All Forum Posts by: Jason Bott

@Kim U. These are not as easy to insure as you would think.  You will need to work with an independent insurance broker.  Start with Travelers, CNA, Hartford and Hanover.  If they can't do it, chances are you will need to get quotes form companies like Lloyd's of London.  Plan for premiums to start @ $2500 per year, $1500 if you get lucky.

Insurance companies and underwriters get scared of any new business where they can not examine 10+ years of claim history.  These sites have been around a long time, but only started purchasing insurance the last few years.  The insurance industry is fearful that a "craigslist killer" case will somehow find the site responsible for the crime.

Good luck

@Jennifer Hollstein 

Work Comp follows state law so the policies are specific for each state.  The property policies will depend on whether or not the insurance company is filed to do business in that particular state.  This will probably not be an issue as most of the companies on the East coast are licensed in all of the states.

@Jennifer Hollstein 

Congrats on getting started.

When the building is being renovated, you need a liability policy covering the premises/property and a builders risk policy.  The builders risk covers the building during the rehab process.  A standard homeowners policy does not cover it while the building is unoccupied.

Once the rehab is done, you will need to get a vacant building policy, or if being rented right away, a rental dwelling policy.  There is an insurance program that rolls all of these policies into one.  Let me know if you want that contact info.

Regarding work comp, it is always good to have one.  If you hire someone without coverage, you will be held responsible for their injuries while working on your project.  The work comp policy will pick up this exposure.  In order to be sure a contractor has current coverage, ask for his agent to send you a certificate of insurance naming you as an additional insured.  Your father being in contracting probably is probably familiar with this.

Good luck

@Will F. Once the home remodel is complete, a builders risk becomes void, and you will then need to purchase a vacant building policy.  The NREI program takes this into consideration and covers you through this transition without purchasing a second policy.  That is why the program fits the flipping biz so well. 

@Padma Mody 

Allstate is one of the companies that only writes rentals if they are personally owned.  A lot of companies have this guideline.

If the agent is asking for SS# & other personal info he/she is trying to write your rental through the personal lines underwriter.  With the limited options in Florida, you will want to stay in the personal lines department as long as possible. 

As for all the questions, these are the standard questions most insurance companies ask. 

@Neil W.

$450k for $3200 = $0.71 per $100 of insured value

$275k for $2100 = $0.76 per $100 of insured value

So even though the 2nd quote is less, the rate is actually more expensive and you are getting less for your money.

In the Midwest, $65/sq/ft is low, $100 conservative, $130 high.  Your 5100 sq/ft building @ $100 per sq/ft, $510,000, so you are not over insuring with either of these quotes.

Regarding the least expensive quote, you are only insuring to $54 per sq/ft.  If you have Coinsurance on your policy, you could get a Coinsurance penalty on a property claim.  This is when the insurance company states you should have been insured to $100 per sq/ft, but only paying for $54.  You will be 46% under insured, and get 46% reduction on a claim payment.  So if you have a kitchen fire for $50,000, you will only get $27,000 less your deductible.

Hope this helps.  Let me know if you have any other questions.

@Account Closed no, not purchase price.   You may be able to get to an average cost per sq/ft if you are dealing with very simulate properties in the same zip code. Unfortunately there are so many variables in developing an insurance rate, I don't think you can come up with an accurate % that would help you advise your clients.

@Account Closed 

Yes, there are programs and insurance companies who will do this and premiums will most likely be reduced.  Once you get over 10 locations, it is best to at least market the portfolio as a package to the insurance companies.  If you find 2 locations are more expensive in the program, cut those out and keep with the other insurance company.  The underwriter will then most likely honor the 10 unit pricing on only  the 8 units.

@Stefanie Marshall 

Unlike and auto or homeowners policy, E&O policies are not all of the same. They can really be tailor made to fit whatever you are doing. In the policy there will be a section called "Description of Operations" where you can basically type in exactly what the client is doing and is cover for. If it is not in the description section, chances are it's excluded.

Chances are the least expensive E&O in the market place has tight guidelines as to what an agent can and can not do. It probably has a description of "residential home sales".

Call a commercial insurance broker and ask for the coverage to be quoted.  They will be able to give yo a ballpark figure.

@Account Closed 

 You are correct on the insurance piece when discussing singles or duplexes, but DP1 is not the jargon most agents use.   We will typically use Basic, Special & Broad Form (Dp1, DP2 & DP3) as these are the terms applicable to commercial policies as well as personal policies. 

Another key distinction is you can have Actual Cash Value or Replacement Cost on any of the 3 coverage forms.  so do not assume you have the all the best coverage options by just asking for "Broad".