All Forum Posts by: Bo Bond

If the agent can't get you an actual quote, they should certainly be able to get you a non-binding indication.  However, if it's just a property that you're interested in and not one that you actually own or are in the process of owning, this may cause them some issues.  Some agents may run from this because you're asking them to quote something and work on something that you may never actually own or bind with them.  Others may have system or quoting requirements internally that keep them from being able to process your request.  

That said, if you have business on the books with an agent, then I'd have to believe that they should at least be able to get you an indication of some sort.  That's what I do when clients have similar requests.  I would think most agents could do this, but again, some may not have this flexibility internally or with their carriers.  I've also worked for agencies where it took quite a bit of time just to run number for someone or submit a quote request.  It certainly helps if you have current business with the agent you're requesting this from.  Hope this is useful for you.

It is common for insurance companies to inspect the properties that they insure.  Some are way more aggressive than others when it comes to these inspections and their recommendations or requirements.  Most of these carriers provide recommended maintenance and required maintenance.  Recommended you have the option to address the area of concern or not.  Required maintenance means you must address the area of concern within a certain timeframe or coverage "may" be canceled.  The required maintenance typically must be well documented (receipts & pictures), and then usually the carrier has an inspector come back out, review the areas of concern, and confirm that all work has been done.  They sign off on everything you've done, and you continue on down the road with that carrier.  If the carrier you're referring to hasn't given you this option, then that would be strange to say the least as most are willing to try and work things out with their client.  If you haven't called the carrier/inspector about this, then I'd suggest that if you like this carrier.  If not, then it may be time to find another carrier. 

As I'm sure you're aware, every carrier is different from the next.  There are some carriers who want your business today, but 3 or 4 years down the road it almost seems as if they're looing for a way to get off your account (with or without any claims issues).  Some carriers are known for getting in certain markets, holding those accounts for a certain period of time, and then pulling back from writing anything in that industry for the next few years.  Almost like a cycle they go through.  Most of the time this is because they've changed their underwriting guidelines or taste for a particular type of exposure.  While I don't believe carriers look to dump your account, I do believe that they can make it really hard for you to stick around.  That's likely what's happening here to you, or they have a legitimate concern with these exposures due to losses they've paid out in your area over the past few years.

The good new is that there are many carriers/agents that would love to quote/earn your business and keep it for years to come.  Good luck.  Hope this helps.

From an insurance point of view, that should be fine.  If you haven't done so already, be sure to have him get you a "current" copy of his certificate of insurance (COI).  The COI needs to have a recent run date listed on it (within the past week or two).  This confirms that the COI was processed recently, and that coverage is indeed in place.  Just remember, the COI is only good for the date that it was produced.  Just because you get a COI today with today's date on it doesn't mean that coverage is still in place and active 30 days from now.  Typical limits of liability for most contractors is $1MM/$2MM.  You may want to discuss in more detail if his limits are lower than this.  

From a liability point of view, you want to be as accommodating as possible while understanding what is and isn't required of you per the Americans w/ Disabilities Act as Greg Scott mentioned above.  The key word above being "reasonable".  If you have any major concerns at any time with regards to your liability, I'd suggest visiting with an attorney that's familiar with these ADA requirements.  

When you have less than a handful of rental properties, then just about any carrier/agent can help you with a quote (direct writer agent or independent agent).  That said, it's always better if you can find someone that understands landlord / real estate investor exposures specifically.  While insurance isn't too difficult to understand, locating an agent with specific industry knowledge, an understanding of common exposures, familiar with risk management techniques, and an eye for coverage details will be key to you getting exactly what you need and expect from your policy.

Frank, 

Beyond the coverage/policy feedback above, a basic understanding of the risk management process is another great tool for any investor.  You don't have to be an insurance or risk management guru to look for potential exposures (property or liability hazards), assess those risks, and make sound decisions about how to address them (eliminate them, fix them, avoid them, pass the exposure to an insurance carrier via a policy, etc.).  Documenting your efforts will be key.  When you do this, you start to reduce your potential for negligence.  

