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Show Summary
In this episode of the Real Estate Pros Podcast, host Kristen interviews Nick Dial, author of ‘Insurance Makes Cents.’ They discuss the importance of understanding insurance, particularly for real estate professionals, and how to leverage it effectively to protect assets. Nick shares his personal journey into the insurance industry, the inspiration behind his book, and the common gaps in insurance coverage that many overlook. He emphasizes the need for a customized approach to insurance and the importance of educating oneself about policies to avoid costly mistakes. The conversation concludes with key takeaways from Nick’s book, empowering listeners to optimize their insurance strategies.
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Investor Fuel Show Transcript:
Nick Dial (00:00)
so one of the big things that you have to consider is how much cash do you ultimately have on hand? There’s a old adage called self-insuring where essentially it’s just using your own assets, your own money to be able to insure yourself. Where I’ve been blessed to say that I’ve been able to meet a lot of people in that capacity where they’ve been able to use insurance products, not necessarily for insurance itself, but that they could use it for leverage ⁓ because their cash is so large and so vast andOn the real estate side, especially on the real estate side is that a lot of people consider the deductibles, the ⁓ co-insurance, the endorsements that they have to have without actually first looking at their own pocketbooks to consider, what is my risk threshold?
Kristen (02:12)
Welcome back to the Real Estate Pros Podcast. I’m Kristen and I’m here with Nick Dial, who’s the author of Insurance Makes Cents. We’re going to talk all about insurance and how to appropriately leverage it so you can free up your other assets. Thank you for being here, Nick.Nick Dial (02:25)
Yeah, thank you, Kristen. I appreciate it.Kristen (02:27)
Yeah, how about you give us kind of a rundown of your background?Nick Dial (02:31)
Yeah, so I’ve been in the insurance space for the last 10 years. I suppose a little over 10 years now. I was a broadcast major in college and aspired to be on Sports Center and all that other thing, maybe a bullet that I missed there. I’m not sure, but in any case, I found myself in insurance 10 years ago and I primarily specialized, overall I specialized in the employee benefit space, but from a recent unfortunate event that happened to our family,Insurance really took on a whole new look for me and what I was actually able to support my clients in terms of education and overall understanding of insurance. And so it inspired me really to be able to put a lot of those kinds of principles and strategies into a book that is now published as you mentioned.
Kristen (03:17)
Amazing. So what kind of went into making this book and how did you get the idea to make it?Nick Dial (03:25)
Yeah, it really came from my father-in-law. So he unfortunately had a stroke out of nowhere back in 2017. And as I mentioned, specializing in employee benefits, I stretched across all sorts of different product lines that I would speak to a lot of my clients on, primarily in the employee benefits space. But when he had his stroke, the reality was very evident and clear as to understand what insurance was and what it wasn’t.And to this day, my mother-in-law has yet to fill out a single job application. She hasn’t needed to. They haven’t needed to replace any part of his income because the insurance that he had set up prior to actually worked and it’s still working to this day. In fact, by any technical standards, he’d be getting ready to retire if he were still working today. yeah, so that’s really the inspiration that really kind of got me going in that direction to be able to bring this information to light.
Kristen (04:19)
Yeah, and how, with your insurance business and background, how do you typically work with real estate investors, real estate agents, anyone trying to get into real estate?Nick Dial (04:30)
Yeah, one of the things that’s particularly underutilized is the information and education of insurance. A lot of people look at it as a tangible commodity. ⁓ It’s a necessary evil. In a lot of cases, they’re actually told, hey, I’m supposed to have insurance in some capacity, right? But what they don’t often look at is strategically speaking, there’s actually different ways to be able to loosen cash up that is actually building insurance the right way. So.people aren’t ultimately just relying on their own money and they don’t have to be spending a ton more in premium if they don’t have to.
