All Forum Posts by: Bo Bond

@Margaret Feit - I'm not an attorney, but do have some experience with Proof of Loss statements.  This really depends on the carrier/adjuster on how they prefer to pay out on claims.  In my experience, as long as there's nothing on the POL about closing out the claim for good or no more payments to be made after signing this POL, then the claim should still remain open for any supplemental payments to be considered/paid.  Other POL's or supplemental payments can be made and signed off on besides just this one during the claim process.  

I recall working a sizable claim with a past client, and the carrier had them sign off on a very large POL, and then there were two more POL or supplemental payments that came after that.  However, the carrier finally put in writing on the last supplemental POL that this was their last and final payment to be made on this claim and that nothing else would be paid out.  If you don't have anything like that on this POL, then you should be okay moving forward.  When in doubt, have your claims adjuster confirm in writing (via email) that signing off on this POL does "not" waive your rights to receive additional/supplemental payments for your personal property, loss of rents, etc.  Also keep in mind that "many" carriers tend to pay out the property damage, the loss of rents, and the personal property in three separate payments.

Hope this helps!

@Samantha Serenes - From an insurance point of view, I'm 99.9% sure this won't be covered by insurance because there's no resulting property damage, it's normal wear and tear as you stated above, and it doesn't sound like the damage is due to a covered cause of loss (fire, lightning, water damage, wind, hail, etc.).  The trees aren't falling into the fence, and the fence is still standing (although it's old).  If there's no resulting property damage here, especially not enough to exceed your current property deductible, you shouldn't have filed a claim or reported this to your insurance carrier/agent.  It shouldn't hurt you or your premiums, but I can't say for sure.  That just depends on your carrier.  Hopefully it doesn't.

As for liability, the burden to prove that you're negligent in a situation after a third-party property damage or bodily injury claim is up to the suing party (your neighbor or their tenant).  They have to prove you have somehow been negligent.  It appears your more than willing to do whatever needs to be done to get this fixed and remove any visible hazards or issues.  That alone creates a great case to remove your negligence in this situation.  That's a great position to take and highly recommended.  

If you really think the best thing to do is remove the trees and replace the fence, go for it.  This should be more than acceptable to your neighbor.  However, if the fence is 20 years old and it's a shared/common fence with your neighbor, then they should pay half to replace it.  Reality is, this fence has likely reached the end of its useful life anyway (especially if it's wood), and needs to be replaced by both parties.  Just because ONE tree has now grown into the fence doesn't mean it's all your responsibility to replace the entire fence & gates.  It sounds like the fence in mainly unstable because it's 20 years old.  If you don't want the hassle with your neighbor, replace it out of your own pocket and move on.  By simply taking quick action, you remove a lot of potential negligence.  Good luck!  

@ Sam Zawatsky - It all depends on the carrier.  Some care and ask, some don't.  Doesn't matter what state.  Every carrier is different from the next.  Their underwriting guidelines are different, their appetites are different, etc.  Some do inspections and some don't.  I'm in Texas, and the carriers we work with tend not to inspect or ask about roofs.  There are a lot that do though.  I personally wouldn't suggest rushing to replace the roof, but if it's over 10 years old (depending on where it's located), it might be wise to look into replacing it or preparing for replacement.

@Manas M. - You'll want to ensure the carrier has an "A" rating and a solid financial outlook by AM Best (or another insurance carrier rating company).  Excess and surplus lines carriers are used all over the country, but especially in hard to write places like the Gulf Coast (TX to FL) and up the East Coast where hurricanes are more prevalent.  Simply put, these carriers have more flexibility in their policy language, their deductible options, and their premiums/rates.  This flexibility "usually" allows them to better compete in hard to write areas of the country.  They would also likely be the go-to carriers for your state (CA) when it comes to areas that are more prone to forest fires or earthquakes.  

However, they're not backed by the state fund if they ever go insolvent.  Going insolvent is rare for these larger carriers, but can happen.  As long as you're aware, then you can evaluate and make an educated decision for yourself.  

As an example, Lloyds of London is one of the most well known excess and surplus lines carriers in the world.  I've written many clients with this carrier/syndicate, and have very little worry about doing so.  Again, as long as they are "A" rated carriers and have a strong financial outlook by AM Best, I wouldn't worry to much about them being excess and surplus lines carriers, especially when you're specifically talking about Houston, TX.  

@Manas M. - In Houston (Harris County), you should be seeing about .80 cents (give or take a few cents) for your more non-coastal locations (Tier 2), and 1.05 for your coastal locations (Tier 1).  On top of that you should see about $80 per dwelling for a $1M/$2M limit of liability.  Most carriers consider Tier 1 to be South of I-10, and East of Hwy. 288.  