An example would be having an arborist look at all the large trees on your properties to ensure they're in good shape, not diseased, and well maintained (pruned back).  If high winds come and a large branch breaks and falls on a person (child), you're in a much better position if you can show that you've maintained the trees on a consistent basis, as opposed to doing nothing at all.  In this case, it may not even take an arborist.  It may be enough just to prune the trees prior to seasons where you might experience higher than normal windspeeds or heavy snowfall.

Many times a court will try to determine if you "acted in a reasonable and prudent manner when compared to others landlords under similar circumstances".  If the answer is yes, or that you went above and beyond what most prudent landlords might do, then you've just put yourself in a better position.  This doesn't mean you won't be sued, and doesn't mean things can't / won't ever go south for you, but certainly helps you when/if someone does try to come after you.  Hope this helps!

Swathi - With regards to insurance, request a copy of their COI (certificate of insurance).  If they have insurance, they'll have this on hand.  Look at the date in the top right of their COI.  It should show a recent date (last few days).  This lets you know when the COI was actually produced.  If the date is over 10 days old, I'd request an updated copy with a more current date.  

Once you have a current COI, then just look at the dates tied to their lines of insurance coverage (General Liability, Workers Comp, etc.).  It should have an inception date and an expiration date.  As long as the date you have them work is within those two dates, your good.  If the expiration date has already past, you need something showing active / updated dates.  Example:  11/1/20 - 11/1/21 is expired, but 12/1/20 - 12/1/21 would still be valid for a few more weeks.  Hope this helps.

Speak to your insurance agent about any potential liability issues.  You can do this, but there's so much to consider.  First, can you do this an be well protected from a liability point of view.  Second, (as someone mentioned above) can you do this without being a nuisance to your neighbors and abide by all local laws/codes.  Third, if this is something that may likely happen, consult an attorney that has some experience in this area.  I'm not sure what else you'd need to consider, but these items seem like they'd be on the top of the list.  Good luck!  

Qiang - Since it would be considered coastal (hurricane) territory by most carriers, premiums would really depend on what limit/value you'd need on the property, what deductibles you'd be comfortable with, and how many miles the property is from the coast.  With these details you should be able to get a ballpark figure from most agents.

Jeffrey - Do a search of local agents and have a few of them shop it out for you.  This gives you multiple options.  You could shop with direct writers (St. Farm, Allstate, Farmers, etc.) and with an independent agent (an agent that can shop multiple carrier options on your behalf).  If there are any agents in your area that tend to write this specific type of coverage for investors, then I'd certainly suggest you include them in the bidding process.  Two or three agents working on your behalf should be more than enough.  Getting started should be pretty easy when it comes to insurance, however, as your portfolio starts to grow you'll likely want to get with an agent that very well versed in this area of insurance and that has access to multiple products for investors.  

Great help above if you are able to get them to cease this operation through contract, local laws, or code enforcement, etc.

However, if for any reason you "can't" legally cease the daycare activity, but you can require them to have daycare-liability specific insurance, then make sure you or your LLC is listed on their policy as an additional insured. Being listed as a "certificate holder" is not the same as being added to their policy as an additional insured. Being an AI means that their liability policy would respond first in the event anything awful happened. I'd suggest at least $1MM/$2MM in liability limits. Depending on how litigious your area/state is, you may also require them to purchase an umbrella policy for excess limits of liability.

It's sad to say, but most death claims typically pay out around $1MM, but if a child is severely injured and will deal with certain trauma or issues for the rest of their life, that type of claim could jump into the multimillions simply because of the years of special care that child would need for the rest of their life.  This is not meant to scare you, but provide some reality on how scary this situation can be without proper insurance coverage and adequate limits.

If you are forced to go this route, get a copy of their "full" policy to ensure that there are no daycare specific exclusions.  From a risk management point of view, do everything you legally can to check in on the daycare, observe the facilities, keep the outside of the premises clear of hazards, etc.  Anything you can legally do to help ensure the inside and outside of the facility is in top shape, only lessens your liability/risks.  Sorry for this difficult situation.  I hope this helps.