And that’s really what we talk about a little bit in the book is how to be able to consider the leverage point from what your cash provides to what you ultimately need in the insurance space. And secondly, I’d say is that we often rely perhaps a bit too much on ⁓ the professionals, the salespeople, so to speak.
of insurance that we don’t really take a moment to actually consider it’s like what are they actually telling me or what are they actually selling me that I could learn a little bit more about.
Kristen (06:18)
Yeah, I think a lot of people don’t really know too much about their insurance coverage until they have to file a claim and they’re like, ⁓ man, this isn’t covered. ⁓ What are your tips for kind of like, for adapting your insurance to your business?Nick Dial (06:35)
Yeah,so one of the big things that you have to consider is how much cash do you ultimately have on hand? There’s a old adage called self-insuring where essentially it’s just using your own assets, your own money to be able to insure yourself. Where I’ve been blessed to say that I’ve been able to meet a lot of people in that capacity where they’ve been able to use insurance products, not necessarily for insurance itself, but that they could use it for leverage ⁓ because their cash is so large and so vast and not necessarily that we need to talk too in depth today, but
On the real estate side, especially on the real estate side is that a lot of people consider the deductibles, the ⁓ co-insurance, the endorsements that they have to have without actually first looking at their own pocketbooks to consider, what is my risk threshold?
is the leverage that I actually have that can maybe mitigate the premium to be able to spend it? Or worse yet, have I really considered how much exposure I’ve left within my own policy? What holes are there that may…
like I may have overlooked to try to save me money. So there’s a balance between what kind of policy I’m actually buying and what my money can actually do for me. So it’s kind of a give and take. It’s a yin and yang effect that not a lot of people I would say often consider. go by the professional suggestions, which is good. And there’s a lot of great professionals out there that do amazing work. But the challenge to it is that oftentimes they don’t consider it enough or at least go far enough to understand, does my money cover this gap or have I created
too many gaps on the backend that would completely deplete my cash reserves.
Kristen (08:06)
Yeah, what are some common gaps that you see with real estate professionals?Nick Dial (08:11)
great question. A lot of them are very minute, very technical, I would say roof as an example or foundation or ⁓ electrical, know, trades in some respects. A lot of those actually can be particularly costly when you don’t consider the policy that would cover, you know, outside water versus inside water. Or if you have a certain type of roof that you’re having to replace that the insurance, maybe it’s not brought up to code from when it was built originally and codes change.You know, there’s a lot of things that can actually be manipulated since acquiring that building or acquiring that piece of real estate in some capacity. So there’s a lot of different nuance ⁓ in the trades specifically that people can find holes in their insurance policy.
Kristen (08:55)
Yeah, and so you kind of suggest, so how should people build a customized insurance approach? Who do you work with?Nick Dial (09:08)
So to answer your first question as far as how to build a customized approach is I think number one is to be able to find someone probably more local than national, someone who’s actually boots on the ground within that given area who can actually speak directly to not only the environment, but also the landscape, particularly on being a little facetious in the way the building is otherwise constructed. Do they know the area and what went into building the construction, right?And they can at least speak intelligently into when code upgrades happen, who was the builder? Was there any additional problems with other buildings that other people had that they should take into consideration? And ultimately, whenever they’re working with someone local, that person also has a bit of a beat as to how they’ve written other policies to be successful as well. When you get into a bit more of a generic…
type of, you know, go online and get the quote kind of a thing, it really starts to diminish the quality of that policy. And that’s really what becomes particularly challenging. Who I work with is a little bit more generalized because I stretch across several different industrial lines from ⁓ public and private sector, but also to include obviously real estate professionals.
Kristen (10:54)
Yeah, that’s amazing. And so basically you’re saying that if you can customize your insurance policy, your money is better utilized rather than just like.Nick Dial (11:06)
I would, that’sa, yeah, no, that’s a great way to put it. I would actually, if I may, I’d probably put a footnote to that, that customization is kind of a, a bit of a cliche, I think, in some respects, because by and large, almost every insurance policy is actually customized. It’s a matter of ultimately understanding the nuance while not being the expert in insurance. That’s one of the challenges is, you know, with insurance, it’s a regulated industry. So, ⁓ similar to investments, you have to actually have a licensed professional to build it to begin with. So.
