All Forum Posts by: Kevin Romines

Sorry for the confusion, I need to clear the misconception regarding my earlier comments.

Farmers will allow 20 policies / units, total on personal lines. When Farmers looks at a 4 unit / 4-plex, they count the total number of units, that being 4. So if you had 5 4-plex's then you would then be maxed out with 20 units.

So you couldn't have 20, 4 -plex's as that would be 80 units, far beyond the 20 unit limit.

Now if you do have more units that 20, you can use Foremost which has no limit on the numbers of policies you can have. However you would only have 1 umbrella covering 20 units on personal lines to back it up as the umbrella is through Farmers.

As @Michael Boyer has mentioned above, some companies cap you at 4 some at 10? I checked with both the personal lines underwriters and the umbrella dept. with my company and the personal lines limit is 20 properties 1-4 units. By properties, I mean doors, so a 4 unit counts as 4 of the 20 properties allowed.

Farmers also owns Foremost. Foremost has no limit on the numbers of personal lines policies and like Farmers can do them even if they are held in an entity such as an LLC. Something to keep in the back of your mind for future ref.

Our recommendation is to require all tenants to have a renters policy with the landlord listed as an additional insured and a certificate holder. As an additional insured the landlord is insured just as the tenant is insured. So in the event of an outside liability claim, the renters policy must defend all insured's the same. As a certificate holder, you are notified if for any reason the policy is about to or does lapse.

Can you build the policy into the cost of rents? I confirmed with my company that you indeed can do this, but the policy would have to be named with the tenant as the insured and they would have to sign the policy application. The billing could be sent to the landlord. It doesn't matter where the monthly / yearly payment for the policy comes from? 

Does it give you an added layer of protection? Yes, for those areas that would be covered under the renters policy, so it potentially saves a claim against your policy. Claims follow the insured in their name as well as the property.

I'm sorry to hear of your claims experience with Farmers @Alex J. I'm actually surprised to hear of your experience because all claims adjusters I have worked with have always went above and beyond to find ways to pay claims where we can. However that said, there are coverage limitations and if a person's claim bumps into those limits, then a claim may not be paid.

If a claim is paid and you disagree with the amount paid, you can take it up with the adjustor and the agent. Provide your documentation that would support why you feel it should paid out at a higher level and go from there. If you still disagree, you can always take the matter to the states insurance commissioner and they can help resolve disputes, although the vast majority of claims never get anywhere near this point?

Although @Derek Lacy has some valid points with some policies that are out there. There are some companies that offer specifically a vacation / short term rental policy designed specifically for this.

Because they are designed for this coverage, they don't have an exclusion for business pursuits as it relates to a vacation rental. I'm not sure what other liability a person would have with a vacation rental if it wasn't on premises? Loss of rents limitation is a max. of 35% of the dwelling coverage which should be sufficient. I don't see where the host liquor liability coverage would come into play as the owner of the unit wont be providing liquor? If the unit owner was concerned about liability from that type of situation created by the person renting it, they could request to be listed as an additional insured on the persons home policy or renters policy. We have done that for our clients in the past.

Foremost is the company that I'm speaking about above that offers this policy. As with all policies, its up to you to read specifically what the policy covers and decide if this is the right policy for you based on your unique situation.

Foremost will do a rehab policy under their vacant policy. You must tell the agent what your plans and timeline are for the rehab, they must go get pictures and get it approved, but once approved your off to the races. Foremost is mostly concerned about the shell of the building, so you have to get any exterior work done 1st. They are not as concerned about the interior of the home.

I like them best because unlike a builders risk policy, you can get liability and theft coverage, neither one of which will you ever get on a builders risk policy. Think about how many people will be coming on and off the property, can you afford to not have liability. Also the house is vacant during the rehab, so it ripe for the picking for someone to come in and steal all the copper and other valuable parts of the home, not to mention tools and supplies.

The part I like the most is that they have a minimum earned premium of $250.00 so if the rehab is done in a short period of time, the most you would be into that policy before you sell it or switched to a landlord policy is the $250.00 I have written in the past, builders risk policy's that are fully earned premium, so maybe a $1200-1500 premium and no matter how long your on that policy, you will never get a refund?

Commercial insurance has general liability as well as completed products and operations. To give you an example of completed products and operations - Lets say your a cabinet builder and installer. You build and install the cabinets of a home. 2 months later that cabinet falls off the wall, hits someone on the head and causes damage and medical expenses. This would be covered under completed products and operations. It could be covered under general liability, but that's up to each insurance carriers claims dept.

If you are in the business of flipping properties, you need a BOP business owners policy, this protects the business, and then you should insure the properties either on personal lines policies or commercial policies. The BOP policy is separate from the home policies. I like to set up the BOP which is a commercial policy and then insure the homes on a personal lines policy followed by an umbrella even if in the entities name. There are some limitations in that with our company, we can only do a max. of 20 properties on personal lines. The primary insured must be an individual with the entity listed as secondary insured, and additional insured on the home policy and the umbrella. Most companies don't do things this way, but Farmers does.

As far as multiple entities, unless you have a company like ours (not the industry norm) that allows an entity owned property to be insured on personal lines, then yes you may need individual commercial policies to go along with each entity that holds property?

I think you got some bad advice.

If you have an entity in any state, so long as its in good standing, you wont have any problem. Keep in mind that insurance is 1st about an insurable interest. If the entity is the owner of the property, then they have an insurable interest, therefore they can insure the property. Insurance companies don't get involved in even checking to see if your entity is still a valid entity, but at claim time that could come up, so make sure your entity remains in good standing. Other than that, buy property in any state you want, no issues!!!

Oh and if you don't know who will insure a property on personal lines policies while owned by an entity, look no further than Farmers and Foremost, both will do it at great rates.

Most insurance companies I work for or with do not have any requirements for continuous insurance on a home. The only times I have that issue is on auto and commercial policies? Ask around, I cant believe my company would be unique in this area?

I have written both builders risk and vacant properties. I have went away from the builders risk policies due to the fact that you don't get any liability coverage, no theft coverage and they are fully earned premium, meaning no refund if you cancel before the end of the policy.

I switched a long time ago to writing Foremost vacant policies because you get liability and theft coverage, and they have a minimum earned premium of $250.00. The fact that the minimum earned premium at $250 works well for my rehabbers, as they set them up on monthly payments and then switch them to standard landlord policies after the rehab and once rented.

On rehabs, Foremost is primarily concerned with the shell of the home being secured. So if there is exterior work that needs to be done, discuss this with the agent, have them get that approved along with the time line through underwriting and then make sure the exterior work is done in a timely manner. Foremost generally isn't as concerned with the interior of the home.