All Forum Posts by: Andrew Wicklow

@Joseph Feldman

Great point. As agents we deal with this every day when it comes to investment properties.

Insurance is not simply “insurance”. Every company and policy is different.

Andrew

@Andrew West

A lot may also depend on if you have a lender. They usually dictate what type of coverage you are required to have. (RC vs ACV).

Also don’t get confused between replacement cost and market value. Very different and very often misunderstood.

If you have any further questions, let me know.

Andrew

@Steven Frey

You’re exactly correct. Policies are usually priced by the insurance companies for a certain deductible and if you change the deductible either up or down there isn’t really the bang for your buck you may be expecting. It’s not a linear. Especially if the portfolio is not that large at this point.

I usually recommend 1k for houses and 2500 for apartment buildings and 5k or higher for apartment complexes.

Let me know if you have any other questions,

Andrew

@Brett Sorenson

The lender usually dictates which type

Of coverage you are allowed to have. i.e. replacement cost vs cash value. They want their asset protected and usually require replacement cost.

On the flip side the insurance company doesn’t care if you have a mortgage or whether you own it free and clear or if your grandmother gave it to you. They are not an investment hedge. They are simply there to repair what was lost should you have a claim. They are also a for profit enterprise and make more money if they charge you for replacement cost vs actual cash value.

The reality is you are way more likely to have a partial loss than a total loss. And the lender doesn’t want to guess whether you have the money to fix any possible loss at that exact moment. So they require replacement cost.

There are many many insurance carriers out there who will insure this property. Some are better at it from a pricing perspective than others. Best thing to do is shop around.

Happy to answer any other questions you or anyone else may have.

Andrew Wicklow

@Jon Whiten

Best thing to do is to call an independent broker who specializes in commercial insurance (ideally also one that specializes in investment properties). There are many many companies out there who can insure a 5 unit building.

Let me know if you have any other questions,

Andrew

@Pavel Quinane

You can buy builders risk insurance in order to upgrade the electric and any other repairs you are considering. This will not only satisfy the lender but is actually the correct coverage for a repair of this magnitude. Plus you can do the upgrade and not the sellers. The caveat is the house will need to be vacant during the construction period, which it may be anyway considering it is the electrical service.

Let me know if you have any other questions. I’d be happy to point you in the correct direction.

Andrew

@Johann Jells

I suspect they would cover “legal non-conforming” but probably not a blatant zoning violation for a coverage A ordinance situation.

Andrew

@Eugenia Koo

The short answer is yes. But the long answer is that you need to have a coverage called ordinance or law. Specifically coverage A of ordinance or law. That covers an undamaged portion of a building that requires a code upgrade. So for example if a fire happens somewhere in the building other than the non conforming units and the city doesn’t allow the nonconforming unit to exist any longer because of its nonconforming status, this coverage would handle a situation like that.

Let me know if you have other questions or this needs more clarification.

Andrew

@Johann Jells

If they are all titled in the same name, then there is always a risk that they could get looped in together. The true only way to limit your exposure is the have every single location titled differently with the correct primary liability limit and then the corresponding umbrella policy going right on top of that policy.

This could get tedious and costly but many find it worth it and also the cost of doing business. Many also go the other direction and bundle them all together.

The reality is that while

Liability claims (lawsuits) do happen. They happen a lot less than you may think when compared to say a fire happening at a property. The best way to keep a liability claim at bay is by providing clean and safe housing that focuses on not being negligent in repairs or deferred maintenance (specifically where people walk or go up and down stairs as trips and falls I would bet are the most common). Although even that is not foolproof.

Let me know if this needs further clarification.

@Johann Jells

Your confusing terms.

What you want is a “Master” policy. This puts all your properties on one policy. All will have their own separate limits and other various coverages but they will all be on one policy that will start and stop on the same date.

An umbrella policy is only liability coverage. So it will take your existing liability limit (say 1MM) to whatever limit you want to pay for, say 5mm. Essentially all that means is now you have 6mm for a lawsuit someone may file against you vs the initial million.

If this needs further explanation, let me know.

Andrew