⁓ Any one of my clients ⁓ that we’ve that we’ve established a strategy for almost all of them never really fully grasped the in-depth ⁓ Intricacies of what insurance is so it’s all customized, but the thing that I would otherwise add is ultimately Learning about why you might need the insurance to begin with so in essence to say and I’ll give you a bit of a general example is ⁓ Why one might actually need flood insurance whenever you’re not necessarily in a floodplain as just an example not everybody needs this kind of coverage
But whenever you’ve got outside water versus inside water, what’s the separation between your policy there, right? When you have a, well, I mean, pre-existing as an example, which pre-existing in PNC and real estate kind of did look kind of, it does differ when it comes to different types of policies you’d see compared to like life insurance or something to that effect. So all that to really say is that it’s really not necessarily customizing the policy, but really
in a way, customizing your knowledge base behind the policy.
Kristen (12:35)
Got it. That’s very interesting. can you, do you have an example of maybe someone you’ve worked with or helped that they’ve been able to, you know, change their strategy with their insurance and benefit from it?Nick Dial (12:48)
Yeah, this might go a little bit beyond ⁓ real estate, if you don’t mind, but ⁓ it’s relevant because of how certain people look at types of policies. And this is going to be more macro than micro. ⁓ So there was a gentleman that I met. He made multiple hundreds of thousands of dollars a year as a general sales manager of an auto dealership. And he was holding onto a cancer plan ⁓ where in my book, I go through this is that there’s two types of insurances out there.income policies and there’s expense management policies. 99 % of all policies live in the expense management column, which all that’s meant to do is just keep you from spending too much money. Where the income category has a very small amount of policies that’s meant to provide an income to you. And that’s really how you can think about it. So naturally real estate and a lot of other areas are going to be in the expense management column. Well, this gentleman had a cancer policy that was basically meant to pay for cancer treatment in some capacity, but in his mind,
it was meant to help pay for his income that he was well north of $400,000 a year. And when we had this conversation and we started talking a lot about his liquidity and frankly the challenge of his own liquidity, meaning that he only had roughly about a year, maybe year and a half of liquidity in cash and in real estate that he could have actually replaced his income in that capacity. All that to say, he thought his cancer plan was doing the income category side, which it was completely in conflict.
And that’s an example of more of a macro perspective of what people think a policy is meant to do for him to say, okay, well, if I get cancer, my income’s protected. That’s not the case at all. So to bring it more towards like real estate as an example is understanding, am I over-insuring a property or am I under-insuring it? What am I imagining within that specific policy? ⁓ Do I have something perhaps missing in that capacity of knowledge that they should?
potentially look or maybe ask a few other questions.
Kristen (14:45)
Yeah, and I think you brought up a good example too. An example of real estate insurance that I think gets misconstrued is flood. Is it outside water, is it inside water? That’s something I hear a lot where people kind of get in trouble with that because they think that they’re covered and then all of sudden there’s an internal flood and they’re not covered.Nick Dial (15:49)
Right. I’ll tell you one thing. This is a, this is a bit interesting. There was a building, gosh, probably about seven years ago now, six years ago, whatever it was. And what was really interesting about this ⁓ issue was that the, was a, this was on a home and the pipe itself had tree roots growing right through it. And what was particularly interesting about this was that the insurance on the home, very well known company, ⁓ seemingly did a great job.and they could not figure out was the, were the roots outside of the home or in under the home. And oddly enough, it just, wherever that footer ultimately was, wherever that lined up is where the policy started. And no kidding, right at the footer is where that the tree roots were going. Right. So literally on its way out of the home. And so the, the homeowner still had to replace the piping and then some additional, like some clean outs and things like that they had to add in there as a bit of an older home.
