All Forum Posts by: BreAnn Stephenson

BreAnn Stephenson has started 1 posts and replied 90 times.

Originally posted by @Jason Hartman:

@BreAnn Stephenson - I got some very basic information from Sara; however, it doesn't tell the story because it only shows claims made but not the amount paid in relation to the claim. For example, it would be easy to say that your company/carrier paid a claim when you paid $1 but the claim was for $25,000. You would call that a claim paid but to the insured would definitely not consider it paid. The insured would call it insurance bad faith.

I'll be happy to look at any information Sara sends me and replied to her asking for details but haven't heard back.

I understand your additional questions here Jason. I would suggest giving her ample time to respond as it does take quite a bit of time to pull the data together. The purpose of this thread was to start a separate discussion on some of the other coverage-related questions in the original thread so I will be happy to continue answering those here. I just wanted to make sure that you had at least received her correspondence.

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Originally posted by @Jason Hartman:

Wow - thanks for all that info but can you please reply to my post on the other thread?

I'm not asking you to research the insurance industry at large, just your own business. Certainly, you must know what percentage of claims processed by you and your carriers for your own customers are approved or denied, right? Yes, I understand the word 'reasonable' is a matter of interpretation and this is why we have a court system so you can disregard the word and just tell us how many of the claims made are approved and how many of the claims made are denied. Please answer the question, thank you.

Hi Jason, I believe that you should have received a direct answer to your question from Sara now. Please let us know if you didn't receive it, thanks!

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Originally posted by @BreAnn Stephenson:

Hi @Darish D.

You have some really good questions in here that I think warrant being addressed on the new thread that I will start. Many don't know, for example, what coverages are typically included in General Liability. Once I get the new thread posted, I will tag you so that we can start a new conversation. Looking forward to seeing what questions everyone has.

-BreAnn

Hi all, as I was unable to tag you all... here is the link to the new thread... I have addressed General Liability and the Lloyd's rating...

http://www.biggerpockets.com/forums/95/topics/2182...

I hope that you find it helpful and have a great weekend!

-BreAnn

1 Vote

Disclosure: I represent Affinity Loss Prevention Services, the chosen loss prevention partner of NREIG/AGM

This question and a few items came up in another thread and warranted further discussion.

@Gautam Venkatesan @Darish D. @Sara Nobles @Juliana Shipp

The questions were:

1. What does General Liability cover and what is excluded?

2. How is Lloyd's of London rated?

#1 About General Liability coverage: When we speak of liability coverage on an investment property the concerning exposure is premises liability. Think slips-and-falls for example. As there are other types of commercial liability coverage (workman's comp is an example you may recognize the name of), let's just be clear on which type of liability we are addressing below...

General Liability coverage is pretty simple and usually has the following categories:

a. Per Occurrence Limit - The maximum payout for any one occurrence (usually $1,000,000). Bear in mind, legal expenses that are incurred due to such a claim do not diminish this limit.

b. General Aggregate - The total limit for the policy period. Typically twice the occurrence limit.

c. Products/Completed Operations - For completed work on the property - usually a contractors liability policy will have this coverage. Accordingly, it is excluded in many policies out there for an investor.

d. Personal/Advertising Injury (For acts of false advertising/slander. That would be if you were harming someone else through your business methods. This may be excluded for premises liability as it could be picked up on a Commercial General Liability policy that a landlord/PM might obtain to protect themselves in business activities...to protect from wrongful evictions, etc.)

e. Damage to Premises Rented to You - Doesn't usually apply for investors as this has to do with space rented to you...such as any fire damage you cause to an offsite office you rent.

f. Medical Payments - Coverage for medical bills as a result of an injury occurring on the insured premises, without consideration for negligence. Many times an insurer will use this coverage as a "good faith" payment to help avoid litigation. This is exclusive of the per occurrence limit above, so don't fret if you do not have this limit in your coverage, or have a minimal amount such as $5,000 or $10,000.

g. Deductible - Your out-of-pocket cost if you are liable for damages to another party's property or for bodily injury.

