All Forum Posts by: Tim Norris

Hi All,

Though I typically would stay out these type conversations, I feel it appropriate that I at least address some of the issues being raised in this thread. Therefore, in no necessary order:

1. Regarding the usage of "master or group" policies, there are a quite a few brokers, programs, and coverage providers that utilize this method to garner coverage for real estate investment locations. Though not typical (as compared to contacting a local agency, for instance), this option has gained notable momentum in this last decade or so. Bill's allusion to "illegality" may be based upon the health insurance industry and his correct reference to the negative issues forming of a group for the sole purpose of purchasing insurance in such a manner. Considering our 14 year-old Program is underwritten by and vetted by insurers such as Lloyd's of London, Allianz, Scottsdale, and Berkshire-Hathaway among others (all AM Best "A-Excellent" or better rated), understand that what and how we do things is certainly "legitimate" and "legal".

2. Nathan, though I/we are happy to expand "offline", any mistakes made to your monthly reporting inventory on our side, definitely need addressed. That stated, one of the benefits of such a "reporting form" is the ability to change occupancy status, coverage, and locations on a monthly basis. So, assuming a client is checking their inventory, catching and correcting such errors is simple. Not an excuse for us making them, by the way!

3. As for our "no inspection" policy, which applies to most locations, we consider this a benefit only as it relates to an ease of doing business. (By the way, certain type properties require inspections by our underwriting companies---such as values over $500,000). This stated, our strategy behind this is based upon a couple factors:

A. The cost to inspect is significant, especially when factored into the assessment of the typical location we insure. In other words, at $100-250 per inspection (varies by market, of course), engaging in an inspection requirement would require us to charge higher costs. Our average monthly cost across all states and all occupancy phases is about $60/month. Considering the minimal benefit of most inspection results from a loss prevention correlation perspective, we decided to fore-go them predominantly.

B. Our attitude is that our target/typical client remedies any risk that such inspection results discover, anyway, requiring the inspection is "redundant" in a sense. (Think loose handrails, and other usual inspection result issues).

C. We utilize other "underwriting" strategies that are more effective, in our opinion and experience.

Bear in mind, our coverages we offer via the carriers I have referenced are all "ISO-based"...ISO is Insurance Services Office, sort of a de facto "stanardizer" of policy forms, etc...most insurers utilize ISO.

Frankly, it's really the "how" that makes us a bit different: Reporting form, aggregating multiple locations in varying occupancy phases, for locations in different states, with pretty competitive costs. Additionally, our usage of more "realistic" evaluation methodologies for Replacement Cost and Actual Cash Value coverages with no co-insurance requirement is another differentiator that sets us a bit apart. Along with understanding the numerous RE investing acquisition strategize and models makes us a good choice for about 4400 investors with about 33,000 units today. Not a pitch, mind you, just understand that we are obligated to many, many clients and take that obligation very seriously.

I know I haven't likely covered everything noted in this thread or our Program, but I am happy to talk with any/all of you offline to further address any concerns or questions you may have.

Happy Holidays!

Best regards,

Tim

My 2 cents (re-post):

It is really not an issue of either/or, as an umbrella (or liability coverage "in general") and an LLC are/could be created for different reasons. Think of the LLC and other work you may do with legal and financial advisers (such as attorneys and accountants) as your "castle walls and moat" around your assets, personal and otherwise. Think of the insurance you secure as an "archer in the watchtower". In other words, the walls and moat should be your foundation as it pertains to protecting you/your assets. The archer (insurance) won't pick off every bad guy that tries to get in, so having the walls and moat is vital. Think of them working together not in lieu of each other. Hopefully this helps!

Re-post, but I think relevant here:

It is really not an issue of either/or, as an umbrella (or liability coverage "in general") and an LLC are/could be created for different reasons. Think of the LLC and other work you may do with legal and financial advisers (such as attorneys and accountants) as your "castle walls and moat" around your assets, personal and otherwise. Think of the insurance you secure as an "archer in the watchtower". In other words, the walls and moat should be your foundation as it pertains to protecting you/your assets. The archer (insurance) won't pick off every bad guy that tries to get in, so having the walls and moat is vital. Think of them working together not in lieu of each other. Hopefully this helps!

Hi Shawn/all,

The $1,000,000 is likely per occurrence, and the $2,000,000 aggregate (per policy year)...FYI. Hope that helps.

Tim

Anything is better than nothing, that's for sure!

Hey Ryan---welcome aboard...most insurance companies that offer owner-occupied homeowner's policies should oblige for you. Just ensure you require (and enforce) that your tenant carry renters insurance!

Tim

A little late to the game, sorry. For those who don't consider requiring the tenant to carry it, the renters insurance also provides liability insurance for your tenant...very important and potentially beneficial to you as the owner, as 60% of property claims are caused by tenant negligence...

Renters insurance also provides liability insurance for you tenant...very important and potentially beneficial to you as the owner, as 60% of property claims are caused by tenant negligence...

Self-insure as much as you can, especially on the "property-side" of things...Liability is a different story, though...tougher to self-insure such an unknown risk...

Coverage at RC (Replacement Cost---gives you the ability to recoup the initial depreciation that is levied against the settlement by simply completing the repairs) that waives any co-insurance requirement may be the best of both/all options, too. There are carriers/Programs that offer this, but not all agents have access to them.