Sam,
Just like you need an Attorney & CPA that is experienced in the areas you will be dealing with (real estate, tax, personal injury defense, eviction, construction, etc.) you should be seeking a professional Insurance Agent. They should have experience insuring rental properties. As you grow your business you may need them to have experience with Apartment buildings, Construction, Vacant land, Vacant Buildings, etc. so you should consider that as well when interviewing them. I would seek recommendations from other investors, your CPA, Attorney, Contractors. If there are any Real Estate Investors groups in your area that could be a good source as well.
Below is some info that I posted in the past. It may be helpful:
Here are some things to look for from an Insurance prospective:
1.Any in-ground tanks (active or inactive)
2.Any Knob & Tube or Aluminum Wiring
3.If built before 1978, does the building have Lead Safe certifications
4.Any wood stoves or secondary heating units. If so, were permits pulled & were they installed by a professional
5.Are any of the homes rented to students
6.Is there a flat roof
7.are there asbestos shingles
The Year that the following were updated (either partially or fully) would be good to know:
- Heating systems
- Roof
- Plumbing
- electrical
Some companies will not write properties with systems that have not been updated.
As long as you are living there, the proper policy for a 1-4 family is a "Homeowners" policyc. If the property is solely tenant occupied you will be looking for a Dwelling/Fire Policy (may be called a Landorrd policy or similar name) or a commercial policy such as a Businessowners or Package polciy.
Most homeowers or dwelliing/fire policies include:
1. Dwelling (Building coverage)
The limit should be based on the Replacement Cost of the building (cost to rebuild with
the same kind and quality excluding the foundation)
2. Contents (Personal Property): most homeowners policies give a set % of the Building
limit for Contents. Dwelling/Fire policies requrie that you request a limit for conents.
3. Detached Structures: for other buildings on the property (ie. sheds & detached garages)
Again, there is normally an included limit of 10% of the building limit. That can be increased
if needed.
4. Loss of Use / Loss of Rents: Normally, there is a 20% included limit. Loss of use is for
your additional expenses if you can not live there due to a covered claim (ie. Fire). The
Loss of Rents is for the loss of Rental income if the tenants can not occupy the house
after a covered loss.
5. Personal Liability: For claims due to Bodily Injury or Property Damage that you become
Liable for and which is covered under the policy. Companies normally offer limits up to
$500,000 but some offer $1,000,000. Buy the max.
6. Medical Payments: Provides coverage for an injury suffered on the premises. Does not
require proof that you were at fault. Used to keep small loses into becoming lawsuits.
Normally offered up to $5,000 but check to see if higher limits are available.
7. Deductible: This is not a coverage but rather your portion of a claim. Most better policies
will not have a deductible for either the Liability or Medical payments coverage. It will
apply to the other 4 coverages. You can select the amount of the deductible, usually
ranges from $500 to $5,000. The higher the deductible the lower your overall premium
but get quotes on all the deductibles you are interested in. Sometimes the incremental
savings from $1,000 to $2,500 or from $2,500 to $5,000 are too small to make the higher
deductible worthwhile. ***depending on how far the house is from the coast, you may
also be required to have a separate Wind or Hurricane deductible. Most times, the
deductible will be 2% to 5% of the building value. That is a significant amount
(on a $500,000 building that comes to $10,000 for 2% or $25,000 for 5%). A policy
with a higher premium may be a better deal if it does not have a wind deductible.
There are many endorsements that are available on the homeowners policy. Without
knowing the details I can not suggest which would be right to add on.
Several you should
pay attention to are:
- Ordinance & Law: Provides additional building coverage to deal with rebuilding cost
Increases due to changes in Zoning or Building laws
- Personal Injury Liability: Libel, defimation of character, wrongful imprisionment, etc. (normally recommended, especially if you are a landlord)
- Water Backup: For water damage due to the backup of Sewers or Drains.
- Personal Articles: Coverage for belongings that have a special or collectors value
such as Jewelery, Furs, Fine Arts, Collectibles, etc...
Good Luck & feel free to PM me if you have any questions.