Sample limits for many policies that cover residential real estate are:

a. $1 Million

b. $2 Million

c. Excluded - See explanation above. For real estate, there is no "product", and the "completed operations" of a third-party such as a contractor typically fall under their coverage. Accordingly, you should always secure valid evidence of insurance from all contractors that work on the premises.

d. Excluded - Typically not an exposure for an investment location

e. $50,000 (or Excluded)

f. $5,000

g. $1,000 (or could be $2500 maybe)

A couple of other important notes...

Liability typically will not cover:

1. Any contractors working on a property (they should have their own coverage for their workmanship and/or workman's comp)

2. Anyone else hired by you to do work on the property (i.e. don't hire your friend's kid to do work on the property as you are opening yourself up to risk)

3. Injuries from animals (i.e. certain dog breeds, amphibians, & insects to name a few). It is best to take a look at policy specifics as this exclusion can vary quite a bit. Carefully consider if you will allow tenants to have pets and what kinds, if any.

4. Trampolines or other play equipment that could be seen as an "attractive nuisance".

5. If you have a pool at your property there may be strict guidelines that must be followed. Many policies require that you adhere to municipal guidelines and may have specific instructions for signage, maintaining safety equipment on the premises (life preservers, flotation ropes, etc.), and could even require the pool be fenced or a certified lifeguard be present when the pool is open.

6. Total pollution exclusion - many policies have this exclusion and it can become an issue if there are injures due to Carbon Monoxide.

Premises liability coverage is important even though liability claims are more rare than property damage. They often are more costly and could take you out of business if someone is hurt as a result of your negligence. The cost of this coverage is pretty low, as you can usually get $1 Million per Occurrence/$2 Million Aggregate for $100/year/unit if you have a company that is also providing the property coverage...

#2 Lloyd's of London's Rating

(I know that you can all Google search quite effectively, but thought that bringing this info. to one centralized location might help...)

Lloyd's of London has a long-standing history as a pioneer of the insurance industry. There are different syndicates, or groups, within Lloyd's, but as they are all backed by Lloyd's Central Fund, they all have the same unified ratings.

a. History: If you would like to know more, I would suggest looking at their site:

https://www.lloyds.com/lloyds/about-us/history which can give insight into their 325-year-old history... 1688... Lloyd's has been around longer than the U.S. has been a republic.

b. Stability: There are a few recognizable rating agencies and Lloyd's displays their ratings here:

https://www.lloyds.com/lloyds/about-us/what-we-do/...

Standard and Poor's: A+ (Strong) - www.standardandpoors.com

Fitch Ratings: AA- (Very Strong) - www.fitchratings.com

A.M. Best: A (Excellent) - www.ambest.com

Cheers, BreAnn

2 Votes

Originally posted by @Darish D.:

This morning I was contacted by a managing representative from Affinity and he reassured me of how claims are handled. It was certainly comforting to know that they are on top of their customers concerns. @Sara Nobles , I think we understand Affinity is not the entity settling claims but the concern is if the carriers that you broker us out to really will cover our catastrophic losses. I do suggest that you provide a little bit of information on the carriers you use on your site and their ratings and maybe more details on the policies themselves. For example what does the General liability cover and what is excluded. How is Lloyd's of London rated, and can you give some insight as to what percentage of claims they deny?

Hi @Darish D.

-BreAnn

1 Vote

Thanks @Sara Nobles and hi @Gautam Venkatesan and all,

I will be happy to start a new thread in the next day or two where we can discuss some "insurance 101" and answer any questions that anyone has. There are many assumptions that can, unfortunately, be made about what is/isn't covered. ALPS is dedicated to helping you guys and gals prevent avoidable losses at your properties, and I would love to share some tips that might save you from having to even go through the claims process. Even the best resolution costs time, effort and some expense that interrupts your cash flow and can derail your business plan. If you can avoid a loss to begin with, you can keep that engine trucking right along.

1 Vote

I'm glad Leo! Building in heating requirements into the lease agreement sounds like a really good idea to me. Definitely may give you a leg to stand on if the tenant decides to turn the heat off.

You may also want to see if your local utility co. has an alert service for owners. One of my colleagues has a rental and their electric co. notifies them if/when service is disconnected. That gives them the opportunity to pay the bill if needed.

Happy Mardi Gras!

