Hi everyone I have a question about how to cover myself for natural disasters. I am a new buy and hold investor and live on the Oregon coast that being said tsunamis are an unforeseen event, how can I protect my assets if this was to happen? Obviously flood insurance is ridiculously expensive, is there a way to get my investments covered another way? If not would putting my rentals into a LLC be smart so I wouldn't be personally responsible for all the mortgages?
First, read your existing policy to find out what is and isn't covered. I had my first homeowners claim last year. The process was pretty eye-opening. You may not have ever read that little brochure the insurance company has sent you. But the adjuster and your agent know it by heart.
If there are specific risks that you care about that are not covered, then talk to your agent and others about its insurability. Many risks are not insurable. Acts of war, for example, are probably not insurable at any cost. While I think its unlikely bombs will fall on our houses, so did lots of other folks all around the world right now who's houses were bombed.
Putting your properties into an LLC will have zero effect on your mortgages. Conversly, if you buy using an LLC and want a loan to the LLC (very possible to get) then you will almost certainly have to give a personal guarantee to get the loan.
For the risks covered by the national flood insurance program there is really no alternative, unless commercial companies have started writing such policies in your area. I've heard that has started happening in Florida where flood insurance rates are skyrocketing.
Jon Holdman, Flying Phoenix LLC
Thank you for all the great info.
On the Oregon Coast - and depending on exactly where your properties are on the coast - there are two hazards to think about. A tidal surge is a Flood hazard, but the cause of that potential tsunami is an Earthquake hazard. You should talk to an insurance agent who's familiar with the earthquake potential where your property is located.
Both Earthquake and Flood are normally excluded from property insurance policies.
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