All Forum Posts by: John Mocker

Ganesh,

In trying to determine what coverage for a rented condo you need to remember that the Association will insure parts of the building but you as owner, have to insure parts also.  The most important document for this is the By-laws.  Specifically, the part that describes your unit in terms of where it begins (ie. does it start at the bare walls or the studs, does it include the windows, doors, etc.) and who insures the limited common elements (common elements such as pipes, wires, ducts, etc. that pass though just one unit or several but not all).  The other thing to look for or ask about is who needs to insured the fixtures, cabinets, built in appliances.   On a condo unit owners policy that coverage can be called Improvents & Betterments or Additions & Alterations or Building coverage.  Your state laws may impact what the condo association must cover and that may change what you find out above.

Some other coverage you may need:

- contents:  for the non-permanent appliances, and other property that you provide with the rental

- Loss or Rents:  Make sure you have enough coverage for 12 mos. rental

- Loss Assessment:  Covers assessments made by Assocation to the Unit owner but only for things that are normally covered under your policy (ie. Liability loss that exceeds the associations limit, building loss that exceeds the coverage, etc.)

Lastly, you need to have Liability and medical payments.  I recommend getting the maximum that the policy will provide (for most companies that is $500,000).  You should strongly consider an Umbrella policy which would provide additional liability coverage in increments of $1,000,000.

Jorge,

Actual Cash Value (ACV) and Replacement Cost (RC) are the primary ways Insurance Policies value the coverage on Buildings.   RC is the cost to rebuild with the same kind & quality (subject to exclusions, policy terms, and the Limit).  The best way to calculate it is to get a builder(s) to estimate the rebuilding costs.  The Insurance companies have estimating programs they use to determine what they consider to the be the RC.  If you are relying on just the companies estimate, see if the policy allows for "Guaranteed Replacment Cost" or a 125% or 150% option incase the RC is more than the policy limit.

ACV is the Replacement Cost minus the Depreciation.  An estimate of the that value is the selling price of the property minus the value of the land.  That is not exact and will change as you make improvements.  Sometimes the Bank Appraisal or Tax Assessors card with also have estimates for the ACV.

If you are purchasing an older home or one that is not conforming to the current zoning laws (ie. too close to the road or neighbors, not enough parking, etc..) you should check with the town's zoning dept to see if you will have to rebuild differently if it is a partial loss and if it is a total loss.   If you will need to build differently, you should purchase Building Ordinance and Law coverage.  That allows you to purchase the additional limits needed to rebuild to the higher standard.

Jorge,

If you are an investor with multiple properties I suggest you look for an independent Insurance Agent that represents multiple properties.  I've found in our area that the same company that is competitive in one area/town is not in one a short distance away.  Also, different companies can be competitive on 1 families or two families but not 3 or 4 family.  Over 4 families you need to look for an agent that works with multiple companies that insure Apartments.

Two companies that do a lot of Dwelling/Fire Policies for 1-4 family rentals are:

   American Modern Home

  Foremost Insurance

They may or may not be competitive in your area but looking up their agents in your area may lead you to some agents who have multiple companies and know the residential market.

Another company that you may want to seek agents for is PersonalUmbrella.com. They do Umbrella policies and can handle certian LLC's and up to 40 units total. In case your company can not cover over all the rental properties you may want to compare them

Taylor,

The question of actual Liability for allowing a Tenant to have dog or other pet should be referred to a lawyer familiar with Landlord Tenant relation.   They can advise better what legal precautions to take. 

From an Insurance perspective, the first thing to do is to find out how your Insurance carrier will treat it.  Most of our companies, have a list of prohibited dog breeds that will cause them to cancel or not write you if they are present.  The same will apply to other types of dangerous animals or farm animals, horses, etc.  Each company has their own list and it may differ state to state depending on state law. 

If the breed is acceptable and you chose to allow pets, your lease should require them to purchase renters insurance, require that they make any roommates get the coverage, and also include language in the lease suggested by your attorney requiring them to indemnify you and hold you harmless, etc.

I would suggest looking up the posts on "Therapy Animals".  Its a dodge that some tenants are using to force you to accept their animals so you know what to do if presented with that situation.

