All Forum Posts by: Tim Norris

The affect on your coverage (filing the claim) is dependent upon the carrier, the type of policy, and other factors. So, the best place to find out is your Agent or insurer. Most homeowner policies would cover the power surge you describe, subject to your deductible, of course. Again, your Agent or insurer should guide you through this.

Some do and some don't, but worth asking the agent/carrier prior to making the inquiry...

The amount of liability coverage you carry is very dependent upon how much you have at risk. Also, a big plus is enforcing tenants to carry renters insurance. The exposures a tenant creates are just as glaring as those you have as the property owner. Remember also that liability coverage is a part of an asset protection strategy, but not the sole means. Think of the liability coverage working symbiotically with the entity or entities you create. In other words, the work your attorney does is your "castle walls and moat". The insurance is the "archer in the watchtower". Sort of a corny analogy, but should help understand that just buying additional liability insurance may not be the panacea...

Jack is correct, always good to check with you Agent or insurer. That stated, with most insurers, filed claims affect either your eligibility and/or your pricing.

From threads suggested:

Which option you take should be based upon your strategy for the individual property. Replacement Cost (RC) coverage allows you to recoup the depreciation that is initially levied against the claim settlement. Actual Cash Value (ACV) coverage does not. However, most of us in RE do not pay "retail" for labor/materials. Accordingly, many times the initial settlement, with depreciation levied) is still enough to repair damages. "Reconstruction Cost" is not Replacement Cost. It should indicate the value it would take to rebuild the property in the event of a catastrophic/large loss. If your strategy in the event of such a scenario is to pay off whatever debt may exist, then raze and sell the lot, then an insured value that is of "reconstruction cost" may be costing you too much premium. In other words, if you ultimately would repair partial losses, but sell in a "total" loss (after garnering the insurance benefit), then "over-insuring" doesn't make much sense. You should really address this issue at the "business model level", so you don't end up giving the insurance company more than the need to cover what you really have at risk. Keep in mind, the co-insurance requirement may hold you to certain levels of insured value, whether you like it or not (with many/most insurers). As such, we use the policies without such "co-insurance requirements" when applicable.

Coinsurance is imposed on the insured by the insurance carrier for under reporting/declaring/insuring the value of the property. The penalty is based on a percentage stated within the policy and the amount under reported. As an example (assuming policy is written on a Replacement Cost basis, also):

The reconstruction value of the property (as determined by the insurer) is: $250,000
The Coinsurance percentage requirement is: 80 %
The Limit of Insurance for the home is: $ 100,000
The Deductible is: $3,000
The amount of loss is: $40,000

Step (1): $250,000 x 80% = $200,000
(The minimum amount of insurance to meet your insurance requirements - assuming the policy required 80% co-insurance)
Step (2): $100,000 ÷ $200,000 = .50
Step (3): $40,000 x .50 = $20,000
Step (4): $20,000 - $3,000 = $17,000

The insurance company will pay no more than $17,000.

The most commonly issued coinsurance percentage is 80%. For this reason, with "traditional" companies, like State Farm, it is vital that values of property are accurately reported and updated annually to reflect inflation and other increases in cost.

Though I concur with many of the statements here, "student housing" has been a very tough class for investors to insure for a very long time. By no means am I defending the insurance industry, but it is a higher exposure to both property and liability. (In general, of course, as indicated in this thread, there is no clear definition of "student"). All that stated, if you are in a college town and renting a "4 unit" with 12 leases, you will likely have a tough time insuring it in a standard market. However, renting a SFH in the same town to a grad student and their spouse should be much less difficult...

I agree with Sharon. It is standard for them to request to be named as an AI. That stated, may be worth asking for them to name you as the owner as AI on their policy! This also ferrets out whether they have insurance or not...right? : )

Most carriers treat the multiple LLCs as the separate entities they technically are. This typically causes them to require a policy for each and does expose the locations to a deductible per policy in wind/hail claims. SOme Programs combine even the multiple owners on one inventory, though...

The issue with Houston is, of course, the Hurricane/Named Storm exposure. Though not considered "Tier 1" by the insurance industry, it's still a challenge for many providers. Many folks, especially north are opting to not cover the "Named Storm" due to costs. Unfortunately, when using OPM, this may not be an option...

I agree with Bill: There are just too many variables to address the insurance issue with a panacea. I've heard "all sides", and typically retreat to where Bill did---let a versed legal advisor dictate the appropriate methodology. Wish I had more on this, but it's a tough one to handle with a general approach.