Below is an example that should help, so just plug in your own RC:

Non-Coastal:  $150,000 Insurance Replacement Cost x .0080 = $1,200 + $80 = $1,280 (taxes and fees likely to be added so keep that in mind)

Coastal: $150,000 Insurance Replacement Cost x .0105 = $1,575 + $80 = $1,655 (taxes and fees likely to be added so keep that in mind)

@ Jessica Niles-McDonough - I agree with Tony.  Based off the limited detail you provided, your premiums seem to be pretty good, but that just depends on the value your agent has applied to your rentals.  If these rentals are insured for $300,000 or more in value, then I'd say you have incredibly low premiums.  However, if they're insured in the $150,000 to $200,000 range, you may be paying a little more than you could be elsewhere.  Your elected deductibles likely play a factor in your overall premium as well, but your main driver is your insured value for each dwelling.  

@Noelle Eads - A hold harmless isn't completely worthless and is certainly better than nothing at all. It's really meant to detour people from suing knowing that they've signed such an agreement. However, it's very likely that a good attorney can poke holes in even the most well written waiver.

Your liability policy should be your primary source of protection if you choose to move forward. You could purchase an umbrella for extra limit, but not sure it's necessary. Some carriers will even provide you with a $2M liability limit (without an umbrella), so you do have some options here. I suggest you have at least $1M in liability protection. While $1M isn't what it use to be, claims in this market space exceeding $1M are pretty rare. Not to say it can't happen, but they are rare. That liability policy will protect you for bodily injury or property damage to a third party (the tenant). Keep in mind that the burden to prove that you were negligent after a loss is up to the tenant to prove in court. They (or someone on their side/family) would need to pay for their prosecuting attorney. Keep in mind that most death claims typically pay out around $1M. If a person (especially a child) is injured in a loss and will suffer issues the rest of their life, then that's when a claim can jump up over $1M pretty quickly.

I would suggest you make a pros and cons list of Risk Management. Risk Avoidance is completely passing on this opportunity due to the risk. It sounds like you don't wish to do that, but that is an option that you should consider and put down on paper. Risk Transfer and Risk Control appear to be the main risk management techniques you're considering here, and you should also put this on paper as well (have a plan if you move forward).

The first and most important is transferring your risk to an insurance carrier by was of a $1M+ liability policy. Controlling the risk would be to address any issues that you can while the tenant is still living there. This could mean helping them find a place, paying for them to stay somewhere else for a few weeks or for the entire 60 days, securing the home in any way you can once you've taken possession of it, checking in on the tenant regularly during this 60 day period just to ensure everything is as safe as possible, etc. Having a plan will be key to protecting you and the tenant during this entire process (if that's what you choose to do). Good luck, and I hope you find this helpful!

@Sean Lesser - That's what I figured.  This being the case, that inspector has "zero" to do with the carrier.  Not ties, connection, or obligation.  The carrier has their own internal inspector that will analyze your roof and they have every right to come to their "own" conclusion about your dwelling.  Some will be very conservative and some more labral.  However, just because an inspector says that the roof has 5 years of useful life left in it, doesn't mean the carrier you approach will agree (nor do they have to).  Every carrier has their own stance on this issue, and it's a big one because carriers "do" payout for wind/hail on roofs all the time.  Between 2000 and 2018 insurance carriers have paid out $8B - $14B in wind/hail claims PER YEAR.  Claims are being paid for sure.  

At this point, your options are to look for other carriers who don't care as much about the current condition of the roof, request the carrier you're working with consider "ACV (actual cash value)" on the roof given its issues (which means less payout for you if a claim is filed before the roof is replaced), or you need to replace the roof.

Hope this helps sir!  Good luck!

@Sean Lesser - Is the inspector even tied to the insurance company you're having issues with?  I'm under the impression that the inspector was apart of your loan/closing process, and has no ties or nothing to do with the insurance company at all.  Is that correct?

@Rick Wiggins - This isn't too unusual for certain carriers.  Some of your direct writers don't really want the exposure of a real estate investor (especially the more you grow).  Some come and go from the marketplace every few years or so because their carrier heavily guides what they can and can't write, or what they will / won't compete on.  Some are much more consistent than others in this niche, while others aren't.  It's just different with each carrier.  

It's been my experience as an independent insurance agent for many years now that your best bet is to visit with an agent who can quote you multiple options with different carriers.  Some direct writer agents do have contract flexibility that allows them to get outside of their flagship carrier/relationship, but many will be limited/restricted by their contract.  However, most of your independent agents have a number of carriers that should be interested in quoting your account.  

Also keep in mind that as you grow, your exposure becomes less and less appealing to some of these carriers as well.  While they may be perfectly fine with you having a few rentals, once you get up over a certain number, they may become much less interested in insuring your portfolio.  Some may increase rates and deductibles in order to stay on the account while others may send you a notice of non-renewal or even cancellation (depending on the issues).  This could be due to the number of rentals you have, location of your rentals, certain physical details about your rentals, loss history, etc.  I'd suggest you reach out to an independent agent to see what they can do to help.

Good luck!  Hope this helps.