-BreAnn

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Originally posted by @Leo B.:

@Richard Dunlop

@Mark M.

Thanks for the replies. Do you communicate to the tenants to constantly heat the home to at least 40 degrees throughout the winter months to avoid the risk of bursting pipes? Or do they already understand this risk and do it anyway?

First, hi @Leo B. (and all!)... :)

Yes, one of the biggest risks during the winter for investment properties (especially vacant, although occupied can have issues too) would be water damage from burst pipes.

Although I would love to agree that all tenants would certainly keep the heat above 40 degrees because that is dang cold! ... some of them don't if they can't afford the heating bill. Then you have an even bigger issue of other heating sources being used like the stove or space heaters or burning phone books in a trashcan (Yes, we have seen it!)....which can end up burning the house down!

Also, some people end up turning the heat way low when they go on vacation in the winter and end up having pipes freeze then.... It's never unwise to keep educating... we all need reminders even about "common sense" items... the same is true of changing batteries in smoke detectors, etc. These are your assets and no one is going to take better care of them than you. The key is teaching tenants in such a way that they understand the impact that these loss prevention items can have on them... The impact on you may be financial, but the impact on them can result in relocation or even injury to themselves or the ones they care about...

Back to frozen pipes...

The general rule of thumb is to leave the heat set to no lower than 55 degrees, but in some cases that may even be too low depending upon the location of a property's pipes. Advising tenants to keep faucets on a slow drip overnight if temps get very cold is a good idea, and opening up cabinet doors to let the heat circulate to pipes can help as well.

One thing to think about with winterizing is that it really is a pretty simple process, but will help you avoid water damage to vacant properties...even if you intend to keep the heat on, a winter storm with high winds or heavy snowfall can knock out the power and then you end up with NO heat at all. Having no water in your pipes at that point would be of great benefit to avoid a mess.

As for coverages, the Special Form format typically includes coverage for Water Damage, BUT you will usually need to be able to show that you have endeavored to keep the heat on (via utility bills, etc.) or have fully drained the system. Basic Form formats DO NOT include coverage for Water Damage so review your coverages if you don't know what kind of coverage you have or give your agent a call.

Hope that helps!

-BreAnn

1 Vote

Originally posted by @Justin D Schwartz:

yes, very much so. Thank you for such a detailed explanation I really appreciate you being so thorough.

I can't say that I like your answer cause it may cost me a lot lol, but I now have a better understanding about their issue with it.

@BreAnn Stephenson

Glad to help Justin! I think I may have missed it, but did you mention a specific company to try @Dave Fontana?

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Originally posted by @Justin D Schwartz:

@BreAnn StephensonI can totally understand some of the stipulation such as the roof and even the water heaters. What I do not understand is how an older air handler is a threat to the property, what Damage can they cause that the insurance would have to cover?

I'm sure there are all kinds of air handlers out there, so the specific risks may vary, but with anything having to do with HVAC components you could have:

1. Fire hazards:

a. If filters aren't changed regularly or if duct work is not cleaned regularly.

b. If fans become clogged with dust build up or other debris (our AC condenser was home to a giant mud dauber nest one year...!)

b. If any components that are electrically powered or powered by gas fail.

c. If any contained refrigerants are involved - potential for explosion.

2. Liability hazards - pollutants could be distributed through the system...mold spores, toxic gases from refrigerants, other allergens, etc.

Anyone else want to add on to the above? Does that help Justin?

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All Forum Posts by: BreAnn Stephenson

BreAnn Stephenson has started 1 posts and replied 90 times.

Post: What does General Liability cover and what is excluded?

Post: What does General Liability cover and what is excluded?

Post: Have you had any experience with National Real Estate Insurance Group (NREIG)/Affinity Group Management?

Post: What does General Liability cover and what is excluded?

Post: Have you had any experience with National Real Estate Insurance Group (NREIG)/Affinity Group Management?

Post: Have you had any experience with National Real Estate Insurance Group (NREIG)/Affinity Group Management?

Post: Freezing Winters in the Midwest cities and Plumbing Concerns

Post: Freezing Winters in the Midwest cities and Plumbing Concerns

Post: Insurance company harassing me

Post: Insurance company harassing me