All Forum Posts by: Aaron Porter

Document everything, and keep as detailed of notes as possible with a timeline.  

If the adjuster says the carrier is going to deny coverage based on the lack of heat you may have to get an attorney to start the litigation process.  

Sometimes a public adjuster can be extremely beneficial to help a claim move forward in the direction that a property owner hopes for.  

There may be some issues where there was a few days of gap where the property had no insurance as once the sale is processed the old owners' insurance is no longer valid.  So your carrier may try and push the liability off to the old insurer or say that the damage happened during the gap of time when there was no insurance.  

keep in constant contact with your adjuster, the more that you bug them, usually they are more likely to process the claim to your satisfaction.  

and again document everything

@Joshua Land Your tenant lease is probably the most important documents for a landlord to have, and maintain.   

@Stephen Dispensa gave a pretty great list.  

a few more things to consider would be:

-update your insurance and inform your agent that you will be renting.  

-require your tenant to get and keep renter's insurance (this covers some liability and the tenants personal property inside of the property)

-decide if you can rent the full basement, if she will treat the basement as a seperate house from her own but still rent by the room,  or if it is going to be a house hack and just renting by the room?

-make sure that you can legally have a renter in your basement (city planners office).  We don't know your exact situation or the specifics of your property, so it is hard to give a blanket statement as to all the steps you need to take.  

@Kenny Tran There is lots of conversation here on BP around having LLC, S-corps, Land Trusts or keeping things in your personal name. One great resource here on BP is this blog https://www.biggerpockets.com/...  

There are also some attorneys here on BP like @Jason Marino who deal exclusively with asset protection and how to properly structure everything.  

From many other investors opinions the best thing is "don't be a crappy landlord, and don't be underinsured"  The best mitigation of risk is going to be you, being responsive, communicative, and proactive in how you deal with your properties and your tenants.  

An umbrella policy is not a catch all and it doesn't work by itself.  You still have to have your underlying homeowners, auto, landlord, or business policies.  Those policies come into play 1st and then an umbrella will kick in if needed to pay out any costs that exceed the limits of your "base" policies.  

Feel free to reach out if you have more insurance questions I would love to help.

This is the thought you should be having.  Is the $300/year worth protecting the $200,000 possible loss?  because that is exactly what it is.  a loss if your property burns down and you walk away from it with the "depreciated cash value" you still own the lot which you are required by law to clean up after a fire or flood, and then you can sell the lot.  you are still loosing that $200,000 in appreciated value.  for the extra $300/year you could rebuild the home and sell it for a net gain of at least the $200K as the brand new home is going to be worth at least what it cost to rebuild.  
Replacement Cost Value insurance is more expensive than Actual Cash Value insurance but your claims processes are easier, you have less fights over the value of things such as a roof, and you are protecting your investment which means you are protecting the inflation and appreciation that real estate enjoys. 

@Kenneth LaVoie State Farm has great products, which they should as they are the largest insurance provider in the US.  But they have their shortcomings as well.  It would definitely be worth shopping your insurance portfolio around and seeing what an Independent Agency/ Broker can do.  
I strongly recommend my clients getting replacement cost insurance.  But I also understand that at the end of the day with property and auto insurance it comes down to what do you want to afford?  Do you want to save the money on your balance sheet?  Or do you want the better coverage?  

Definitely consider the tax and penalty implications to taking money from your annuity.  

If that is still the direction that you want to go, the easiest way forward is to work with the agent that helped you to purchase the annuity.  If that is a bad option, as so many agents come and go or sell things they don't know how to service,  you will need to get ahold of your provider and follow the steps that they outline for you.  

@Blake Rohrich  I have limited knowledge on the 1st part of your question, and would refer you to someone who is an "expert" in that field.  There are attorney's on BP like @Jason Marino or @Richard Bechtol who are extremely well versed in the world of LLC's and asset protection.
There are also tons of other threads right here on BP where other investors, agents, brokers, attorneys, and specialists discuss the pros and cons of LLC's, land trusts and other asset protection structures.  

For your question about an umbrella policy.  Umbrellas are a great way to solve a problem.  For most people that problem is they are wanting to increase their liability coverage over multiple "base policies" without having to increase the liability limit in each policy which can get expensive.  

Umbrella policies act as a extra buffer should your homeowners, landlord, or auto policy max out on the liability payout.  If that happens and you have an umbrella policy the umbrella then kicks in and adds additional payout up to what is needed.  Umbrellas are in most cases cheap ($275ish/year for $1,000,000 in umbrella coverage)

Be sure to communicate with your insurance agent.  If you choose to provide for your renters add-ons like bikes, surfboards, skateboards, snorkel gear, basketball in your backyard, pickleball courts, paddleboards, scooters, a pool, hot-tub or literally anything that can be seen as an added liability.  If you do any add-ons this can add extra liability.

Your insurance carrier does not want to pay for claims.  They are contractually obligated to pay but if the carrier can find a legal/contractual breach to not pay a submitted claim they will.  

Anyone who does not communicate what they are doing with their property essentially breaches their insurance contract which gives the insurance carrier the right to deny a claim.  

So make sure to communicate with your insurance agent, record the calls and make notes about the communication you have with your agent. Work with an agent who will go to the lengths that you need from them. Some carriers won't accept some add-on or some properties, so you may have to switch carriers to be able to cover yourself if you decide to rent bikes, or do whatever else as an add-on to your STR.

One strategy that could be implemented would be to create a type of "buy-sell agreement" where as part of the contract for seller finance the purchase of the property includes a term life policy that if the buyer dies will pay off the remaining balance of the "sellers financing mortgage".  and the remaining of the insurance payout goes to the family/estate of the "buyer".  

There can also be options for the life insurance policy where you can use a "return of premium" type policy that should you not die or make a claim against the policy and the policy comes to the end of the term you the owner of the policy get paid back up to 100% of the premium that was paid into the policy.

@Rahnesha White

Make sure that you are comparing apples to apples with your quotes.  There are definitely differences in cost from one carrier to others, sometimes higher, sometimes lower.  The main thing to watch is are the policies the same type of policy?  Are they both Actual Cash Value or Replacement Cash Value? are your deductibles the same, are the coverage limits the same, and are the quotes you are being given a proper representation of your property (age of home, condition of home, construction type, roof age and condition, plumbing and electrical age and condition, etc)

@Jon Fletcher  The short answer is. Maybe, maybe the claim will effect your premiums going forward.  Usually one property doesn't effect the others but insurance carriers are able to see your total portfolio, kind of, and they are able to see the claims history on any given property.  

So the underwriters are able to look through and see how many claims you the property owner has made on your properties, and how many claims have been made on the specific property whether it was owned by you or whomever before.  

However just because you have a claim that doesn't mean that your carrier is going to raise the premium rates on the property that had the claim or any of your other properties. 

This HUGE maybe is what gives huge importance for every investor to have a good relationship with a good insurance agent.