All Forum Posts by: Bo Bond

Jason,

Insurance claims are rarely easy to manage, no matter how big or small.  Communication by all parties is key.  The main contacts are you, your contractor/s, and the adjuster assigned to your claim.  It's imperative that these 3 parties stay in constant and clear communication with each other so that the ball isn't dropped.  If you're agent isn't helping you manage this, hopefully they have a claims manager on staff who can.  Most good size agencies have such a person on staff.  

The insurance carrier is running a business just like yours.  They don't want to pay out any more than they legally have to in order to make their insured whole again (back to like kind and quality).  In a typical claims scenario (in my experience), the assigned claims adjuster will likely be low and the contractor will likely be high when it comes to their assessment of the total cost to get things repaired/replaced.  The goal is for you and your agent to get the adjuster and the contractor to sign off on a "statement of loss / scope of work" that they can both agree to.  Until they reach that agreement, there probably won't be much movement/resolution with your claim.  Some carriers may not even cut any checks until the entire scope of work is agreed to by both parties and signed off on.  However, some carriers will cut multiple checks to the insured throughout the entire claims process.  It depends on the carrier and the way they prefer to do business.  Most carriers prefer to cut as few checks as possible during the process.

Also keep in mind that the claims process can also be delayed significantly when the claim is larger (damage is more substantial).  A $200,000 fire claim is naturally going to take a lot longer to resolve and close out than a $10,000 water damage claim.  "Most" water damage claims can be fixed and closed within a few weeks or months, where a fire claim "may" take 6 months to 1 year to close out due to more extensive construction, delays in materials or labor, weather/seasonal delays, etc.  This is just something to keep in mind as you continue along your investment journey.  Sorry to hear about your claim.  I hope you find this helpful!

@ Natalie Casey this is a really tricky one to answer on this platform because there could be so many variables here.  However, I'll attempt to help as best I can.

I would suggest you look for these 3 items below in your policy if you're really hesitant about filing a claim or contacting your agent.  As a side note, be careful about approaching your agent because some agents may file a claim whether you want them to or not because you've notified them of a loss.  

* Wind driven rain exclusion.  Some policies have exclusions for wind driven rain, so you'd want to read the language in your policy (if any) about this to gain more insight about how the carrier might respond to your situation.  That said, if wind truly pushed your shingles upward and allowed water in, then a carrier likely won't be able to hid behind this exclusion because wind ultimately caused property damage first, which then allowed the water to penetrate your home.

* ACV (actual cash value) policy or language (specifically for roofs over a certain age).  If you have an ACV policy OR specific language in your policy about ACV on your roof if it's over a certain age (typically roofs over 10 years old), then you'll likely get very little protection on the roof anyway.  ACV takes into account depreciation, so your payout would be way less than current replacement cost.  ACV is full replacement cost, minus depreciation.  Keep in mind that your applicable deductible will lessen this payout even more.  "If" you have RCV (replacement cost) on your building and roof, then you're likely to receive a much larger payout.

* What's your deductible for wind damage (which appears to be the original cause of loss).  If the wind deductible is higher than your total loss (or really close to it), then you wouldn't want to file a claim for very little coverage / payout anyway.

I hope this helps.

@Huong T Nguyen it depends on the carrier. Many carriers won’t allow any grills of any kind on balconies, but there are carriers out there who don’t have any major issues with grills as long as they’re gas or electric grills.  Most of the carriers I’ve dealt with or encountered certainly won’t allow charcoal or wood burning grills.  However, there are carriers who are okay with gas / electric grilling on balconies.  Some carriers/underwriters don’t ask many questions while others ask about the height of the balcony ceiling, building materials used in the balcony area, sprinklers on the balconies, etc.  If there are several tenants you’re dealing with who like their grills and may actually move if you push this on them, then I’d suggest finding a carrier who would quote your dwellings despite the grill exposures.  

Matthew,

With replacement cost value, your carrier will pay out replacement cost, less your applicable deductible.

With actual cash value, your carrier will pay out replacement cost, less your applicable deductible, and less depreciation.  In short, because they're adding in depreciation, your overall payout after a significant claim would likely be thousands less, and possibly tens of thousands less after a more catastrophic claim (wind/hail, tornado, hurricane, sizable fire, etc.).

Always remember though, just because you have replacement cost in your policy that doesn't mean the carrier is going to pay you whatever it takes to completely rebuild the dwelling.  With a replacement cost policy, the carrier WILL NOT pay any more than the total limit on file for that specific dwelling/building.  That's why your agent needs to run cost estimators on your property, or you need to get a third party "insurance" appraisal on your property (not a real estate appraisal), or you provide your agent with a limit that you're agreeable to in the event of a total loss.  Total losses are rare, but certainly do happen.  

As @Nathan G. pointed out above, you weigh your options, visit with your agent, and go with what you think is best for you.  We see investors taking both options every day.  Hope this helps!  

Ariel,

When in doubt, it's always good to find an independent agent who can shop multiple carriers on your behalf.  A 6% - 8% increase every year and never filing a claim seems off even with increases in premiums (especially in TX).  If it's come to shopping, go for it.  However, below might help explain why you may be experiencing increases in your premiums when you haven't filed a claim in years.  

Most property and casualty carriers write in multiple states or nationwide, and write all different types of exposures.  When/if these carriers are hammered in different areas/states by catastrophic events (Western US wildfires, TX freeze, hurricanes, wind/hailstorms, etc.), they don't just tend to penalize the clients who filed claims and received payouts, but try to spread their premium increases across many insureds.  That's why you'll see typical increases of 2% to 5% even if you haven't filed a claim in years.  Yes, the insured who suffers a direct hit and receives payment via a claim will likely see a more significant impact to their premium, but to keep from drastically increasing the premiums of those insureds, they're rather spread minimal increases among many insureds.  

