The Insurance Solution
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We are Real Estate Investors too...
As fellow real estate investors we have designed our programs with the investor in mind.
We serve thousands of real estate investor nationwide.
We offer you the best possible insurance coverage at the right time for your real estate needs! We specialize in insurance products that protect your investments in the most appropriate and cost effective way. We offer insurance protection for rental properties, vacant properties and rehab properties, office space, retail centers, condos and apartments.
Our Investment Property Insurance Programs were designed with the real estate investor in mind. Whether you renovate, flip, rent, hold for long term, residential or commercial properties... we have the solution.
Nationwide Programs since 1999
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The Insurance Solutions
Negligent tenants can cook more than your goose.
The biggest threat to your investment property has always been and will always be your tenant. Every year over 200,000 homes are destroyed by kitchen fires, careless smoking, and candles. More than 60% of Property claims are caused by negligent tenants, totaling hundreds of millions annually.*
It’s not unusual to see these losses exceed $10,000 or more. That's why it is imperative you require your tenants to purchase their own renters insurance policy naming your owner as an additional insured.
It’s easy, affordable, and provides great peace of mind to you and your tenant.
*According to the National Fire Protection Association
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INSURANCE CONCEPTS THE INVESTOR
(BUT PROBABLY DOES NOT)
It is imperative to know and understand the information being presented to you in the form of a proposal in order to make sure the policy is providing the protection you intend.
A policy is nothing more than a legal contract – it will pay what is says it will pay and it will not pay more or less. It is simply money in exchange for a piece of paper and a promise. Quite often the old adage of “you get what you pay for” applies.
All policies are not created equal. There is not always standardization in the coverage forms, terms or conditions.
Top Misunderstood or Unexplained features of the insurance policy for the investor:
1. Insurance to Value – Coinsurance
This is a policy feature that if not managed properly can cost you a lot of money in the event of a loss. A discussion needs to be had with your agent as to what your recovery expectations are in the event of a claim. A penalty for insuring the property for less than its determined replacement cost is not always a bad thing if there is a strategy behind it.
We often take this element of ambiguity off the table by negotiating an agreed value for the properties with the underwriter on the front end.
2. Replacement Cost versus ACV
Neither of these is better or worse than the other. It is simply a matter of understanding and deciding on the appropriate loss settlement type for your goals.
3. Vacancy Clause – all vacant properties must be boarded & secured at the time of a loss (30-60 days)
Most policies have this clause which means you could find yourself without coverage in the event of a loss which occurred while you were between tenants.
We prefer to negotiate the removal of this limitation with the underwriter when possible.
4. Warranty Statements – Grounds to deny a claim.
These are “absolutes” that will void coverage and are normally attached to the back of the policy. Examples: Insurance coverage does not apply: if smoke detectors were not present and working, if aluminum wiring exists, No Wind coverage in a particular Zone or distance from coast, there could be many others.
5. Wind/Hail – Deductibles, exclusions – no coverage for named storm, typhoon, atmospheric disturbance, depression, hurricane, tropical storm or other weather phenomena
This speaks for itself but it is amazing how many policies have these exclusions present.
6. VMM/Theft sublimit – $30,000 max
There are certain types of loss that will be covered but will then have a limitation as to how much money would pay out. Vandalism and Theft are common categories we see.
7. Tenants HO4 Renters Insurance Policy
Always require the tenant to carry their own renters insurance. You would be amazed how many losses we have seen paid out under the investor’s policy that could have been picked up by the tenants (HO4) renters policy. This helps keep as many claims off of your record as possible.
8. Minimum Earned Premium
Many policies have a feature called a Minimum Earned Premium. This is a percentage of the total annual premium the insurance company will keep if the policy is cancelled mid-term. This is not necessarily a bad thing but something you need to be aware of and understand the implications if you are moving providers.
9. ACV – Example: Roof over 15 years old
We often see stipulations written into the policy that may revert the coverage on a roof from replacement cost down to actual cash value if the roof is over a certain age.
10. Only 2.5 Million TIV with a 16 Million schedule
Some of the “program” policies we have looked at do not truly cover all the properties on the schedule. For example we reviewed a policy that had $16 Million worth of homes listed but had a coverage limit of only $2.5 Million. This opens you up to a tremendous risk as the coverage limits on the policy are insufficient by 85% from the very beginning.
11. Perils – basic, broad, special
The perils are the specific Causes of Loss that the insurance policy covers. Basic, Broad and Special are various coverage forms that dictate what type of perils are included in the coverage of the policy. These can range from only 3 or 4 things being covered all the way to “everything” being covered unless it is specifically excluded in the policy language. The appropriate form will depend upon the characteristics of your portfolio as well your risk strategy.
12. Impact of deductibles
We advise investors to carry as high of a deductible as they can possibly afford or are allowed by any outside factor such as a mortgage company. This demonstrates to the insurance company that you are sharing in this risk by having skin in the game and are going to utilize this policy to transfer catastrophic risk only. Investors have a reputation amongst underwriters of utilizing their insurance policy as a maintenance plan. Higher deductibles separates an investor from that reputation while at the same time it keeps the small claims off your record which in the long run provides more options and better pricing.
If you think of your insurance agent as “selling” you anything, then you have the wrong agent. The relationship should come from the angle of a trusted consultant - another integral part of your team, no different than your lawyer, your CPA or your real estate mentor. They should know your business, simplify your life, remove any doubt about your coverage and save you money over the long term.
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