Andrew,

It sounds like you do not have an agent for the First carrier.   The question you have is a simple one and should be easily answered by that company.  You may have to ask for a supervisor.  I would ask for the answer in writing. 

As Nicole mentioned, some do and some don't cover over policies issued by a different company.   We have about 30 markets and varies greatly.  I have some companies that will write the umbrella if they cover the auto, others will only write it if they cover the home, and still others will not write it unless they cover all the policies (auto, home, dwelling, etc.)

If you can not cover both locations on the same umbrella with Carrier 1 or Carrier 2, there are still options for you.  There are stand alone Umbrella markets that will cover over both the home and the rental policy.  PM me if you have to go that direction and I will let you know who we use.

Thomas,

If a commercial policy proves too costly vs. the separate policies for each unit, another way to simplify the Insurance would be to make all the dates match.  That allows you to deal with the renewal process once a year.  Another benefit is you may be able to finance all three policies and thereby simplify your billing process.  The companies who finance the Insurance policies can combine the billing for multiple policies in different companies.  There is a Finance charge but with the current low interest rates it probably will not be too much more than what the Insurance companies would charge for installments on each individual policy.

Kurt,

We represent many companies for personal Insurance.  Not many will insure multiple buildings on the same property.  I have a homeowners policy that has two houses.   We had to do a dwelling fire policy on the extra house.   I did not insure Liability on that dwelling fire policy.  Rather, we were able to extend the Liability from the homeowners policy to cover that house as well.  My experience with that leads me to two cautions:

1. Get in writing from the agent that state farm knows that it is insuring 6 units on one property.  In case the agent has not cleared it with State Farm it will help you in suing him/her later if State Farm denies coverage.   If they have cleared it with State Farm, the letter or email should not be a big issue.

2. Do not have more than one company on the Liability.  If later some other company offers a better price to insure one of the units don't move the coverage until you know how the policies will handle the liability (suppose someone falls on the property and sues you, which company responds?.)

I would check with Independent agents that represent multiple companies and that write both Commercial and Personal policies in your area.  That may point out other areas of concern with how to insure this property

Jeremy,

A few words of Caution, the Forced Place coverage is by the Mortgage Company and for the Mortgage company.  They may not cover more than their interest in the property.  There is no standard so I can't tell you if your interest is covered for Liability.   Do they cover your contents and your loss of use of the property?   I would continue to search for coverage from every possible market.  Even if you have to pay more than the cost of the Forced Placed coverage you may need to do that to cover the risks properly. 

Susan,

I'm not sure on the rates out there.   I agree with your concern that $500,000 limits may not be adequate.   If you are unable to purchase higher limits on any of the properties you should look into an Umbrella policy.   Many companies have restrictrions on what they will accept.  Some will not insure more than a certain number of units or locations, others will only do an umbrella if they write all the underlying policies, and most have minimum limits of Liability on the underlying home, auto & dwelling policies.  If your agent has a problem with the umbrella suggest that they look at PersonalUmbrella.com.  It is a program I use when I can't place the umbrella with our standard markets.

Jim,

The temptation is to just turn over the proceeds of the Insurance and trust the contractor to do all the necessary work.  If it was my property, I would ask the contractor for a detailed estimate with all the work to be done and the final cost.  Then draw up a contract that spells out what is to be done, what the cost is, what the requirements are, etc.   If you are requiring the work to be done in a specified time frame you should spell out the penalties if not completed.   If this is a big job, you should discuss with your agent and/or attorney whether or not a Bond would be appropriate.   You should get proof of Liability, Business Auto, & Workers Comp. from the contractor before they start the job.   You may also want to require that they add you as an additional insured to their policy with 30 day notice of cancellation.  Further, a requirement in the contract that any subcontractors have to meet the same requirements may be a good idea.  Lastly, discuss with your attorney any other things you should build in to the contract (that they hold you harmless and indemnify you, that their insurance is primary and non-contributory, that they waive subrogation against you, etc..).  Some of these things I've mentioned may not be applicable or advisable but a good attorney should be able to advise you.  The contractor may not like it that you are requiring things but you need to protect yourself.  

** thought of one other thing.   Compare the Contactors quote against the Adjusters report on what damage they are paying for to make sure everything is getting done.   If the Adjuster did not give you a detailed report ask your agent for help in getting it.