However, if the losses are bad enough for a particular carrier, I've seen them completely back out of the area/state altogether when it comes to certain types of exposures/clients.  In most instances (in my experience), these were carriers that were writing heavy habitational accounts (community associations, apartments, condos, townhomes, etc.).  I hope you find this helpful.

Chris,

You're only forced into this if you elect to stay with the same carrier/agent.  If the agent doesn't have other carrier options, then look for an independent agent who can help you shop multiple carriers for alternative options who don't have issues with this roof.  

Sometimes issues like this isn't about the "insurance industry", but about an underwriter/agent who didn't follow underwriting/quoting protocols, missed something, or wasn't aware of the exposure somehow.  The policies we provide have little concern as long as a roof isn't over 15 years old.  Some carriers have issues once they reach 10 years old.  Just depends on the carrier and their policy.  That said, most carriers don't cancel coverage if you don't replace the roof.  They just apply ACV (actual cash value) to the roof if it hits 10 or 15 years of age or more (whichever is listed in their policy).  ACV is current replacement cost, less depreciation.  

Also, some carriers run an inspection and then present the insured with their report.  On that report you usually see both optional and/or required maintenance.  It would appear that this is required maintenance from your carrier and not optional, but I suggest you call the agent/carrier to confirm (if you haven't already). I've had some insureds confused by the report, believing it was required maintenance when it was actually optional.  Hope you find this helpful.

Erica,

I really don't see how it would even be possible for a tenant to "insure" the septic system.  First, the tenant does not "own" the dwelling or septic system, and therefore has no "insurable interest" in these items.  Second, many policies exclude coverage for underground pipes.  While you "may" be able to find this coverage, it would be hard for sure and virtually impossible for the tenant to secure since they don't have an insurable interest.  It appears someone is reaching really far on this one.  I also don't know an agent who would write a "septic system only" policy.  LOL!

Now, what you really want to protect and I assume is what they may be ultimately referring to is the backup of water or sewer into the rental.  However, there still must be an insurable interest in the items before you can insure them.  The tenant owns and should insure their personal contents/belongings.  They have an insurable interest in their contents/belongings.  They do "not" have insurable interest in the flooring, sheetrock, trim, etc. that might be damaged after sewer / water backup.  That's up to the owner/investor to insure since they own those items and have an insurable interest in those items.  I'm not saying someone wouldn't write this for a tenant, but it's unlikely and certainly a reach to try and push this to the tenant to insure.  

Each party is responsible for insuring the items in which they legally own, and have an insurable interest in.  

Please also remember that "maintenance" is different from "insurance".  The owner "may" require the tenant to maintain certain items within the unit (septic system), but that has nothing to do with insurance.  Requiring the tenant to have the septic system cleaned, inspected, etc. so often would be a maintenance requirement and not an insurance related requirement.  This would make more sense as a requirement by the owner/investor.  Hope this helps!  

David,

Are these apartments, single-family homes, condos, etc. (attached / detached 34 units)?

Jake,

You are correct, insurance won't pay for maintenance related issues. As it stands right now, this is a risk management situation, and good for you for taking a proactive approach.

Now if a storm causes that branch to break and fall on your home, your insurance policy would likely pay because the resulting damage is to your home, and your home is covered by your policy (not your neighbor’s policy).

However, if there was negligence on behalf of your neighbor in maintaining that tree, then your carrier would still likely pay the claim and then look to subrogate against your neighbor’s insurance carrier. Keep in mind that there's no requirement for your insurance company to subrogate. It's completely up to your carrier (not you) whether they do that or not. The decision to subrogate is usually based off the size (amount) of the claim, and whether the carrier's attorneys feel they have a good case against your neighbor or not.

Beyond this, I think your first option would be to have a conversation with your neighbor about the branch to see if they're okay with you removing it (assuming you haven't done this already). If they're in agreement that it needs to go and you're both on the same page, then just make sure there aren't any local tree protection laws you might be infringing upon. 

If your neighbor isn't on board with you removing the branch, then I'd have an arborist inspect the tree and provide their expert opinion. If their report states that the tree/branch is in bad shape or needs to be removed, then you would have another conversation with your neighbor. You'd explain their potential negligence in not removing the tree/branch and what that might mean for them.

Lastly, if your neighbor isn't in agreement with you removing the branch, and the arborist says the tree/branch is in good shape, then you'd need to visit with an attorney about your options legally. Does your city/state allow for you to remove the section of that branch hanging over your property, and are their other laws concerning the removal / trimming trees that you need to be aware of. Some areas have very strict laws about cutting down / pruning protected trees.

I hope this provides you with more direction on this topic. Good luck!

Nathan,

In my opinion, no matter the agent or carrier, an investor should really be looking for a commercial special form policy or a DP-3 special form policy.  Special form policies provide the broadest level of coverage you can find with an insurance carrier.  In these forms, anything that is not specifically excluded in the policy is covered.  With a policy like this, you need to read the policy itself, but certainly need to read the exclusions and their exact wording.  Many of them will be standard exclusions that you and any agent would expect, and can review quickly.  However, there may be a few that you need to discuss further before binding a policy.  Some carriers may be flexible and remove the exclusion if you request them to, while others may not.  Then some exclusions will likely never be removed.

Below are other items to review & consider:

* Make sure you're limits are as current and accurate as possible.

* Understand how co-insurance and actual cash value "might be" applied to your dwellings at the time of loss.

* Understand your deductibles and how they would apply at the time of loss (especially your hurricane/wind/hail deductible).

* Keep in mind that most policies do not automatically provide coverage for flood or earthquake damage.  In most cases, these would have to be purchased as separate policies, or be added to your current policy upon request w/ additional premium.