All Forum Posts by: Bo Bond

Any more details about the unit/building?  

Many carriers (like most we work with) provide package policy options that require the investor to have 3+ rental properties before they'll look at the account.  Otherwise you may be best served going with another direct writer (Allstate, Farmers, Nationwide, etc.) or a independent insurance agency who can shop you multiple options all at once for this unit.  

Syeed, yes you should absolutely get liability coverage for this investment.  Anyone and everyone tied to that air b&b will be sued when something goes wrong.  As the owner of that building/home/unit, you'll be the first person they sue.

Greg, your are correct in that the carrier may likely consider this to be an issue of normal wear and tear, and decline the claim since wear and tear is a standard exclusion under most policies.  Yes, you could file a claim, but may just send you down a road of meetings, paperwork, reports, etc. only to be officially denied in the end.  Assuming this has all been repaired, you have to consider that now there's nothing for an insurance adjuster to review.  You might have pictures and some details, but nothing first hand for the adjuster to review.  In the end, if there's no real indication that a covered cause of loss caused the gas line to leak, then I'd just move on and chalk this up to an unfortunate maintenance issue.  

As for your second scenario, your neighbor paying you out of pocket or filing a liability claim under their own personal auto policy would be ideal so you aren't paying the price in any way.  It would be unethical to collect from your neighbor and then file a claim with your carrier for damages. I would never recommend you doing this for multiple reasons.  Carriers are also cracking down on issues like this and would consider this a type of insurance fraud.  Filing a claim when you don't need to would also trigger your claims history, and depending on your location and carrier may increase your rates.  

Mitch, you need a package policy that covers all your properties.  The policy should include coverage for each property, as well as liability for each location as well.  The product I'm most familiar with provides your requested property limit for each location, as well as a $1MM per occurrence / $2MM general aggregate limit for each separate location as well.  The product has a builders risk or rehab component built into it.  I'd suggest getting something along these lines for sure, and making sure the product can quickly and easily add and remove properties as you do your work.  This is even more important if you plan to work multiple fix-&-flips at a time.

Errors and Omissions is important to protect you when you fail to manage your LLC professionally. However, if you willfully neglect to do what's required by law, you likely won't find coverage under that policy.

You would certainly want protection for yourself if you are hurt and out of pocket for a number of weeks or months, but not sure what options you have outside of the standard health/medical insurance for yourself.  

However, when/if you hire a contractor to do your remodel work, I certainly suggest that you confirm that they have workers comp and general liability coverage in place, and with decent limits (most have at least $1MM in GL coverage). WC depends on their number of employees and state WC laws, but most states require WC coverage for employers with 3 or more employees. If the contractor's carrier will add your LLC as an additional insured during the course of their work, then that's even better. Please note that listing your LLC as a certificate holder is "NOT" the same as listing your LLC as an additional insured. If the contractor's carrier is willing to add your LLC as an additional insured, then that just better protects you if anything happens.

If the contractor is doing any significant structural work, or adding on to the existing home/building, then I'd certainly discuss them having their own builders risk policy due to the size and scope of the work they're doing.

Hope this helps sir!

From an insurance point of view, if the damage/issue was caused by a "covered cause of loss" (fire, water damage, lightning, sewer backup, wind, hail, etc.), then the tenant should have protection under their own renters policy to rent a hotel.  This is usually "not" covered under the owner/landlord policy for that rental home.  The "loss of use" (aka additional living expenses) coverage falls to the policy of the person who's having to move out and relocate for a certain amount of time.  In this case, your tenant.

However, if this damage/issue is "not" caused by a "covered cause of loss" and is just typical maintenance, then I'm 99.9% sure neither you nor the tenant will have insurance protection.  If this is the case, then I'd suggest you use your best business judgement in this situation, and any advice of others that have been involved in similar situations. Hope this helps!