All Forum Posts by: Gurjot Grewal

Im closing on my first remote investment. Its got a tenant who so far seems great. I was thinking before I get things with the PM I have chosen set up, that I connect with the tenant. Ask him to let me know if he has any issues with the PM. As a way to vet the PM. Is this a bad idea ?

0 Votes

Quote from @Bill B.:

Yup.

Ps. This is all liability. You are more likely to use “replacement cost” to replace a burned down/blown up property. Make sure it’s not diminished value, or market value. Almost no home can be rebuilt for its market value.

@Bill B. Yes I've made sure its replacement cost value. On your previous point, if my net worth currently is 300k, would I also need to take into consideration my future income? Would that also be at risk ?

0 Votes

Quote from @Bill B.:

If you are sued, they can go after the insurance or your net worth. That stopped me for a long time from getting an umbrella. Why get a $2mil umbrella if I could get sued for $10m, my insurance plus my stuff? It was explained to me that they could go after one or the other.

So if you have $4mil net worth and $1mil insurance they’d sue you and get your $4m in stuff, you’d be left with your $1mil from insurance. If you have $1mill insurance and only $500m stuff, of course they take the insurance.

Plus, you have an insurance company’s lawyers fighting to keep their million, that might save you just in lawyers fees if you were obviously (to you) not responsible.

If you’re worth $500k, sometime in the next year or two, assuming things continue to go well, I’d get the $1m umbrella. Or if you can find an umbrella that only requires $300k on property you might save money with lower property limit and umbrella.

@Bill B. this makes alot of sense thank you. I'd estimate my networth to be around 250-300k atm. So 500k for now should be okay.

1 Vote

Quote from @Bill B.:

$500k is actually pretty high for a residence insurance liability limit. Usually you would only get $300k and the rest would be covered by the umbrella. (Although some are now requiring $500k base). You should have a little more insurance than your net worth. Lawsuits rarely exceed $500k, but when they do they might be $2-3million, so if you’re worth that, you want insurance for that much. If you’re worth $500k then you’re covered.

You get the umbrella coverage because you are 10x more likely to be personally responsible for someone getting hurt than your property is. You’re in a car accident, you didn’t know there was mold, you chose a gas appliance that exploded, you didn’t get the sidewalk cleared. You’ll be in the line of fire for any lawsuit. If you have stuff you have to pay the “success tax” of extra insurance.

@Bill B. thanks for the reply. Im definitely worth less than 500k at the moment. Do I really only need enough coverage for my net worth? If the amount sued exceeds my net worth what would happen?

0 Votes

Quote from @Jeff Copeland:

Quote from @Gurjot Grewal:

Thanks for the reply. Would you say 1million per occurrence and 2million general aggregate is enough(I have a quote for a policy without water/sump, but this level of liability coverage)? With this being my first property I'm unsure if it would be worth getting additional umbrella coverage.

This is probably more of a question for your financial planner, CPA, and/or attorney. And it's largely a matter of what you are comfortable with, risk wise.

I would say it's fairly common to have $1M liability coverage if your just own a couple of properties. But as your portfolio grows, so does your risk. After your own 5-10 properties, you might want to consider a higher limit.

It also depends on the costs. $2M in coverage is not necessarily twice the cost of $1M in coverage, so it's often worth asking what the additional premium would be for additional coverage.

@Jeff Copeland I appreciate the info. Im leaning towards I’d rather be covered on that end, over the sewer/water back up. Ill also run this question by my CPA. Thanks again.

0 Votes

Quote from @Jeff Copeland:

In the US, it's typical for your homeowner's policy liability coverage to max out at $300-500k. Additional coverage (usually up to $1M or $2M) is often provided by an umbrella liability policy.

Note that liability coverage protects you against personal injury or wrongful death occurring at one of your properties, and these types of claims (though somewhat rare) often exceed $500k if/when they happen.

0 Votes

Having a hard time finding a policy that covers sump/water backup, but I found one at an okay price. The only problem is the liability coverage is max at 500k. I'm buying with a LP/Corp structure, not a LLC. Unsure if this would change anything. This is the first property that I own. I'm from Canada. Is this enough coverage?

0 Votes

Hello BP,

I'm purchasing a remote property in the US and live in Canada myself. I'm learning as I go about the insurance and have received about 7 quotes. All seem to have varied coverages. My investment property is built 1952 on a slab. In a city that has pretty mild temps but gets lots of rain, wind, hail, snow etc. So far what I know is, I want replacement cost value, water backup, and sewer line coverage. Is there anything else you would suggest as a must-have?

0 Votes

Hello BP,

I'm purchasing a remote property in the US and live in Canada myself. I'm learning as I go about the insurance and have received 7 quotes. All seem to have varied coverages. My investment property is built 1952 on a slab. In a city that has pretty mild temps but gets lots of rain, wind, hail etc. So far what I know is, I want replacement cost value, water backup, and sewer line coverage. Is there anything else you would suggest as a must-have?

0 Votes

I'm purchasing a home all cash. In OH the seller gets to pick the title company and they cover the fees including title insurance from my understanding. I'm sending a large sum and want to be cautious. This is my first remote investment. They have told me that since I'm buying all cash I will be able to e-sign all closing documents. Is this correct? Any major red flags to look out for ? Any tips are appreciated thanks.

1 Vote

All Forum Posts by: Gurjot Grewal

Gurjot Grewal has started 72 posts and replied 156 times.

Post: Is contacting my tenant a bad idea if I have a property manager ?

Post: Is 500k liability enough?

Post: Is 500k liability enough?

Post: Is 500k liability enough?

Post: Is 500k liability enough?

Post: Is 500k liability enough?

Post: Is 500k liability enough?

Post: Any specific insurance coverage that you would consider a must-have ?

Post: What kind of coverage would you recommend on an older home ?

Post: Things to look out for with a title agency ?