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What Influences Your Home Insurance Policy: An Interview with Paul D. Mattes of Sterling Insurance Group

By Paul D. Mattes

Tell us a little bit about your company and its foundation.

The agency was a startup in 1996, primarily as a Personal Lines agency serving the Metro Detroit area. Over the last 18 years we've become the largest agency in Macomb County Michigan employing over 65 people and a top performer for the majority of our insurance carrier partners. Sterling has been named a Top 100 place to work the last three years in a row by the Detroit Free Press. We've been able to achieve these results because of the caliber of staff we employ at the company and our mantra of treating clients the way you would like to be treated. Sounds simple enough, but now a day's people are willing to accept mediocrity, but not at our company. The client is always first and it shows in our client satisfaction and retention!

What are some of the services your company provides?

We provide full service offerings to our community:
Personal insurance packages (home, auto, life, watercraft, recreational vehicles, Umbrella coverage, etc.)
Commercial Insurance/Risk Management and Employee Benefits.

Is there a generalized formula that is used to determine home value and thus home insurance? If so, what is this formula in an easy-to-understand way for readers?

One question consumers get confused about is what limit of coverage is right for my home? Consumers tend to think of market value (how much can I sell my house for?) as the similar value to place on the insurance- it's not. Actually they are two different values entirely. Things like lot location/size, waterfront addresses and city placement never come into consideration in insurance, but can have dramatic differences on home market values. Each insurance provider has a software program that can develop true replacement values for homes based on the characteristics of the house (square footage, age, construction material- frame, brick or custom stone, etc.). Higher valued homes are typically inspected and a detailed report is developed for the home owner. I've seen homes at replacement cost of anywhere from $125/square foot to $500/square foot based on the construction quality and amenities in the home.

What are five aspects that affect the cost of home insurance and please explain? (e.g. age of home, credit score, number of structures)

1. Credit Score.
2. Location and Fire Department (Protection Class) response.
3. Deductible selection: Standard deductibles are $1,000. Anything less is surcharged against the policyholder.
4. Carrier Selection: Are you dealing with a direct writer (State farm, Allstate, etc.) or an Independent Agency (Direct access to multiple providers- Citizens, Auto Owners, Travelers, Hartford, Encompass, etc.) Michigan is an "Open rated" state so no two carriers are the same cost and no two carriers have identical coverages. In my opinion, an independent with a full stable of competitive carriers is better than direct writer who only has one company. "Selection" is a friend of the consumer.
5. Coverages: What are you getting for your premium? Does the home have a "Guaranteed" replacement cost or "Extended" replacement cost on the dwelling? Guaranteed is just what it says- if the home is destroyed and the policy was written for $100,000 and the home costs $400,000 to replace, The Guaranteed replacement cost policy pays $400,000. Extended Replacement cost policies have caps on coverage and typically max out at 125% of the policy limit. So in the past example if you're insured for $100,000 and lose the home to fire, your policy is going to quit after the provider pays $125,000 and the home owner is stuck with the balance. Does the policy include Water & Sewer back-up coverage? There's a wide variety of options and the home owner and agency should have an in depth conversation on what the needs of the home owners are.

Is there any additional information you wish to share on the topic of influences on home insurance policy?

My dad had a saying- If you don't know your meat. know your meat man. Make sure your agent has the capacity to shop multiple options for you and has insurance carriers that provide the best types of coverage. The last thing anyone wants to hear is that "you didn't purchase that type of coverage and/or your loss is not covered". Always try and "package" your home and auto with one carrier. That provides the best rates and ease of doing business. Our company has a better than 90% package ratio for new business clients.

What is the best way for people to get in contact with you or your company?

Anyone interested in talking with a professional about their situation can reach us toll free at 888-525-7575 or on the web at www.sterlingagency.com.

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