All Forum Posts by: John Mocker

Melissa,

Here's is some general info that I sent to a new client who was looking for properties. It may be helpful.

The things to watch out for/avoid from an Insurance perspective are:

1. Homes with Underground tanks (in use or not)

2. Homes with Lead Paint

3. Homes with Knob & Tube or Aluminum Wiring (even if you can't see it in basement or attic have your electrician check to see if it's still in the walls)

4. Homes with Fuses or less than 100 amp service

5. Homes with Flat Roofs

6. Homes with Pools that are not fenced or that have diving boards or slides

7. Homes with prior losses (they will show up under a CLUE report of the prior claims).

   May not be a problem if the issue was addressed or if it was from a "Catastrophic" loss

   such as a hurricane

8. Homes with EFIS (type of spray on siding) or Asbestos shingles or siding

9. Homes with Polybutylene Plumbing

10. Student rental:  If you are renting to students you may have a problem getting coverage.

Other factors that will impact the rates:

1. Age (newer construction will often get rate credits)

2. Renovation of Systems

     - Heating

     - Plumbing

     - Electrical

     - Roof

Complete updates are better but partial updates help. Within 20 years.

3. Distance to the coast (closer to the water the less options I have)

    - over a mile is normally not a problem

    - under 1500 ft can be a problem

4. Alarms: Central Station monitored alarms will give credits

5. Animals:  For either you or for your the tenants, certain breeds of dogs will cause the

                    companies to not write you Any bite history for any type of dog will also

                    cause them to decline.

6. Other factors that lead to credits with some companies

     - Insurance Score (based on info from your credit report)

     - prior insurance (how long you were with a company)

     - education level

     - other insurance with the company (auto, life, boat, etc.)

Peter,

It is common on policies that have Replacement Cost Coverage for the company to pay the Actual Cash Value (depreciated value) of the items/repair.  Once the repairs are done, they would pay the difference.  This does not sound like the same thing.  From what you said, they want you to front all of the cost and then get reimbursed.  

What has your agent done?   Have them speak to the adjuster at the company.  If the company is worried about the work getting done, maybe there is another way to handle it (ie. payments direct to contractor after CO, progress payments to you or contractor at certain points, escrow the money with an atty pending completion, etc.).   If you can't get them to agree to any other option, you may need to contact the State Insurance Department.   Lastly, if nothing works and you are going to do the work, get the commitment in writing on how much they will pay, what you will need to show, and how soon will that payment be sent.  

Jonathan,

What Jason indicated was correct.  We write in all states and we find that even in the same state, the best company for multiple properties varies.  That is due to differences in fire protection in the towns, what losses the companies have had in that town, Coastal issues, etc.   You should still look at national brokers for quotes but also consider splitting out a property or properties if they are much more competitive with a local agent. 

Jack,

As Agents, we do not see the back round data that the companies use to create their rates.  I'm sure they use that info or similar info but they don't release it.   You might try any Building/Rental trade associations.  They may also collect data and may be more willing to provide it.

Melissa,

If you are not living at the property then it is not eligible for most Homeowners policies.  The correct policy is normally a Dwelling/Fire policy or a Commercial Package/Businessowners policy.  Which is best for you depends on the type of property, age, condition, etc.  What policy will be the best value (price/coverage) will depend also.  We have 30 markets in CT and depending on the situation any of 10 companies may be best. 

If you will be remodeling it before renting it out, you may be better with a Builders Risk (property) and separate Liability policy until you get your Cert of Occupancy (CO). 

If the property will be Vacant, there are special Package policies for Vacant buildings.

Regarding what coverage you should look for, there is more info than I can get into here but there are some general things I look at for my clients:

1. On the building:

    - if possible, we try to insure the Replacement Cost

          (cost to rebuild today with the same kind & quality)

    - if possible, we try to get Special Form (all-risk) for the perils insured

    - if the property is coastal, we watch to see what deductible the company has for wind

          (some can have as high as 5% deductible)

 2.  Income:

       Be sure there is coverage for Loss or Rents/Business Income.

          (if the building is damage you will lose income until it can be rented again)

3.  Liability:

       Look to max out the Liability coverage limits.  Most personal policies can have $500,000

       Commercial policies will go higher ($1,000,000 or more).   If you can only get $500,000

       consider getting an umbrella policy also.   It will provide an additional $1,000,000 or

       more after the $500,000 is exhausted.

If you want to discuss this further or have any specific questions please do not hesitate to PM me.   Good luck

Mark,

I would look into both a single policy and also individual policies to see which provides a better rate for you.  Depending on the property type (ie. single family, 2-4 family, etc.) there could be ones that are cheaper by themselves.

Loren,

Gerald is correct about the Builders Risk.  If you can get a company to do a 12 mos. policy which can be cancelled for a refund if you finish earlier, that is what I usually recommend. 

You also need Liability coverage for the property and possibly the project (if you self GC).   

If you are hiring the people working on the project, consult your agent on Workers Comp.  If they are contractors, require proof of coverage.  If they do not have coverage, depending on the details of who is directing the work, how they are paid, etc., you may need to purchase coverage.

Joseph,

Alex is correct on the three ways to cover the buildings.  Remember, you are insuring the building not the land.  Your purchase price included both, as well as detached buildings on the property.  Of the three, Agreed Value is the best if you have good idea of the cost to rebuild it.  If not, you may be better served with Replacement Cost for the building (Especially if the company will offer Guaranteed Replacement Coverage or 125% or 150% coverage endorsements).   The Actual Cash Value is the least desirable unless you would not rebuild.  If you would just take the proceeds and sell the land, that may be your best value.

The Mortgagee may have a say in how much you must cover.   In CT the Insurance Industry was able to get passed a law that restricts the amount that can be required for coverage by the Mortgage company.  They must accept the replacement cost even if the purchase price is higher.  In CT as in CA, the value of the land can sometimes out weigh the value of the building on a property.  You agent should be able to tell you if CA has a similar restriction to CT.  

Lastly, If the properties are older, on non-conforming lots, or would otherwise not be able to be rebuilt as they are, you should have your agent look into "Building Ordinance & Law" coverage to insure the higher rebuilding costs.

If you are not happy with your current agent/company, I suggest looking for an Independent Agent who represents multiple companies.  I have found in CT, sometimes the company who is good in one town may not be the best on in the next town.  So the agent may suggest different companies for different properties you own.

Rich,

I normally recommend the Umbrella policy whenever there are tenants involved.   If all the properties are just in your name then my recommendation would be even stronger and would probably be for 2mm - 5mm limits. 

The rate seems reasonable.  A personal  umbrella normally also covers over your auto policy.  The number of autos, age of drivers, and driving record can also effect the rates.

Jack,

I don't have the stats but have seen both types of disputes. If you are considering going without Liability coverage I would recommend against it. Even if the property is in an LLC or corportation, there is always the possibility that the claimant could pierce the veil of the LLC/corp. I would speak to an Attorney familiar with Rental properties.