Is Anyone Tired of INCREASED Insurance Premiums and cancelled their policies?

Question

Hello BPer's:Anyone else out there tired of the annual insurance premiums increasing year after year, even with no claims ever? My rates jumped 25% on all my properties in just 1 year all with no claims! I have Erie Insurance on my properties and have never ever filed a claim. So, it begs the question: Would you cancel your policy and go without insurance? Even if each one of your properties were held in a separate LLC? I am contemplating this and wondered if this is a good idea? The money I would be saving could be used to defend any lawsuits that "may" come my way. I've never been sued, but do understand that its not a matter of if, its a matter of when. Could save me over 15K per year. Thoughts??

Derek Lacy · Answer

You cannot get an "umbrella" policy without underlying coverage. If you did, by definition it would not be an "umbrella" policy. An umbrella policy is an excess liability policy, meaning that there must be a primary policy. With that being said, umbrella is the most misused moniker for a policy. Insurance people have a very specific meaning for that word, most insureds do not. You can certainly buy a $10,000,000 General Liability policy to go over 1-10,000 single family dwellings and never touch an umbrella policy, but 9 out of 10 investors will call that an umbrella policy. To the same, "Self-Insured" is being misused above. That is more correctly defined as "uninsured." People like to misuse self insured for uninsured because one sounds better, but self insured means there is an insurance captive (self owned insurance company) somewhere out there, to be fully self-insured. You cannot prove work comp to a state regulator by just not having it, there is a formal process to self-insured.Lastly, to the original poster@Jim Carson , living in Indianapolis, and knowing a lot about insurance, repeat this mantra when thinking about insurance. Indiana is a high risk insurance state. With the new weather patterns (think hail storm every year, high winds every other month, etc), we are no longer low risk with whatever is changing. So premiums are going up. There are three ways to deal with it. Grin and bear the increases. Increase retention (meaning up your deductible), but also look at things like putting on hail proof roofing, etc, or go uninsured and maybe increase loss control as well. My suggestion is call an actual independent insurance agent and see what can be done. With a clean claim record they will have an insurer that can do better than Erie.

Derek Lacy · Answer

Absolutely not, all locations must be listed for coverage to apply. Yes you can set any level. The sky is the limit.

Jim C. · Answer

@Derek Lacy : Thanks again for all the info! Is it ok if I call you to discuss further?

Jim C. · Answer

@Derek Lacy : Thanks for the Info! Is the general liability policy a set price no matter how many properties are under it? I assume that you can state the amount of liability like 1M, 2M, 3M, etc?

Jason A. · Answer

@Jim Carson Quite true. This was a while ago, back in my days of careless youth. I do handle things differently nowadays.

Derek Lacy · Answer

You can certainly purchase a general liability policy. Here is a article for what a GL policy covers by the SBA. Your discrimination claim probably falls outside (depending on the full circumstances), but it may fall under the personal injury definition. I don't want to give the false impression to anyone that a GL policy would always cover a Fair Housing issue. I've seen when it does apply to GL or when it does not. It's always the circumstances surrounding the issue.The simple answer is this. GL covers the bodily injury or property damage you (as in the owner of the property) are found legally liable for towards a third party which is not your agent, employee or contractor. If personal injury is added it also picks up some tort like issues. Here is a great article on personal injury. It is usually included in a commercial general liability policy, but for personal insurance, it is an option to have it on there. I personally always recommend this coverage especially for property investors.http://www.irmi.com/expert/articles/2007/stanovich01.aspx

Jim C. · Answer

@Jason A. : Thanks for the clarification. Your setup would probably work for a few properties, but once you get over 5 or so, I would suggest additional asset protection strategies (Such as LLC, etc). With your current structure, you are exposing everything (personal and rentals) in event of a lawsuit. Just my $.02

Jason A. · Answer

@Derek Lacy - Yes (to both questions), that was it exactly. @Jim Carson - Yes, in this case everything was in my own name, not as an LLC.

Jim C. · Answer

@Derek Lacy : So If I understand you, I can just get Business Liability Policy? What would that cover? Slip and Falls? Discrimination Lawsuits? Just wondering what this would include?

Jim C. · Answer

@Jason A. - I just re-read your post and you said that your umbrella policy is part of your Homeowners. I would assume that your properties are held in your name and not a legal entity (LLC, Corp, etc). If they are, I believe your insurance could deny any claims since you aren't the 'legal owner' of those properties. At least that what my agent informed me as I wanted to do the same umbrella for me individually but he said wouldn't cover any liability claims on the properties since they were in an entity (LLC) and wouldn't be covered.