Tips for Insuring Rural Property
By Bob Lusk
My first thought was, “They’ll get this put out and we’ll sleep here tonight.”
Back in 2005, Lusk Lodge,1 caught fire. Burned to the ground. The fire investigator was a true fire scientist and boy, did we learn a lot. While we knew where the fire started, we weren’t totally sure of the cause. He told us that mostly likely a squirrel had gotten into the ceiling space of the great room, about 30 feet up, built a nest around the wiring and chewed the insulation off the wiring. He said over time there were small electrical arcs, not enough to ignite a fire, but enough to build carbon on the bare wires. One day, the arc happened, there was enough carbon to ignite and the fire started. Insulation caught fire and the rage was on.
When the fire started, Debbie called me at the office, 13 miles away. I raced home, beat the fire trucks and I heard the eerie sounds of fire crackling in the ceiling and could see small flames pushing through the eaves of the house.
My first thought was, “They’ll get this put out and we’ll sleep here tonight.”
Bad logic. I should have thought the opposite. There was a din of smoke high up the ceiling and I grabbed my camera and started shooting photos…from outside. About that time, the fire department came; I showed them what I could and then got out of the way. After 30 minutes we knew this would end badly.
I called my banker, the one who holds the mortgage. Told him the house was on fire. I thought he needed to know. Then, as I was shooting photos from a variety of angles, I called my insurance agent, Mike Haynie, with Farm Bureau of Texas. I told him, “Hey Mike, I thought I better call and let you know our house is on fire.” I’ve known Mike for years. He laughed a little bit and told me to quit joking. “It’s not a joke,” I told him. Silence. Then, compassion.
Someone called my sister and she posted it on the website forum. Soon, I was receiving all kinds of phone calls from friends and neighbors, all wanting to help in some way. One call I’ll always remember was from a former insurance adjuster and longtime Pond Boss subscriber and frequenter of the Pond Boss forum. He said, “Bob, I know what you must be going through, but when things settle down, give me a call and I’ll coach you a little bit about how to go through the process with the insurance company.”
I took him up on it a few days later.
After that discussion, I knew there were a number of things that would be important to know. First, insurance protection is designed to cover you, your property and your assets. At the same time, the agent and adjuster work for the insurance company. Understand this, up front. The agent works hard to advise you as to what coverage you need. But, you must prove up your claim in the event of a loss. Granted, the face value of the policy covers the amount for the structure, but the contents must be proven. When we were finished with our claim, I had typed up 36 pages, single-spaced, of everything we could think of that was in our house.
Do you know everything you have, inside every drawer? Can you prove the value of that painting on the bedroom wall? How about that priceless silver bracelet you were gifted years ago?
Here are some tips about insuring your property.
First, with your agent, determine what the best policy to buy is. Inside the city limits, a homeowner’s policy is probably the best choice. But, a homeowner’s policy doesn’t cover any farm and ranch pursuits. Be sure your agent is aware of these exposures, and a Farm and Ranch Owners Policy might best fit your needs.
Farm Bureau’s policy is called “Texas AgAdvantage”. Be sure to choose the amount of liability to be covered, too. That’s based on what you can afford to lose in case of someone’s injury…or worse. According to Haynie, “If you have a swimming pool, pond, lake frontage or a river running through it, you need the correct liability coverage, so always consult your agent. That doesn’t mean that someone can’t take legal action in case of an event, but your policy covers you.
There was one case where some kids snuck into a property to swim and one was injured in a fall. The landowner was sued and was ruled neglectful because the youngster fell off a slippery slide that wasn’t in the best of repair. The landowner’s insurance company paid legal fees and the judgment after the judge’s ruling.
Here’s another tip. Be sure you buy enough liability to cover your entire asset package. If there’s a loss, your losses could extend beyond your policy, if you have assets beyond the policy limits. You can lose. Ask most any insurance agent and they’ll quickly tell you how important liability insurance is. Consider an umbrella policy, which gives you additional liability insurance over and above your personal liability limit under your Homeowner and Auto policies. Buy an umbrella policy in million-dollar increments, based on your balance sheet and net worth.
If you buy a utility vehicle for the ranch and someone is injured on your property, your liability insurance will cover it to policy limits. But, unless you added the vehicle to your policy, it isn’t covered in case of damage. Be sure to add your equipment to your policy. Each implement, tractor, trailer, four-wheeler or any other piece of equipment has to be named in the policy to be properly insured. You won’t necessarily need a separate policy, but be sure talk about it with your agent.
Be sure you insure weekend house and contents as a secondary residence. Properly insured means covering the replacement value of what you have. There are caveats, though…if you have expensive guns, artwork, or other valuables, talk to your agent and make sure that special stuff is properly covered. Different insurances companies have different philosophies and different products. You may need a special floater policy which will cover those special, expensive items…with limitations. For example, Farm Bureau covers guns without limit. But, jewelry is typically only covered up to $500. You can raise that to $5,000 with an increase in premium. Or, you can go have it appraised and insure it for the value. The reasoning? Jewelry is small and can disappear. Cash money is covered only up to $100 with Farm Bureau. So, if you have a bunch of $100 bills stuffed in a mattress and they disappear, you get $100, minus the deductible.
Any loss under your policy must meet deductible first.
Here’s another important tip. Take pictures or shoot a video of what you own. Photograph or video all four walls of each room. Open drawers and take photos of contents. Write down serial numbers of things valuable. There’s no way to remember everything you own in case of a claim. Do it for your benefit…and for proving your losses.
Another tip…don’t totally depend on a fireproof safe and don’t put your important papers in the freezer, thinking they won’t burn. A fireproof safe is only as good as the heat baking it. The fire investigator in our case told us that paper inside of a fireproof safe wouldn’t have burned because there was no oxygen for fire, but it would have disintegrated because of the heat generated in our fire. Take your important papers, photos, videos and list of serial numbers to your safety deposit box. Keep a copy of all that stuff at home, but have a copy off site. The freezer idea? Nope. The ceiling collapsed on our freezer and about half the stuff in the freezer roasted. The other half, mostly meat, thawed out. By the time the fire investigator arrived and the adjuster gave us permission to enter and begin the cleanup, a few weeks had passed. We started to get the mess of the fire cleaned up and found the freezer about a month afterward. Can you imagine what we found in the crushed freezer? Don’t put important papers in the freezer. (We didn’t, by the way)
Do you charge for recreational land use? Maybe have a hunting operation? Let people fish for a fee? Ride their ATV’s? Talk it over with your agent. You’ll likely see an increase in premium for charging dollars for rights on your land. That fee that you charge changes the entire program of liability. If you ignore it, don’t be surprised if a claim is rejected and you have to deal with a loss personally.
Fires, injuries and tragedy won’t be avoided. It won’t necessarily happen to you. But, trust me; you can rest more comfortably if you are confident you are properly insured. Our fire was tough to deal with, but knowing we were properly insured gave us a certain amount of peace as we rebuilt our home. I can’t imagine dealing with the tragedy of a fire with the added anxiety of finding out we weren’t properly insured. Thank goodness, we were properly insured. Our agent saw to that.