scammers. People who show up from out of town offering to do work are especially ones to watch.

“This is where we see a lot of scams,” said Jodi Ocadiz, the Hobbses’ Shelter Insurance agent in Andover.

“Not everybody who comes into situations like this is coming in for the good.”

Ocadiz recommends checking with the state to make sure a contractor is in good standing.

Wess Galyon, president and CEO of the Wichita Area Builders Association, said that Andover residents should contact the city of Andover to make sure contractors are licensed and properly insured.

“We caution: Do your own due diligence right now.”

That means slowing down and not making rash decisions, Galyon said.

“Don’t be too anxious to get something settled with an insurance company.”

Ocadiz said just because an insurance company issues a check, that doesn’t mean a claim is done.

“That just means we’re trying to get you . . . money in your hands as quickly as possible.”

Galyon said homeowners can call his office at (316) 265-4226 for help with reputable contractors.

With “costs all over the place,” he said, “This is not going to help make things move any quicker, so it’s important they work with someone who . . . can give them an accurate estimate.”

He said before taking a settlement, homeowners should get estimates and call contractors “and swap notes to make sure you don’t agree on something and wish you hadn’t done that.”

When Jerrome Castillo saw the debris from Friday’s tornado, he immediately thought of the difficulties people would face with rebuilding.

Castillo is a real estate broker with Titan Realty and a general contractor with Titan Construction & Roofing.

“We’ve been short,” he said. “Siding, plywood. I mean, I can’t get windows.”

The supplies he can get are astronomical. For instance, the plywood sheets that go under siding used to be $9 a sheet. Now they’re $40 a sheet. That equals an extra almost $20,000 for the average house.

“I myself am underinsured,” Castillo said. “I was going to call (my agent) today actually.”

He said his home is insured for about $450,000, but it would cost him $600,000 or $700,000 to rebuild. Nor could he find a similar house to buy on the west side, where he lives, due to the tight market.

“It’s crazy. I’ve never seen anything like that before.”

A testament

On Friday night, the Hobbses weren’t thinking about insurance. After seeing the tornado approach and riding out the storm in their basement with their five children, they immediately ran to the house of one of their children’s best friends.

Unlike the Hobbses’ house, which received relatively minor damage in comparison, this house was destroyed.

“My husband pulled out four different families,” she said of his work that night.

Then their immediate concern was to get their children to his parents’ house.

At about 10:15 p.m., only two hours after the tornado, a representative of Ocadiz called on her behalf since her power was out.

“They thought of me before I could even think of them,” Matt Hobbs said.

He said it’s a testament to Ocadiz and her team.

It’s also probably a testament for having an agent who knows you.

“It really solidifies the fact of having . . . someone we trusted,” Hobbs said.

Stacey Hobbs said she feels for all her friends and neighbors who have a long road to recovery, especially those whose insurance policies may not be enough.

“My heart really goes out for those folks,” she said. “It’s going to make it even harder.”

This story was originally published May 2, 2022 3:01 PM.

Carrie Rengers has been a reporter for more than three decades, including almost 20 years at The Wichita Eagle. Her Have You Heard? column of business scoops runs five days a week in The Eagle. If you have a tip, please e-mail or tweet her or call 316-268-6340.