More homeowners have inadequate insurance than ever - a business opportunity for appraisers

A consequence of the housing boom that has been overlooked — by homeowners and appraisers alike — has been the growing problem of underinsurance.

As property values have bulged in recent years and so many homeowners have cashed out equity to invest in further improvements, the homeowner's insurance policies they bought when they closed on their mortgages are likely out of synch with the value of their homes.

According to the Wall Street Journal, spending on home improvements reached $155 billion last year, an increase of 27 percent from just two years before. And material and labor price increases have driven replacement costs up by seven percent a year over the last five years.

It's not a matter of homeowners not being able to keep up financially. A survey released this week by Travelers reveals homeowners by and large don't know the details of their policies, such as what is covered and not covered, and what they would be due in the event of damage or destruction.

Forty-four percent of 1,300 respondents in the survey had not revisited their homeowner's coverage in the last year. Twenty-seven percent weren't sure if their policy would cover the total replacement cost of their home.

"It's not at all unusual for homeowners to get insurance coverage when they buy a house, but not revisit it for years," said Joseph P. Lacher Jr., executive vice president of Travelers Personal Insurance. "The survey suggests that few people are making sure that as changes occur, their insurance remains in-synch with their lives."

The WSJ meanwhile cites a forthcoming survey conducted by Marshall & Swift indicating that 58 percent of houses are undervalued for insurance purposes, by an average of 20 percent.

In the last edition we described a new WinTOTAL/XSellerate plugin that helps you market to owners of past appraised properties from your database. A replacement cost update is just another professional service you can offer to owners of past appraised properties that can help them out.

Homeowners are used to dealing with insurance agents to help determine their needs. While this is a path of least resistance, you have a number of things over an agent. You work for a fixed fee, not a commission. You are a professional appraiser who values property for a living. And, in the case of a past appraised property, you're seen as familiar with the house and have done reliable work on it before.

It's important for both you and the homeowner to understand that a qualified insurance agent is the way to go to estimate the replacement value of personal property, coverage needed for homeowner's liability, and the like. But no one knows better than you the value of home improvements like new siding or a roof, an inground swimming pool, or an addition. That's your area of expertise.

For an appraiser who may not like marketing, "cross selling" is going to be another foreign concept. But if a homeowner is interested in bringing his or her insurance up to date and wants you to help, you have a great opportunity to convince them to buy a full appraisal which will tell them the current market value as well as replacement cost of their home.

Even if you're not yet using the WinTOTAL/XSellerate plugin, the problem of reinsurance and the alarming number of homeowners who are not keeping up with their coverage is potentially a huge marketing opportunity. As you cast about for new sources of business, remember this one.

Four XSite features that make it easier to get paid

Clients can access their account history online. Your XSite's new Client Accounting feature gives each of your clients their own secure area on your site where they can see their order and payment history. They can download reports and, with your merchant account, make credit card payments on the spot. "I never got the invoice" doesn't work anymore. It's part of every XSite right now.

Require payment before they download the report. Your Enterprise level XSite lets you prompt for payment before a report can be downloaded from your XSite. (You can turn this on and off, so you won't agitate a reliable client.) With your merchant account, they can get the report right away by entering a credit card on the spot. "Require Payment Before Delivery" is as easy as checking a checkbox for that client.

Take credit card payments at the door or before starting work. This feature works with your merchant account and from any Internet-enabled device. Your client can pay on your XSite, or you can enter a credit card number from your Internet-enabled PDA or cell phone at the door.

Send automatic past-due notices. Collections is an uncomfortable racket. XSellerate, included with your Enterprise level XSite, includes a professionally written e-mail campaign that you can set to send to past-due clients. You trigger how often and what gets sent based on how late, what they owe and so on. It's all in your control — the notices are even customizable. But they work for you while you're appraising, instead of chasing down clients on the phone.

These features all work together to help you collect more money you're owed. XSellerate also includes a slick, professional "new client" campaign that lets them know how easy it is to work with you and pay through your XSite. To see all the benefits of an Appraiser XSite, or to upgrade from a Standard to an Enterprise level site and get all these great tools, click here.