Kristen (16:25)
⁓Nick Dial (16:49)
But the insurance company, unbeknownst to my client, unbeknownst to him, the insurance company ⁓ covered the discovery because they couldn’t figure out was it external or internal. And they would have had to dig the pipe up regardless. So there’s things like that where not a lot of people ultimately understand. Like where’s the policy start and where does the policy end?Kristen (16:59)
Yeah.Totally, and through your book, mean, you’re helping people be empowered with this kind of information, right? I would love for you to talk about the takeaways that you want people to have from your book.
Nick Dial (17:17)
I think the subtitle itself really speaks for it. I’ll tell you briefly is that one of my clients, this has been many years ago, one of my clients once said affectionately that insurance is just a waste of money. It’s just a scam. And outside of the history that he had, which I felt bad for, we had a different conversation, but my title of the book is Insurance Makes Sense, but the subtitle is The Art of Money Well Wasted. And conceptually,We talk a lot about how insurance, lot of people go on talking about how you can make money on insurance and different policies, things like that, particularly away from real estate. But at the end of the day, insurance is really a tool that is meant to manage and leverage risk to the advantage of the individual if it’s built correctly. So many people have this takeaway to think that the insurance companies are the ones that are meant to make all this much money. And at the end of the day, they have to…
they have to report their own profits. Like they’re under so much scrutiny based on even claims and they’ll forgive the terminology, they’ll dig their own graves if they’re bad on claims. And so we can at least be rest assured that there is a, at least someone else within the department of insurance of every single state that’s looking out for all of us as insureds to make sure that an insurance company is solvent and that they could do the job. So at the end of the day, really what…
drives a lot of people, I would submit, what drives a lot of people to say that when insurance is a waste of money is whenever they built it poorly, or if they didn’t fully get the bill that they thought they were meant to get. And that causes a lot of problems. And that’s one of the bigger takeaways that I would suggest is if they’re reading the book, they can at least consider, okay, this isn’t about just buying a product. It’s installing a strategy that can actually transcend my money.
Kristen (19:05)
Yeah, and I mean, I think that’s such a unique take on it because I do think a lot of people have the opinion of insurance just being a scam or it’s not worth anything or when they need it, they can’t use it. So I think that’s amazing and I think that’s actually really empowering people to optimize a part of their business they’ve never even thought about.Nick Dial (19:11)
Right.No, and I think you hit the nail on the head. I don’t have much to add beyond that. It’s such a challenge where people have a preconceived notion based on, you know, a friend that went through a bad experience. I mean, here in Colorado Springs, as a really good example, had the, in 2012, we had the national known Waldo Canyon fire. And then just that next year later, we had the Black Forest fire. So many people lost homes and pieces of their lives, right?
And some insurance companies came through, other ones didn’t. And those people are talking. They’re saying, insurance was just awful and it’s horrible. what gives that any more credence to the other person that says, no, actually insurance pulled through and they took care of everything. At the end of the day, it’s obviously choosing the right company, but it’s also educating oneself.
Kristen (20:12)
Totally. So I would love for you to tell everyone where to find your books so they can educate themselves.Nick Dial (20:17)
Thank you so much for that. So they can find it on Amazon, Barnes and Noble. ⁓ Both are available and the audio book is pending. So we’re working on that actually right now. So really excited about that. And I’d give a slight disclaimer to say that we’re talking about real estate and thank you so much for allowing me to be on the podcast. And in the book, they’ll find a lot more than just real estate insurance. They’re gonna find the scope and bit of a macro view of insurance at large that I hope it helps anyone reading it can find the value there.Kristen (20:46)
Amazing. Well, thank you so much, Nick. I think people probably learned a lot from this.Nick Dial (20:51)
Well, thank you so much for having me. This has been a real treat. Thank you.Kristen (20:54)
Yeah, well thank you everybody for listening. Hope you learned a lot. Hope you got some inspiration to look into your business and optimize it in ways you never thought of. And we will see you back next time.
